F&I Management & Training

Changes to the way that dealership staff are taxed for using demonstrators or company cars could leave dealers open to fines.

Dealers are being advised to ensure they are aware of and acting upon the revised Benefit In Kind (BIK) rules in order to avoid action from HM Revenue & Customs.

Barry Cooper of Cooper Solutions told delegates at a recent AM Dealer Council Chairmen meeting: “The networks need to go away and discuss this, your dealers must determine how well sorted are they to go through a review from HMRC in the next few years.”

Cooper said the new system requires dealers to look at what demonstrators and loan cars were in the business between January 17 to January 31, and allocate these into 10 bands based on their retail prices. Then, from looking at the CO2 emissions for each band, allocate BIK to it.

A car’s CO2 emissions place it in a band, which gives the percentage BIK tax a driver will pay on that car. In the 2010/11 tax year the base rate is 15% for cars producing less than 130g/km of CO2.

This rises by 1% in 5g/km increments, to a maximum of 35% for cars producing 230g/km and above.

Finally, allocate staff to each band and ensure they do not use cars from other bands – this must be the BIK band that each driver will keep for the rest of the year.

Cooper said it will be vital for dealers to keep records showing that drivers are sticking to their bandings. Cooper Solutions is in the final stages of creating software that will help dealers with this.

“It is likely that HMRC will see this as an opportunity to get back some of the money it has had to pay out to the industry in VAT refunds in recent years,” he said.

DATED: 30.04.10

FEED: AM

Sir Nigel Rudd has announced his intention to retire as chairman of Pendragon, the UK's largest franchised dealer group.

Rudd plans to step down from the board later this year, he told shareholders at today's Pendragon annual general meeting.

The search for a new chairman has already begun, said the group.

He was appointed chairman more than 20 years ago after Pendragon's demerger from Williams Holdings.

Rudd said: "I have been considering my retirement from the board for some time, but the financial turmoil and difficult trading conditions of the last two years had deemed it inappropriate to leave the company.

"The trading position of the company has now improved to such an extent that I feel it is now appropriate for me to stand down from the board of Pendragon later this year.

DATED: 30.04.10

FEED: AM

Car dealers don’t always put sufficient emphasis on warranty sales because they fail to recognise the way in which they provide not just a margin at the point of sale, but create an uplift in aftersales for as long as the next three years.

RAC Warranty says that for every £100 a dealer spends on a warranty, a significant proportion will find its way back to the dealer’s workshop in claims as long as that dealer is successful in capturing the work from the customer – achieved by the vast majority.

Ian Simpson, sales and marketing director, said: “A surprisingly large number of both franchise and independent car dealers often measure returns in terms of only the margin they receive when they sell a warranty along with a used car.

"They simply don’t recognise the other benefits to their business that heavily promoting warranties will bring.

“The simple fact is that warranty profits also include what happens in the workshop in subsequent years.

"The warranty helps to strengthen the link between the customer and dealer in the medium and long term because they are likely to return to where they bought the car to make any future claims, as well as for servicing and other maintenance.

“Also, the longer the warranty, the greater the potential for workshop profits because claims have a propensity to increase over the life of the vehicle and. It is no accident that new and used car dealers who are good at selling warranties also tend to have thriving aftersales operations.

"The warranty creates an almost umbilical link to the dealer.”

Simpson added that dealerships measuring warranty sales to include aftersales returns as well as other customer retention benefits tended to promote them more heavily as a result.

He said: “Where the full profit potential of a warranty is recognised and exploited within a car dealership, managers go to greater lengths to ensure that there is a warranty sales infrastructure in place with proper training, marketing materials and incentives.

"In this type of environment, both the dealer and their customer tend to reap the best results.”

DATED: 30.04.10

FEED: AM

Motorists have given a resounding 'no' to the idea of privatising the motorways according to a new poll.

A survey of over 1,000 people by a car supermarket giant found 64% of people against the radical proposal recently put forward by the Social Market Foundation to give everyone tradable shares in England's major road networks.

Under the think tank's scheme the shares could be bought or sold on the Stock Exchange whilst motorways would be made into tolls, charging 10p a mile to use them.

A spokesman says: "In spite of its well-documented problems, the poll indicates that the vast majority of the public would prefer the motorways to be kept in state hands."

The introduction of swappage schemes by car manufacturers could pave the way for a new generation of dodgy salesmen.

Consumers are being warned to be on their guard, as their current car might be worth more than the typical £2,000 discount offered under a manufacturer's swappage scheme.

That's according to Trimble MRM, experts in telematics, who are concerned that dishonest dealers will try and undervalue older cars.

But, the latest technology from Trimble MRM could provide the answer at a touch of a button.

Trimble's in-vehicle box - known in the industry as the TVG660 - provides 'Vehicle DNA' and is already being used by companies such as BT and British Gas.

The box, which fits into any vehicle, reports information on a car's condition, its mileage, how it has been driven, fuel and mpg efficiency, as well as CO2 emissions.

"The technology is simple," says Andrew Yeoman, MD of Trimble MRM Europe. "If it was available to consumers adopting the car swappage scheme, the stereotype of crooked car salesmen would be a thing of the past."

'Vehicle DNA' information can show whether there has been excessive harsh braking or speeding and even what type of journeys the vehicle has been used for giving a clearer picture of its condition and value.

!If a car is driven well, drivers could be entitled to far more than £2,000 in a swappage scheme," says Yeoman. "It is the perfect solution for both consumers and car manufacturers."

With only a week to go before the election, and a hung parliament the most likely outcome, WhatGreenCar takes a look at the main parties' policies for greener motoring.

While the Labour Party has implemented some highly effective green car support policies, it has of late become less confident in proposing and implementing radical green car policies. While the evidence shows that purchase taxes (and breaks) are ten times more effective than road taxes in changing car buying behaviour, Labour has recently left it to the market (in the form of the 'credit crunch' and high fuel prices) to persuade car buyers to buy smaller lower emission cars. True the 'first year' road tax will make a difference - but if they'd been bolder we might have seen a 20% shift in new car CO2 rather than the 5.5% reduction over the past 12 months.

WhatGreenCar maintain that now is the time to build on the work done by the previous Government - whichever party or parties gain power on May 6th. As economic, global oil and Climate Change issues become ever more critical, the new Government should be planning to get more radical with green car issues - not for its own sake, and not in ways which only serve to penalise the motorist, but by intelligent policy making which benefits owners of low emission models and (fairly) increases the costs of more polluting vehicles - much in line with the Green Party 'polluter pays' approach.

One way to be radical is to put road user charging (in all its forms) back on the agenda - as proposed by the Liberal Democrats, the only leading party that has maintained interest in this policy. Although controversial, this system does have a great deal of untapped potential for environmental benefits, although there would need to be a review of how best to implement such as scheme to maximise effectiveness. Over the pond, at least one State in the USis experimenting with an opt-in pay-as-you-drive system which offers many green benefits without the big brother issue which has stifled much of the debate to date.

New technologies are also undoubtedly part of the long-term solution - and the Conservatives are right to promote the electrification of the car, even if the battery-electric technology they currently advocate morphs into an as yet unknown form - such as the technically possible plug-in fuel cell hybrid. Although somewhat simplistic in its approach, this party's vision of technically-led zero-emission transport will have to be worked through, along with the 'softer' measures adopted by the Lib Dems and Greens.

While committees are not always the best do-ers, the expected hung parliament could be a useful forum in which to develop and implement the next decade's radical policies to accelerate the shift towards greener, low emission transport. In this scenario, the Conservatives' push for electrification and roll-out of a national recharging network could be better integrated into the developing use of green taxation initiated by Labour. Policy benefits could then be further maximised by re-opening the Lib Dem debate on road user charging, and continuing to invest in greener (and cheaper) public transport - as advocated by the Greens. Less policy of the 'reds' versus the 'blues', and more policy of the 'rainbow'.

Dealers need to ensure that they are meeting the expectations of customers who can no longer afford new cars following price rises and are buying used as an alternative, says Network Automotive.

The company points out that the prices of new vehicles have risen to historically high levels at a point in time when consumer confidence remains low, unemployment is an issue and salary increases have slowed or even stopped.

Colin Bruder, managing director, explained: "Developments over the last couple of years have increased the gap between what a customer might want and what they might be able to afford. Increases in the prices of raw materials and other factors have prompted manufacturers to raise new car prices substantially.

"What this means is that some customers entering your dealership can no longer afford to make the same kind of purchase that they might have made three years ago. Someone who previously bought new might now be buying a year old car.

"What dealers need to recognise is that these customers do not have radically changed expectations. The customer buying a six month old, 5,000 mile ex-demonstrator still wants that new car smell and a bunch of flowers on the back seat. People paying the same amount for less need to be made to feel special."

Bruder said that dealers needed to ensure these vehicles were as well presented as possible, that PDI inspections were diligently carried out and that all vehicle history, warranties and other paperwork were made available.

He explained: "This is something that is going to be even more important as the scrappage scheme ends. To some extent, it softened the list price increases of the last year or so but there is now a chance that the full implications of the £12,000 mainstream entry level hatchback will hit dealers - and that a used car is the only option for someone who would have been a scrappage customer."

Bruder added that the same kind of thinking also applied to the used market where stock shortages meant that model for model, used cars of the same age where now substantially more expensive than before the recession.

He said: "It is a similar situation. A customer whose last purchase might have been a three year old/40,000 mile car may now be buying at five years/60,000.

"What dealers need to recognise is that this car, which may be oldest to be found on many franchise dealer forecourts, still represents a substantial outlay for the customer. They need to feel that they are making a good deal for a quality vehicle and their business is appreciated. It is up to dealers to meet this need."

Japanese carmaker Honda has reported a profit for the first three months of 2010, following losses a year ago.

The company said it made a net profit of 72bn yen (£507m; $772m) between January and March, with sales up 28%.

A recovery in the major US and Japanese car markets helped Honda, as well as expansion in developing markets including China.

Honda also announced that it expected annual profits for the year as a whole to be up 10%.

Ford has reported net income of $2.1bn for the first three months of 2010, its highest quarterly profit for six years.

The figure compares with a loss of $1.43bn for the same period in 2009.

Ford said the result was down to a recovering economy, which meant people were again beginning to buy expensive, one-off items.

The carmaker also said that it expected to be profitable in every quarter this year.

Unlike its rivals, Ford did not receive any government money to help it through the credit squeeze and economic downturn.

'Solid quarter'

Ford said sales in its key North American market rose by 37%, and it planned to increase production by 9% this year.

However, the company said it was too early to say whether it would be hiring more workers to help it build them.

Globally, the stand-out area was China where sales rocketed by 84%.

Ford chief executive Alan Mulally said: "The Ford team around the world achieved another very solid quarter, and we are delivering profitable growth."