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Motability is now a major player in UK car market

Motability, a charity overseen by a list of names representing the noble and well-intentioned, has a long history.

In the 1970s it was responsible for the issue of nasty little blue three-wheeler cars to disabled drivers at a time when the disabled were not thought competent to own or drive proper cars.

Now Motability is responsible for the purchase of one in 10 of all new cars bought in Britain every year.

There is every reason to suppose that it might be slightly removed from commercial reality and rather too pleased with itself.

But nothing could be further from the truth. The charity has a very loyal fan base in the motor industry these days.

They do not come much tougher than the sales director of Arnold Clark, Scott Willis, who has a 35% share of the Scottish market for new cars.

He said: “We know Motability very well. We deal with it multiple times every day. Five or six years ago it was all old-school-tie. Today it is cutting edge. It has taken great trouble with recruitment and training.”

The Motability operations director is Ashley Sylvester whose previous jobs were with Leaseplan and Dial Contracts as well as buying and selling electricity for the East Midlands Electricity Board.

“The Motability scheme has a huge impact on the market as a whole. We have between 150,000 and 200,000 cars to buy and dispose every year.”

Because of the need to dispose efficiently, he tries to mimic the market with his purchases to ensure that he is not in danger of distorting it.

Gone are the days when Motability bought large quantities of whatever was available cheaply.

“We have worked very hard to ensure that our fleet is representative of the market,” he said.

One of the very few major brands missing is Jaguar. Users find that the insurance is too high.

Sylvester then sells three-year-old used cars to 1,600 independent traders and makes it easy for them to trade through a website (mfldirect.co.uk) because he gives good visibility to what cars are going to be available and when.

They are checked for condition and MOT’d.

“Early terminations by users tend only to be for health reasons.

“Otherwise we know precisely when the three years are up and the car is ready to be pre-marketed.”

Franchised dealers have access to a website that they can brand as their own.

They can sit with the customer in their showroom and examine Motability cars online as if they were in their stock. If sold, the car will be delivered within two weeks.

The Department of Work and Pensions is the arbiter of who is disabled and who is not.

The age range is three to 65 and qualification is available for those who are unable, or virtually unable, to walk. That creates a pool of 1.8 million people.

They then qualify for the higher rate mobility component of the Disability Living Allowance.

After the age of 65 there is no qualification for the allowance.

The number of disabled is growing quite quickly because of the aging of the population and the greater survivability of illness.

“Everything a disabled person does is more expensive,” said Sylvester. “The best way the state can help is to give them a mobility allowance.”

Two-thirds of the customers drive themselves. The other third are driven by family or a helper. Clearly, the three to 17-year-old group need an able-bodied driver.

Thirty percent of the cars are automatic and 10% have adaptations and special controls.

Some of the cars modified are not suitable for website marketing. They need visual inspection for modifications and Motability sends these to auction so that buyers can assess them.

The cars are spread over a wide area and put through a large number of auctions to improve their value.

“We used to purchase cars on a buy-back guarantee, but basically that meant cajoling the trade into doing something they did not really want to do. It is a much better strategy to engage the trade on something that they are keen on.”

As a result, franchised retailers are now disposing of 70% of the cars and they bring in the best redemptions.

“It is a worst case scenario to send cars to auction,” he said.

The trade likes Motability stock. Its customers appreciate the car scheme and take good care of the cars. Mileages are much lower than average – almost always less than 25,000.

“Our customers seem to enjoy engaging with us through the web. We have even taken orders over the internet on Christmas Day.”

It is intriguing that it is possible in car retailing to have very satisfied customers without any physical presence whatsoever.

“We have no front-end presence and no back-end presence. But we get 100,000 hits a year.

“We find that we are now also selling to other members of the claimants’ families.”

The Disability Living Allowance is to become the Personal Independence Payment (PIP) at the end of 2013. “Our role is expected
to be unchanged,” Sylvester said.
From the Government’s point of view, Motability is a great wheeze because it costs them nothing to administer their own scheme. The only cost is the grant to the user.
By all accounts, it is a model piece of administration. The company has had researchers from as far away as New Zealand keen to discover more about how it works.
The company has 800 people running the scheme – 350 in London and 450 in offices in Bristol.
“We do continue to look at ways that we can do better. With the economic climate as it is, we are constantly trying to get better prices for the cars.”
The users’ choices are changing. There has been a very big uptake on diesel to improve fuel costs and there is significant interest in electric cars.
The Nissan Leaf is being added to
the fleet.

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