Higher Bank of England interest rates mean that company car and van lease costs are beginning to increase, the Association of Fleet Professionals (AFP) is reporting.
Denise Lane, board director at the industry body, explained that the increases were not uniform across the market but were being widely reported by AFP members and especially appeared to be affecting vehicles already on order.
She said: “Businesses are waiting on the delivery of an historically large backlog of vehicles because of ongoing production issues and some leasing companies are increasing their lease rates on these because of the higher base rate. Typically, the increases are around 1.5% with a low of around 1% and a high of 2%.
“The leasing companies involved are generally being very open and transparent about the cause. Most are providing calculations to show the additional interest by taking the Bank of England base rate at the time of the vehicle order and the equivalent figure now, then applying the difference of the outstanding average capital.
“The AFP’s view is very much that this is being driven by financial factors that are completely out of the hands of the leasing suppliers involved but it does create problems that are not just about having to pay higher costs. For example, the increases may move vehicles between company car bands or mean that the lease rate exceeds employee entitlements.
“This creates some difficult decisions about whether to keep the vehicle on order, especially if a build or delivery date has been provided, or whether to start the ordering process again from scratch for a lesser vehicle choice, which could result in the loss of previously agreed manufacturer discounts and will almost inevitably mean a further delay.”
Denise said that if, as expected, the Bank of England increased rates still further in the coming months, it would almost inevitably mean additional rises.
“With inflation running at over 10%, the Bank of England has already signalled that further base rate rises are almost certain, which will mean further knock-on increases in vehicle lease rates before the end of the year and possibly more in 2023.”
Electric vehicle (EV) drivers queuing to use chargers in car parks are inadvertently being caught out by penalty fines, the Association of Fleet Professionals (AFP) is warning.
Chair Paul Hollick said that the situation was mainly occurring where automatic number plate recognition (ANPR) technology was in use, and it was easy for company car and van drivers to miss signs warning of the maximum free time.
He said: “If there’s a one hour free limit in an ANPR car park and a driver has to queue for 30 minutes and then connect to the charger for 40 minutes – which is by no means an unusual situation – they’re getting a fine.
“It seems that because they are queueing and not in a parking bay, drivers are forgetting that they are still liable for car park charges. It is something that is being flagged up by a quite a number of our members as an issue and dealing with fines such as this is always a time consuming and surprisingly expensive administrative process.
“Certainly, this seems to be sufficiently widespread that we think it is worth fleet managers communicating to drivers that they should bear in mind the maximum free time in a car park when they are charging.”
Paul said that the adoption of EVs by fleets was highlighting a number of similar issues that fleet operators were working through.
“It seems almost every week brings something new such as this which requires an adjustment by fleet managers and drivers, some small and some larger. They’re all part of the learning process of electrification and the AFP is performing an important service for its members by sharing best practice solutions.”
Environmental issues are beginning to quite radically change approaches to grey fleet management, the Association of Fleet Professionals (AFP) says.
Speakers on its Grey Fleet Management webinar, held last week, reported that there was increasing pressure from boardrooms to look at all vehicles being used on business from a sustainability point of view.
AFP chair Paul Hollick explained: “The message coming from senior management can perhaps be summarised as ‘What is the point of making our core fleet zero emissions through electrification if our grey fleet lags miles behind?’ and it’s a good question.
“The answer is quite complex. Yes, employers can probably start to insist that cash takers move over a period of time towards electric vehicles (EVs) because they have chosen to forego a greener company car. However, more casual grey fleet drivers – those who use their vehicles for limited miles on business – cannot be approached in the same way.
“There are several potential answers for this group. Salary sacrifice schemes that promote EVs are one although these are currently being hampered by poor supply, high rental rates and rising interest. Zero emissions pool fleets and rental vehicles are other possibilities, although again the latter is being frequently restricted by poor availability. Which option is best for your fleet will depend very much upon individual circumstances.”
Paul said that much of the current boardroom interest in zero emissions vehicles came from Scope 3 emissions and a general interest in promoting an image of sustainability.
“One of the interesting aspects of the current mood is that the way in which the environmental aspects of grey fleet appears to have really registered with many directors. We’re not sure why this is but it could simply be that when you walk across the company car park, the green divide between a new EV and an eight year old diesel car – both used for business – is all too apparent.”
The AFP webinar covered many key aspects of grey fleet management including the experiences of major operators, the need for a clear and robust policy that enforces minimum standards, the necessity to record driver and vehicle documentation, and the requirement to undertake driver risk assessments and training.
Paul said: “We are seeing a general increase in interest in grey fleet management from our members and this webinar was well-attended with more than 100 delegates registered. It’s an area that we plan to spend more time supporting with AFP events and resources in the future.”
Hydrogen is not currently a realistic zero emissions alternative to electric vans and fleets waiting to see if the situation changes are probably set for disappointment, believes the Association of Fleet Professionals (AFP).
Paul Hollick, chair, said that the organisation was aware of a sizeable minority of fleet managers, mainly with extensive light commercial vehicle operations, who were waiting to see whether hydrogen would become viable in the short-medium term.
He said: “We’ve discussed this topic at some length at every level of the AFP and our conclusions are clear. Electric is effectively the only option when it comes to the future of zero emissions vans in the UK for at least the next decade. Hydrogen is simply not happening in any meaningful way and there is no real sign of that situation changing.
“The facts are that the hydrogen fuelling infrastructure barely exists, availability of vehicles is limited in the extreme and those that are available are very expensive. Apart from the introduction of one hydrogen van over the next year, we are seeing only minimal levels of investment in the fuel and certainly not on anything like the scale that would be required for widespread, rapid adoption.
“Elsewhere, such as in Germany, there is significant state support for the expansion of hydrogen but government commitment here is low. It is clear that as far as the vast majority of road transport is concerned, our politicians see electric as the future. Fleets waiting for hydrogen to emerge as a realistic alternative are almost certainty set for disappointment.”
Paul explained that operators hoping for a hydrogen solution to occur were quite often those who also had significant reservations about the viability of electric for their van operations.
“It is becoming clear to a significant proportion of operators that electric vans will not always be able to replace existing petrol or diesel models on a like-for-like basis because of compromises over range, charging times and payload. That means that they’ll often have to change their operational model and cause a degree of disruption to their business.
“Hydrogen appears to provide a solution to this situation because of the promise of ease of refuelling. However, there are only around than a dozen hydrogen filling stations in the whole country and literally no programme for widespread expansion. Rapid filling-up of a vehicle is meaningless when the nearest pump is 100 miles or more away.
“There are higher level problems, too. Generating green hydrogen on a large scale would be required and the infrastructure for that is also sorely lacking. In other European countries, there is investment happening and government support in place that could help to overcome some of these issues – but not in the UK at this point in time.”
Paul added that accepting your van fleet would become electrified over the next decade was an important step when it came to identifying solutions that would work for you.
“It is no exaggeration to say that the number one task currently facing light commercial vehicle fleets is to resolve the infrastructure and operational issues that will maximise electric van effectiveness as the transition away from ICE happens over the next few years.
“There are no easy answers to some of the questions created by this situation but fleet managers and organisations such as the AFP are working to find new ways of maximising the effectiveness of EVs – and making substantial progress almost month-by-month.”
Substantial price increases and discount rollbacks on new cars and vans are “damaging manufacturer-fleet relationships,” believes the Association of Fleet Professionals (AFP).
Paul Hollick, AFP chair, said that the issue was being raised by an increasing number of AFP members, with some reporting that they have seen increases affecting more than 80 different models on their choice lists during the last year, in some instances exceeding £10,000.
“The subject of very long lead times on new vehicles has been widely discussed in the fleet sector. What has received less attention are the price increases that are also occurring.
“Clearly, we are living through a time when there is substantial upwards pressure on prices generally and we understand the many reasons why this is happening but some manufacturers are leaving fleets essentially unsupported, ignoring existing discount agreements and refusing to honour price protection pledges.
“Experienced fleet managers are telling us they’ve never seen prices move up so quickly, in many cases faster than they can easily track in order to keep their choice lists up to date.
“It is creating a situation where, if you manage to get a confirmed order for a vehicle, there is no guarantee you will receive it because a cancellation remains likely and, even if it does arrive after 9-12 months, there is a strong chance that the price will have risen markedly.
“Fleet managers want to continue to nurture sustainable long-term business partnerships but this behaviour, by some manufacturers, is undeniably damaging for future relationships.”
Paul added that the potential administrative burden for fleets should not be underestimated.
“The impact of continually changing prices on choice lists creates an ongoing headache and, of course, brings the strong possibility that an employer will no longer be able to bear the cost of a car that a driver has already chosen and ordered. If an existing vehicle goes up by a few hundred pounds, that will probably be absorbed but we are seeing increases running into thousands of pounds and that potentially creates a much more difficult situation.
“We’d like to see pricing held for agreed periods of time by manufacturers and, once an order is placed, for that price to be honoured. This seems the least that should be done in order to help preserve existing connections with fleets. Treating prices as something that be increased substantially without discussion is no way to treat major, long-term vehicle buyers.”
Problems created by revised regulations covering the installation of isolators for home electric vehicle (EV) chargers appear to be no closer to being resolved, the Association of Fleet Professionals (AFP) is reporting.
The issue was first highlighted by the AFP in March and is causing installation of home chargers to be delayed by a typical period of 4-6 weeks as well as causing uncertainty in costs as these vary from suppler to supplier.
Paul Hollick, AFP chair, said: “This is quite a complex problem concerning the installation of isolators, which allow for the safe isolation of a property’s electricity supply to enable the installation of an EV home charger.
“However, to summarise, electricity industry regulations were changed last year to require at least two visits to fit an EV charger, including one from a representative of an energy provider to fit the isolator. To reverse the decision or adopt a better solution requires agreement from around 40 energy providers – but that doesn’t seem to be forthcoming.
“In the meantime, fleets and their drivers are having to wait long periods for their home chargers to be fitted while paying more, which is a genuine headache at a point in time when many fleets are enthusiastically pursuing electrification strategies.
“We want to see a single visit installation solution adopted that is faster for fleets and, because it means fewer journeys, cheaper and more environmentally friendly. There is no reason to believe working this way should involve any compromise in the safety or quality of the installation, as long as the installation is carried out by an experienced and qualified electrician.”
In June 2021, decision makers behind the official Meter Operation Code of Practice Agreement (MOCOPA) – created by electricity distributors and meter operators – removed the ability for MOCOPA registered companies to put isolators in place under the instruction of a third party EV charger installation company, stating that this needed to be arranged by energy providers themselves.
This had such a detrimental effect on charging installation times and costs that the decision was reversed in September. However, in January, the new Retail Energy Code (REC), which has superseded MOCOPA, said that the original June decision would be reinstated pending an independent review expected to take around six months. This has yet to be resolved.
The AFP’s preferred process would be for a single electrical installer to fit both the isolator and EV charger on the same visit.
Paul said: “As most fleet operators know, the semiconductor crisis has meant that getting hold of home charging units themselves has been tricky and the further issues with installation are making difficult what should be, we believe, a fairly straightforward task.
“This is something that is creating an ongoing hurdle to EV adoption for fleets and we would like to see the REC resolve the issue as soon as possible. In our view, it has now dragged on for long enough.”
He added that some home charger installation companies did not use isolators, instead wiring the equipment straight into the main fuse board, but believed that that most fleet operators were using more comprehensive isolator-based solutions. MOCOPA themselves acknowledge that until a resolution to this issue has been found, electricians across the UK will continue to remove the property’s main headfuse, causing them to work in an unsafe manor.
The direction of taxation regarding electric company cars has been described as “potentially worrying” by the Association of Fleet Professionals (AFP).
The trade organisation says that the recent scrapping of the plug-in car grant scheme could indicate that the government believes the EV market has now reached a point where it can operate with fewer or even no measures designed to speed and support adoption.
Paul Hollick, AFP chair, explained: “Fleets have been at the forefront of the electric car revolution and a key factor behind this has been the low benefit-in-kind (BIK) taxation on offer to drivers, a fraction of that charged to petrol and diesel company car users. It’s been a highly successful incentive.
“However, we remain in a situation – which we have been highlighting for some time now – where BIK tables have only been published up until 2024-25, leaving businesses and employees with no indication of what the rate will be for 2025-26 and beyond.
“The loss of the plug-in car grant is not in itself significant – it applied to few fleet vehicles – but our fear is that if the government believes that the electric car market is now capable of standing with little support, we will see a sudden jump in BIK taxation over a short period of time. The temptation to do this might be strong, especially at a point in time when the public finances are not in the best shape. It’s potentially worrying.”
Paul said that the AFP recognised that taxation on electric cars needed to rise but remained adamant that it should be implemented in a manner that was gradual and well-signposted.
“In our opinion, increasing BIK rates too quickly would potentially affect rates of adoption by fleets and even potentially push people back out of electric company cars into private petrol or diesel alternatives. There needs to be a fair and equitable approach over time.
“Of course, the whole situation is complicated by the fact that EV supply is currently so poor. A company driver asking his employer to order a vehicle today may well have to wait over a year for delivery. That places them in the 2023-24 tax year when BIK will be 2%. Assuming their car is on a four year cycle, they know that rate will be held until 2024-25 but they will be driving it until 2027-28, a period for which we have no information whatsoever.
“Our view is very much that it would be deeply unfair for that employee to suddenly find dramatic jumps in their taxation during their last two years with the car. It would also threaten the long-term electrification plans that, many fleets are enthusiastically pursuing right now, including our members.”
Paul said that the AFP was currently in dialogue with Her Majesty Customs and Excise (HMRC) on a number of issues and this was one that they continued to raise.
“All we can do is make HMRC and the Treasury aware of our views and support them with as much evidence as possible. As the fleet industry’s professional organisation, we are working hard to make sure that our voice is heard.”
The new car supply situation for some fleets is worsening and remains extremely patchy for almost all, the Association of Fleet Professionals (AFP) is reporting.
Paul Hollick, chair, explained said that feedback from across its membership showed that serious problems were persisting and causing increasing operational disruption.
“This is, of course, a worldwide problem caused by worldwide issues, ranging from demand for raw materials to semiconductor shortages through to, more recently, the war in Ukraine hitting manufacturing of key components.
“However, it is also a problem that is very much affecting fleet managers in the UK and we are hearing many stories that suggest the situation is worsening, at least for certain businesses, and show no apparent signs of improving.
“Some fleet managers are telling us that drivers are having to go through the process of choosing a new car half a dozen times before finding one for which a manufacturer will even provide an production slot – and that date is likely to be a year or more away.
“Other manufacturers have closed their order books either completely or for certain models. In general terms, PHEVs have become very difficult to acquire and it seems that production is being skewed away from them towards EVs, probably because of CAFE regulations.
“Even when cars can be obtained, they are often being delivered without meeting the order specification. The wrong colour is fairly commonplace but equipment is often missing – parking sensors seem to be a particular issue – with no resulting adjustment in price.
“All of these problems exist for petrol and diesel cars but can generally be doubled for EVs.”
Paul said that, in these situations, fleets had little choice but to continue operating their existing cars for as long as possible but with new car shortages now in their second year, there was increasing pressure on managers.
“The situation creates two sets of problems. The first is that the car is ageing and difficulties with keeping it on the road in a cost effective manner increase over time. Some cars are now being operated into their fifth year and will probably still be on the fleet in their sixth because they cannot be replaced. These are unchartered waters in maintenance terms.
“The second is an employee satisfaction issue. Drivers who are keen to move into EVs but simply cannot get hold of the right model are having to continue to pay benefit in kind on ageing and increasingly unattractive diesel models, with no solution in sight. There is no easy answer to this situation and it does cause some disruption.”
Paul added that AFP members had become adept at swapping information about vehicle availability during the last year or longer.
“One of the key advantages of AFP membership is the ability to network extensively with fellow professionals and there is certainly much conversation taking place at the moment about when and where cars are becoming available.
“It is very difficult to know when the underlying supply issues will start to noticeably improve but with the degree of order backlog that exists, we don’t expect to see any real change for at least a year or probably longer.”
The Association of Fleet Professionals Fleet Academy is now an IMI (Institute of The Motor Industry) Approved Centre for training.
Ronnie Gillman, training manager at the AFP, said: “We are delighted to have become an IMI Approved Centre.
“The aims and objectives of the AFP are closely aligned with those of the IMI and it is an important seal of approval. We work to elevate the standards of management in the fleet sector and help the current and next generation of fleet leaders put new skills and knowledge into action. We want learning and development to be available to everyone in the fleet industry – there are no qualification pre-requisites to attend our courses. They are designed to get everyone involved, enabling delegates to develop their professional skills, gain recognition and further their career.”
Steve Nash, CEO of the IMI added: “The fleet sector plays a fundamental role in the UK economy. The IMI is, therefore, delighted to see the commitment being made by the Association of Fleet Professionals to elevate the sector’s standards with its Fleet Academy which is now an IMI Approved Centre. We look forward to working together to help extend continual professional development across the sector in the years to come.”
The AFP’s Fleet Academy was launched at the start of 2022. The Fleet Academy is an evolution of the Institute of Car Fleet Management (ICFM), with the training based on the same course structures, professional trainers and range of resources. The AFP was formed two years ago by uniting the ICFM with the Association of Car Fleet Operators (ACFO).
Details about all of the AFP’s courses, including pricing, dates and locations, is available at Education & Training – AFP (theafp.co.uk)
Company car and van drivers need to be given practical advice on home charging, the Association of Fleet Professionals (AFP) is reporting.
Paul Hollick, chair at the industry body, said that there was often an assumption that drivers would just know how to use their domestic charger – one that was frequently proven wrong.
He explained: “In terms of the EV transition, we are seeing a lot of attention given to public charging – to whether it can be easily accessed, its costs, compatibility with apps and so on – but comparatively little is being said about home charging.
“However, we are hearing from our members that drivers often don’t know much about home charging beyond how to connect their vehicle. It does seem to be an area where parties such as employers, manufacturers, charging providers and organisations such as the AFP need to fill the gap. Simply, knowing a few basics will help drivers to get the most out of their electric car or van, as well as keeping costs low.”
The two key areas where advice was needed centred around charging vehicles overnight irrespective of whether it was needed and accessing power at times when it was cheapest.
“Our members are finding that many new EV drivers are treating their new vehicle in the same way as they might their mobile phone. They come home and they plug in their car or van overnight, no matter what the state of charge.
“This isn’t good for mobile phones and it isn’t good for EVs. You shouldn’t seek to top up your vehicle continually but let the battery run down to the point where it needs charging if your journey pattern allows. Many experts recommend keeping the charge in a 20-80% range.
“Also, charging in the early evening is usually the highest rate for power companies and is much better done in the early hours, when it tends to be a lot cheaper. Accessing the lower rate can make a substantial difference to EV fuel costs.”
Paul added that the AFP had received requests from fleets wanting to hold short orientation courses for new EV drivers covering charging and more.
“Employers want to ensure that employees know how to charge their vehicles but additionally, recognise how to adapt their driving style, such as using regenerative braking and a ‘one pedal’ approach. This can all be covered in a couple of hours. It’s obviously important that people adopting electric cars and vans develop good habits early on.”
More information about fleet electrification can be found in the members’ area of the AFP web site – www.theafp.co.uk.