AM Online

Cover: Fleet insight - Carmakers step up action against illegal discounted car sales

Contract hire companies and brokers have been warned that their contracts will be terminated immediately if they are caught selling on discounted new cars within three months of purchase.Ford UK managing director Roelant de Waard told AM (October 3) that it is now monitoring websites that advertise heavily discounted cars to discover who is supplying the vehicles.

It led to the termination of several contract hire contracts
last year.

General Motors confirmed it has also “taken action” against
brokers who have breached their agreements.

Volkswagen said it has put a number of checks in place to
insure against any illegitimate business practices. 

“We would take any incidences of wrong-doing very seriously in order to protect our brand, our residual values and our genuine Volkswagen customers,” said a spokesman.

In 'serious breach of agreement'

Nissan said any company caught disposing of vehicles before the required three-month retention period would be treated as a “serious breach of agreement and more than likely (Nissan would) terminate its business relationship immediately”.

“We also make it very clear from the outset with all contract hire
companies that we have set rules regarding this area of the business and they must strictly adhere to them – no deviation is tolerated,” said a spokesman.

Reaction to the Ford story in AM included calls for more carmakers to take this kind of action, but also questions about whether contract hire companies were the worst culprits.

Establishing who is responsible

One dealer said: “Ford is looking in the wrong place – try the rental companies. Selling cars, holding on to log books for six months and then changing the owner – what chance do honest dealers have when rental companies are doing this via a few dishonest dealers just to increase their sales.”

Another poster on the AM website laid the blame on dealers themselves: “Have a look at the dealers who are registering cars in fictitious names at members of their staff’s home addresses to hit targets,” he said.

“These cars are pre-registered to hit targets but can be sold straight away. It makes a mockery of the three month pre-registered rules that they are supposed to stick to.”

The British Vehicle Rental and Leasing Association’s (BVRLA) broker committee is working to improve the industry and has established a set of compulsory standards for its members.

“The BVRLA works hard to ensure that the Block Exemption regulations are upheld across the industry.

Selling cars at a profit

Just as we challenged the manufacturers when they tried to demand our members’ customer data, we will do everything in our power to stop people posing as leasing brokers or contract hire companies in order to obtain discounted cars that they can sell on at a profit,” BVRLA director general John Lewis told AM sister publication Fleet News.

“We have already spoken with Mr de Waard to try and give him and his team a greater insight into this part of the industry. Our eventual goal is that Ford and other manufacturers can place promotional deals in the knowledge that they are working with a legitimate broker.

This is what our leasing broker and leasing committees are working hard to achieve.”

While the broker industry is working hard to improve its reputation, incidences of bad – and in some cases illegal – practices remain.

“The real problem is with pseudo- contract hire companies or fleet customers who purport to be buying for specific fleet customers or for business contract hire, and then put the cars straight on the web at cash prices,” explained Jeff Peyton-Bruhl, national corporate operations and remarketing manager for Hyundai Motor UK.

“I have come across many of these in the past, but not so many now. We did have a company do this to us last year and we cancelled the contract immediately after only a handful of cars had been bought.

“Where manufacturers agree extra support direct with brokers, then they should be well-known and trusted and with a good contract in place. If not, then the manufacturer would have itself to blame,” he said.

PCP products

There are some areas where both supplier and broker have difficulties. 

“The grey area is sometimes with PCP products, where a cash price has to be shown even though it is not meant to be the acquisition method,” said Peyton-Bruhl. 

“As the market deteriorates I guess there is a likelihood that manufacturers will offer stronger deals through possibly riskier channels that will then come back and bite them on
the backside.”

Audi overcomes the problem by refusing to offer discounts to brokers. “Audi UK isn’t susceptible to this problem because we don’t offer incentives to contract hire companies or resellers when supplying cars, and therefore we aren’t exposed to the potential negative implications of transactions of this kind,” said a spokesman.

Toyota said it deals with just four brokers and operates a direct invoicing policy to ensure its fleet terms remain confidential.

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