BVRLA Leasing Broker Committee update
Chair of the Leasing Broker Committee, Alan Carreras from the Bridle Group, reports from the latest meeting.
COVID-19 impact on March sales
Leasing brokers saw the traditional end of March sales spike literally locked up in car retailer compounds as the coronavirus lockdown froze car deliveries. Committee discussion centred around the impact of the WLTP taxes introduced from April for both VED and BIK.
On a broad level, brokers were broadly split between those offering a PCH service and those with business customers. PCH brokers were possibly least affected, even though the VED changes could land an additional bill of up to £700 on contracts. Nevertheless, a combination of some funders deciding to take the financial pain, or a shared response between broker and funder to cover the increases, has generally smoothed over the issue.
For those brokers engaging with the SME and business sector through unregulated business, the issue has been more challenging, with a number of cancellations.
Nevertheless, in the wider scheme of things, the volume of cancelled orders was not as great as many had feared. Perhaps a bigger source of frustration among the broker committee was the insistence of both funders and OEMs that vehicles should not be moved, despite customer willingness to have vehicles delivered.
Nevertheless, we asked the BVRLA to consult with HM Treasury over a request for special dispensation. However, the Treasury remained unmoved and confirmed it would not be changing the introduction of WLTP based motoring taxes.
For many brokers it left a bad taste. On reflection, though, it’s a realistic if disappointing response. Government policy is not aligned to ICE technology, but to pursuing zero emissions. And, in the long run, the decision may do brokers a favour with the more widespread uptake of EVs.
Job retention scheme and bonuses
This is an area where the broker committee played a significant role in assisting the BVRLA to inform Treasury thinking. We spent time with the BVRLA modelling the inclusion of bonuses in the job retention scheme.
It can’t be underestimated what a huge piece this was around commission payments. It was not just brokers reporting into the Treasury, but all forms of retail. However, Treasury took the broker-informed BVRLA response and acted on it.
Confirmation that employees would be entitled to regular ‘compulsory’ commission payments as part of their basic wage calculation for a furlough claim was a significant result for the broker committee, the brokers it represents, and the BVRLA itself.
Forbearance and PCH
Having seen what the FCA was doing with mortgages, the committee felt that similar action was necessary on regulated business agreements. The BVRLA did a powerful job in helping the FCA understand the difference between PCH and PCP and to ensure personal leases were included in the forbearance guidance. This successful collaboration was then followed by a webinar explaining what was expected under the new regime.
Moving vehicles during the COVID-19 crisis
I have already touched on the frustration felt by many brokers at the vehicle movement impasse and the effect new WLTP taxes would have on contracts.
Equally frustrating was the inability suffered by many brokers to enable delivery of vehicles to key workers. Understandably, no one wants to put anyone at risk. But it did seem counterintuitive that, for example, essential workers could not receive a new vehicle but had to rely on public transport instead; or that a fleet of vans destined for a pharma company to deliver essential drugs to patients affected by coronavirus was not allowed to proceed.
The BVRLA, and in particular Toby Poston, championed the movement of vehicles as part of the logistics supply chain. The DfT agreed and, working in partnership with the SMMT and the FLA, the BVRLA produced guidance for maintaining vehicle supply.
The messaging on vehicle movements came at a time when feelings were still running high during lockdown; it led to a significant level of criticism directed at the BVRLA, and Toby Poston in particular from many quarters. But it was unquestionably the right thing to do, and a significant turning point in getting back to business, as subsequent events have played out.
My final message to brokers
While I understand many of you have been through and continue to experience great difficulties, it appears that we are beginning to ease our way out of lockdown. Activity across the sector is increasing and broker orders are rising, and cars are starting to be delivered.
While there is still a long way to go, I’ve been hugely impressed with the resilience shown by brokers. And, in particular, their determination to continue trading in the face of such adversity, not unsurprising of our sector given the skills, experience and attitude to adapt, with many taking the opportunity to upskill their teams during lockdown and continue valuable ongoing training.
I hope that in my next column from the committee, we will be in a better, more confident and safer position.