23 Feb 18

Ireland threatened by “disastrous” flood of UK ex-fleet cars

The UK's interpretation of consumer protection laws could see a dramatic rise in the imports of UK company cars into Ireland. So says Jeff Aherne, director at Cartell.ie, Ireland's main automotive data provider. 

Mr Aherne came to that conclusion at a seminar in Derby (UK) on the legal and commercial impact of the UK's Trading Standards action against certain vehicle dealers. 

Material information
At issue is a confusing interpretation of consumer protection laws, more particularly an October 2017 ruling by the Advertising Standards Authority (ASA) on the sale of ex-fleet vehicles. 

The ASA has ruled that the fact that a vehicle was an ex-fleet vehicle constitutes “material information”, and should be disclosed to the prospective buyer. Over the past 12 months, one million buyers in the UK acquired an ex-fleet vehicle (i.e. former rental of company car).

Arbitrary assumption
“UK enforcement bodies have gone a lot further than the EU directive on consumer protection that the UK implemented in 2008”, says Ahern. “They seem to have decided that former daily rental vehicles are a bad second-hand buy”. 

This even goes to the point where dealers have been hit with thousands of pounds in fines and forced to offer compensation of around £1,000 to £2,000 (€1,138 to €2,276) for the vehicle. “This on the arbitrary assumption that it is worth that much less because of its previous use”, Ahern clarifies. 

Sales price
On top of that comes the recent ASA ruling. “Not revealing that a car had any form of fleet use is now deemed materially significant. This means that if a car was a company car, used for company business, or a leased vehicle, this could have an impact on the sales price”.

Case in point: a ruling from January 2018 by the Gateshead Council Trading Standards Authority against Peugeot Citroen Retail UK. It had committed an offence against the Consumer Protection from Unfair Trading Regulations 2008 Act when it sold a used car to a customer in January 2017 for about £10,000 (€11,380). While mentioning that the car had had “one previous owner”, they did not specify that this was an international car hire firm.

Peugeot Citroen Retail UK pleaded guilty, was fined £5,000 (€5,590) plus costs of £500 (€569). It was also ordered to pay the customer £1,000 (€1,138) in compensation. 

Well maintained
To Mr Aherne, both the case and its regulatory foundation are counter-intuitive, to say the least. “As the producer of a leading used-car valuation guide in Ireland, we at Cartell.ie are well placed to understand used-car values. For us, fleet vehicles are actually a very good used-car purchase: the vehicles are generally well maintained and are in good condition. What we're seeing in the UK just doesn't make sense”. 

In fact, Mr Aherne continues, “in our system, we flag a former company vehicle or taxi, providing our customers with additional confidence in the car they're buying”. 

Biggest fear
Mr Aherne calls on the UK motor industry to remedy the situation. “If not, our biggest fear is that courts and other regulatory bodies will be setting a precedence on the value of second-hand cars by previous usage, rather than that value being determined by the market”. 

“Dean Bowkett provided us with data on these cases, which seem to show that the compensation levels are decided without any evidence to substantiate the amounts. Those amounts are such that it would make financial sense to move ex-fleet vehicles out of the UK, which is now developing into a two- or even three-tier used-car valuation market, and into Ireland – because the value of ex-fleet vehicles is well understood in our country”.

Ebb and flow
Mr Aherne acknowledges that fluctuations in exchange rates and minor changes in legislation and regulation will always account for some of the ebb and flow of cross-border traffic in used vehicles. 

However, he warns that the “illogical UK legal decisions” could lead to a flood of ex-fleet vehicles into Ireland, the impact of which on the Irish used-car market would be nothing less than “disastrous”. 

Authored by: Frank Jacobs