The long-term confusion from Government over both the future of company car taxation and Brexit continues to delay fleet orders as firms postpone decisions to upgrade to the latest and most efficient cars, according to two of the UK’s biggest brands.
Both BMW and Audi have blamed the Government for the uncertainty, with true fleet sales down year-on-year.
“Where we have got some challenges is the number of policies that are still on hold,” said BMW Group corporate sales manager Rob East. “This year it’s very much about the whole political and Brexit uncertainty. We’re still talking very closely to those customers but there are a range of large end users who are saying they will maintain their policy hold until they get some clarity on the future.
“No doubt, we’re seeing customers extending existing contracts; if people are looking to renew their cars they are having a recycled car, but we recognise that won’t last forever, we just have to make sure that we are maintaining that very open dialogue,” he continued. “At the moment with unclear future taxation and increases in tax it’s difficult for fleet managers to advise drivers where to go for the next three years.”
Audi’s new fleet boss, James Buxton, said his firm has also witnessed the same impacts on the company car sector. “There is undoubtedly a significant element of uncertainty out there,” he told Company Car Today. “Hopefully the Brexit position will clear slightly but the lack of clarity from central Government around Benefit-In-Kind rates is undoubtedly slowing order take and therefore slowing the market.
“We hear regularly that customers are holding off and they’re extending, and the challenge is that there comes a point where the extensions can no longer be extended,” he continued. “The key for me is getting some clarity around the BIK bands. We really need this clarity from the Government because once that’s given we will see a significant element of that pent-up demand released.”
EST slams BIK
The current Benefit-in-Kind regime needs to be changed to stop discouraging people from ditching company cars, and should instead reward those who choose lower-emission vehicles, according to the Energy Saving Trust’s fleet expert Matthew Eastwood.
“Annually we’re seeing 10,000 drivers a year moving away from company cars to other measures such as personal cash allowances and personal contracts which shows the current taxation system is discouraging people from using company cars, and we’re seeing that when people are leasing their own vehicle they are typically selecting larger, more polluting vehicles than what may be available through a company car scheme,” Eastwood, head of transport at the organisation, told Company Car Today. “What you want is a system that ensures they derive the revenue they need but also offers incentives for people to choose the right vehicles, and that doesn’t seem to be happening at the moment.”
“We need to have rates that are published at least five years ahead so fleets can have some confidence in actually investing significant,” he concluded.