Saturday, November 13, 2010
VW Group buys Porsche dealer network
Volkswagen Group is buying Porsche Holding Salzburg (PHS), Europe’s biggest privately owned dealer group, for €3.3 billion.
VW said the deal will take place during the first half of 2011 and no later than September 30, 2011. The carmaker said this was the “next planned step towards the creation of the integrated automotive group with Porsche led by Volkswagen”.
PHS is Europe’s most successful private dealer group with a strong presence in Austria, Western Europe and South Eastern Europe as well as China. In the 2009-10 financial year (to March 31), unit sales of 421,000 new vehicles generated sales revenue of €12.2 billion, with profitability higher than the market average. PHS employs 20,300 staff.
“PHS will retain its status as a single organizational unit with its successful business model as well as all assets and all brands,” said Martin Winterkorn, CEO of Volkswagen AG.
“At the same time we will be significantly strengthening our own trade activities in major markets and regions. Moreover, by combining processes in relevant sectors such as financial services or IT we are also leveraging synergies and raising our performance in automobile trading, thereby making an appreciable contribution to achieving the targets of the Volkswagen Group’s Strategy 2018.”
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Range Rover customiser Overfinch in administration
Overfinch Bespoke Vehicles, the specialist Range Rover customiser, has gone into administration.
The company, based in Farnham, Surrey, was launched in 1975 and operates in 15 territories and is best known for the Holland & Holland Range Rovers its has supplied to celebrity customers such as Jeremy Clarkson, Steven Gerrard and Colleen Rooney.
Joint administrator Lisa Hogg, from Wilson Field in Sheffield, said the company had been hit by non-trading costs.
“Over the last 35 years, Overfinch has established a reputation as the originator and leading authority in high performance derivatives of the Range Rover. Unfortunately, over the last 18 months the company has incurred significant one-off non-trading costs which have severely affected cash flow.
“We are continuing to trade the business while a purchaser is sought and we are already in talks with a number of interested parties.”
The administrator is being advised by legal firm Clarion in Leeds who is confident a buyer can be found for the business.
“Given Overfinch’s position as a world leader in its field and with its valuable intellectual property rights, we are confident that the business will be sold within the next few weeks, securing the future of its 20 staff,” said Roger Hutton, senior partner at Clarion.
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Competition law - new dangers for directors
Recent dawn raids (and an arrest) in the commercial vehicle sector have highlighted the importance of competition compliance.
The investigation is led by the OFT, which can prosecute individuals and businesses involved in serious anti-competitive practices.
Although the spotlight is on commercial vehicles, this is not the only ongoing investigation in the automotive sector and the OFT may cast its net wider in due course.
Miles Trower, competition partner at national law firm TLT, said: "The OFT has had its nose bloodied recently with the collapse of criminal proceedings against several British Airways executives, but is fighting back, redoubling its efforts to punish illegal activities."
The issues go wider than price fixing; a single meeting between individuals from rival groups where sensitive commercial information is exchanged can expose those businesses and senior management to competition risks.
Certain topics are legitimate, say, discussions on motor industry regulation, but it is important that individuals don't cross the line.
Trower said: "Aside from fines for serious infringements, the OFT can apply to have directors disqualified for up to 15 years.
"Businesses need to take this on board because the OFT now intends to apply this penalty, not simply to senior executives who were personally involved, but also to those who 'ought' to have known about an infringement, but who failed to take steps to uncover or remedy it.
"All directors, even non-execs, both in the automotive sector and elsewhere, must take an active role in ensuring competition compliance."
Nicola Kingaby, associate and leader of TLT's 'Dawn raid response team' comments: "Often, the first time a business comes to us for competition advice is when the OFT arrives unannounced at its doorstep demanding access.
"By that stage all we can do is to help our clients limit the damage.
"Too often we see businesses punished for offences that had they made a small investment in training and guidance upfront would never have happened in the first place."
> For any queries connected with this bulletin, or if you would like further information about compliance programmes, staff training or dawn raids please contact Miles Trower (0117 917 7652 or miles.trower@tltsolicitors.com) or Nicola Kingaby (0117 917 7869 or nicola.kingaby@tltsolicitors.com)
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Honda, BMW and Ford win top fleet reliability prizes
Honda has the best overall reliability record as a car manufacturer according to a survey of the country’s 50 largest contract hire companies.
But the BMW 3 Series is the most reliable car in the UK.
The annual survey also names the Ford Transit as the most reliable commercial vehicle, with Ford as manufacturer of the most reliable vans.
The FN50, published by leading industry publication Fleet News, is an annual report on the UK’s contract hire and leasing industry.
In part of the survey, companies were asked to nominate the most reliable cars and vans on their fleets. The research included 1.5 million vehicles owned or managed by the top 50 leasing companies in the UK.
The Honda Accord takes second place behind the BMW 3 Series, followed by the Audi A4.
German and Japanese brands dominate the top 10 cars, although three of the Japanese brand cars that feature are built in the UK.
There are also British success stories in the commercial vehicles’ top 10 with Southampton’s Ford Transit at the top of the table, followed by the Mercedes-Benz Sprinter in second place and the Ford Transit Connect in third.
The Luton-manufactured Vauxhall Vivaro is eighth in the commercial vehicles table.
As well as the highest placed British-built car, Nissan also produces the UK’s most reliable pick-up truck with the Navara taking seventh place in the commercial vehicles table – the only pick-up in the top 10.
Fleet News editor Stephen Briers said: “Businesses that depend on vehicles take reliability very seriously, and can’t afford downtime through breakdowns that incurs extra costs.
“This is the largest reliability survey of its kind, so any vehicle with a top 10 placing will represent a safe bet for any organisation or private motorist.”
FN50 most reliable cars
1. BMW 3 Series
2. Honda Accord
3. Audi A4
4. Nissan Qashqai
5. BMW 1 Series
6. Ford Fiesta
7. Mercedes-Benz C-Class
8. Toyota Avensis
9. Honda Civic
10. Volkswagen Golf
FN50 most reliable car manufacturers
1. Honda
2. Volkswagen
3. BMW
FN50 most reliable commercial vehicles
1. Ford Transit
2. Mercedes-Benz Sprinter
3. Ford Transit Connect
4. Citroen Berlingo
5. Citroen Relay
6. Vauxhall Combo
7. Nissan Navara
8. Vauxhall Vivaro
9. Volkswagen Caddy
10. Volkswagen Transporter
FN50 most reliable commercial vehicle manufacturers
1. Ford
2. Volkswagen
3. Mercedes-Benz
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Finance analysis: 7,000 a day are upset by banks
Good complaints handling standards should be the rule and not the exception in the banking sector, says Sheila Nicoll, director of conduct policy at the Financial Services Authority.
An FSA report that revealed 1.3 million grievances were lodged against banks in the first six months of this year – an average of more than 7,000 a day.
Sub-standard service and poor advice on insurance and mortgages are among customers’ chief com-plaints. Santander was named as the worst major High Street bank at dealing with complaints within eight weeks.
All retail banks provide car buyers with loans in person or via websites. Some have specialist divisions operating within the motor industry (the proportion of complaints relating to motor loans has not been given).
This is the first time the FSA has forced banks to disclose the number of complaints against them. The watch-dog, which wants to improve customer service by naming and shaming offenders, is proposing new rules to improve complaints procedures.
The complaints league is topped by Lloyds Banking Group, which includes a number of brands. It received 288,717 complaints in the first half of 2010.
Other totals: Barclays 245,348, Santander 244,978, Bank of Scotland/HBOS 115,638, Lloyds TSB 146,846 and NatWest (almost 84,300).
New TFC 'vision and values'
The Funding Corporation (TFC) closed for 24 hours this month to brief all 250 employees from around the UK on its new ‘vision and values’.
It is now SAF (specialist automotive finance) approved by the FLA.
The Chester-based group includes sub-prime car retailer ACF Car Finance, Cygnet Financial Services and a debt collection agency.
David Challinor, TFC managing director, said: “We wanted to shape the company to the values they have told us mean the most to them. We have provided staff with even greater opportunity for future self-development.”
Challinor claimed TFC demonstrated a pioneering approach for the finance industry by adapting the business to meet the desires and needs of its staff. He said TFC staff turnover of 2.6% in the 13 months to August compared with a UK average
of 13.5%.
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"The Consumer Credit Directive or CCD, in force from February 2011, is set to change the way dealers promote their finance offer. When it comes to d
I am showing my age here, but my first industry column was called “Death of the Barge” about how the likes of the Scorpio and Omega were doomed in the face of premium executive models.
Now we seem to be facing the death of the cars that were meant to replace them in volume manufacturers’ ranges: the upper medium models.
Market share so far this year fell to just 6.2%, making upper-medium cars less popular than city cars or SUVs.
Since 1995, the upper-medium seg-ment has lost an average of one percentage point every year – a trend positively Rover-like in its grim trajectory.
Both the main contenders in the segment, the Mondeo and Insignia, will sell about the same this year as the 30,000-35,000 that the Granada Scorpio/Omega used to sell in the
late 1980s.
However, it is interesting how differently the two companies approach the issue. Vauxhall appears to be carpet-bombing the sector: three bodystyles, 4wd options, V6 options and numerous trim levels mean there are no fewer than 160 different versions of the Insignia (if you take the automatic as a different version).
In comparison, there are just 48 Mondeos using the same counting method. Currently, the Insignia is outselling the Mondeo by about 10%, but I suspect that if you asked Ford whether they would trade a 10% increase in sales for a threefold rise in model complexity, they might politely decline. In fact, you cannot buy a Mondeo saloon in the UK any longer, a remarkable turnaround for the company that invented the three-box D segment car.
Wherever you look in this segment, weird statistics jump out at you.
It is hard to know which is odder: the fact that the Mazda6 now outsells all three French contenders combined, or the fact that the Skoda Superb now outsells the Renault Laguna.
It seems that in this declining segment any car that stumbles gets the most brutal beating. The top five models now account for 84.8% of the whole segment, leaving 10 cars to fight over the other 15,000 sales so far this year.
So is there any hope at all for this segment? After all, there are only two European markets that really matter for this size of car – Germany and the UK – and Germany is not much more enthusiastic than we are.
In fact, upper-medium could be saved by globalisation. The original Mondeo was meant to be a world car, but its US brothers, the Ford Contour and Mercury Mystique, looked overpriced and undersized to Americans.
The next Mondeo will go back to America and any upper-medium model that wants to survive is going to have to go global as well, whether it is to the USA, China or both.
Europe is just not big enough anymore.
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The face of dealer finance is changing – are you prepared?
"The Consumer Credit Directive or CCD, in force from February 2011, is set to change the way dealers promote their finance offer.
When it comes to dealing with financial services, credibility is all important.
Dealers need to know and fully understand the CCD requirements and how they affect their customers.
Many finance companies are initiating the changes before the February deadline, so the way in which dealers sell finance is set to change in the forthcoming months.
So how does this affect motor dealers?
Primary changes include:
• The customers ‘right of withdrawal’
• Details of the customers ‘pre-contractual information’
• The customer’s ability to make ‘early/partial repayments’
• Information required in order to provide ‘adequate explanations’
• Affordability and the ‘assessment of creditworthiness’
The directive covers almost all types of consumer credit with balances from €200 to €75,000 or £160 up to £60,260.
1. Right of Withdrawal
Customers will now benefit from a right to withdraw from their credit agreement. They don’t have to offer any explanation and have 14 days in which to formally make this request.
The right to withdraw forms a kind of cooling off period in which the customer can change their mind if they decide that the credit agreement is not suitable after all.
This does not mean that they can return the vehicle. If the customer chooses to withdraw from their agreement, they must repay the amount of the credit plus any accrued interest and then find some other means of funding their car purchase.
2. Pre-Contract Credit Information
Whilst the pre-contract information itself is very similar to that which dealers are already providing, the directive is very prescriptive about the way in which this document is laid out, stipulating that all pre-contract Information follows the layout of a SECCI, the Standard European Consumer Credit Information formwork.
This is principally to help customers compare information from different lenders.
3. Partial Early Settlement
Effectively, with a view to reducing the balance owed, the customer is now able to make one or more additional, lump sum payments at any point during the agreement. The credit agreement is not being settled off by the payment, the early payment is just being used to reduce the balance outstanding.
The customer must give notice to the lending company of their intention to make any partial payments which can be given verbally or in writing.
The customer can choose whether to reduce the term of the agreement or the monthly repayment, or a combination of the two.
4. Pre Contract Explanations
Before a credit agreement is made, the creditor is required to provide the borrower with an adequate explanation of the key points of the agreement, they must also advise the borrower to consider the pre-contractual information and, where this is disclosed in person, that the borrower can take it away.
They must give the borrower the opportunity to ask questions about the proposed credit agreement, and they must also advise the borrower how to ask the creditor for further information and explanations.
It’s a requirement that some of the information is offered verbally and these sections will be highlighted on the document.
Delivery of this information will fall to dealership personnel and must be applied in all cases.
5. Assessment of Creditworthiness
Okay, so how do the CCD requirements affect those promoting dealer finance in the motor trade when it comes to affordability?
Well, there are three main requirements within this part of the directive.
Dealers need to make the customer aware of the breakdown of repayments, they need to ask the customer to consider whether or not they can afford them and they need to ask the customer to consider any potential future changes in their circumstances which could affect their ability to maintain these monthly repayments.
For ease, this will invariably be covered off as part of the pre-contract explanations however it is important that this additional stage is completed.
Implementation of the Consumer Credit Directive requirements will form a fundamental part of how dealers promote their finance offer at point of sale.
Further information is available at the BIS website.
DATED: 13.11.10
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Hybrids to overtake petrol within the decade
Petrol-powered company cars could almost be obsolete in 10 years, according to a new study by Lex Autolease with 300 finance chiefs and company car drivers.
Two exclusive surveys, conducted for the UK's largest leasing company, reveal that early adopters of hybrid and electric vehicles could sound the death knell for petrol.
Less than 5% of both groups polled believe that petrol cars, once the staple choice of business drivers, will outsell other fuel types in a decade's time. In contrast, 8 out of 10 business drivers (78%) and two thirds of FDs (65%) are confident that hybrid or electric vehicles (EVs) will become the most popular company car choice.
Chris Chandler, principal consultant at Lex Autolease, says: "Diesel has already overtaken petrol as the fuel of choice in the fleet sector, which is renowned for being an early adopter of new vehicle technologies. But, clearly, there is an expectation that the move away from petrol will accelerate as hybrids and EVs now begin to attract greater market share.
"10 years is less than three company cars away for most business drivers, so these options are being looked at by finance chiefs and drivers with a greater degree of seriousness than many believed, even within the industry. Employees are readied for change and the business benefits are becoming more and more apparent to financial stakeholders too."
Further findings from Lex Autolease's driver survey show that 87% would consider a diesel for their next company car, while just 28% would put a petrol option on their shortlist. However, exactly half of the drivers polled would also include a hybrid, in either petrol or diesel form, which suggests that the latest batch of hybrids have overcome many of the perceived barriers to entry.
Indeed, almost half (47%) of all drivers polled would like to road test either a hybrid or a fully electric vehicle, while almost two thirds (64%) of finance bosses believe that employees should be given the option to add these vehicles to their company car choice list.
"For the time being diesel is king, but we are witnessing a shift in the market dynamics with new developments coming to the fore with potentially significant benefits for both drivers and companies. FDs are often cautious by nature, so the optimism coming from the shop floor to the boardroom is encouraging to say the least", adds Chris Chandler.
Lex Autolease says that the early interest in EVs has already translated to the next stage:
"We have a fleet of over 300,000 vehicles and many of our customers are looking to trial alternative fuelled vehicles, which is a sensible approach, and our consultancy team has never been busier with enquiries of this nature.
"In tandem, we are forging ever closer alliances with manufacturers and other parties in the supply chain to ensure that our customers are well informed and ahead of the game, irrespective of whether they are keen adopt now or in the future", concludes Chris Chandler.
The Lex Autolease surveys were conducted with 230 company drivers and 70 directors of finance.
Jaguar and Land Rover sales drive Tata's profits
Tata Motors has seen its profits soar as demand for its Jaguar and Land Rover brands improved.
India's biggest vehicle maker made 22.2bn rupees ($505m; £310m) in the three months to the end of September - an almost 100-fold increase on a year earlier.
Sales in India climbed by 35% in the quarter, but it experienced even bigger growth in China and Russia.
The firm also produces the world's cheapest small car, the Tata Nano.
Accelerating growth
It has been reported that 70,000 Nanos have been sold since its launch in March 2009.
"We have to break new ground in how we market it and how we make financing accessible," chief executive Carl-Peter Forster said.
Last month Tata reversed a decision to close one of its manufacturing plants in the UK because of the pick-up in sales.
It is also planning to hire new workers in Britain to deal with the surge in demand for cars from its Jaguar Land Rover division.
Jardine acquires Jaguar site from Merritts
Jardine Motors has acquired a Jaguar site in Amersham, Buckinghamshire, from Merritts Motor Group for an undisclosed sum.
The transaction completed on 5 November and the business will trade as Lancaster Jaguar Amersham.
The acquisition increases Jardine’s representation with the prestige brand to five sites with the group already holding the franchise in Reading, Sevenoaks, Sidcup and Bradford.
“We are delighted to be growing our relationship further with Jaguar who are one of our key brand partners in this very important territory with significant opportunities for growth,” said Alun Jones, Chief Executive of Jardine Motors.
“This acquisition is also firmly in line with our strategy of growing our business 2010 both through organic growth and further acquisitions,” he said.
Essex-based Jardine, rated number nine in the latest Motor Trader Top 200, is part of Jardine Matheson, the diversified international trading group, and trades across over 50 sites as Lancaster, Scotthall, Appleyard, Minories, Abridge and Clover Leaf Cars.
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