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ON THE MONEY: My New Year resolution is to banish the bumps

Date: 21 January 2009

Rupert Saunders

If business car managers want to cut costs in 2009 they should begin by promising to reduce the level of wear and tear in their fleets

I have a New Year resolution for you. And it's one I suggest you stick with, whether you are a business car manger or driver. My resolution is: I'm going to look after my company car better.

This is not just good practice, it is also sound economic sense because, as belts tighten across the industry, poorly maintained and damaged cars are going to hit you where it hurts hardest - in the wallet.

I'm taking about poor resale values at auction, higher costs of refurbishment and, perhaps most significant of all, a tougher attitude to damage recharges by contract hire and leasing companies.

Figures from Manheim reveal that two out of every three vehicles coming off fleet have damage that is worse than the BVRLA Fair Wear and Tear guidelines. The average cost of repair is £275 a vehicle but 6% of these have damage estimated at over £500.

The most common sign of misuse is dents and scratches, with 58% of inspected vehicles displaying such damage, but 27% have alloy wheel damage and 11% have tyres "at the edge of legal".

And it's not just about physical damage. There are still 23% of those vehicles coming back with missing V5s or incomplete documentation, such as service history, which can now lead to a recharge of up to £200.

In the good times leasing companies tended to turn a blind eye to all but the worst cases, but that is changing according to David Mercer, managing director of Manheim Defleet Services.

"The waivers are dropping and leasing companies are enforcing their damage clauses more rigorously, pushing up recharges," he told me. "Economically, it makes an awful lot of sense at a time when margins are being squeezed. Across the industry we estimate about £1.25m is available in recharges and that's a really big number at the moment."

Of course, the question for many business car managers is: who is going to pay the recharges, the company or the driver? Professional defleet companies will have got a signature, agreeing the damage, when they collected the vehicle, but do you have a company policy in place for salary deduction? And how rigorously do you enforce it, across the whole fleet?

"We are finding that more and more companies are recharging the end-user and they are doing it more aggressively," says Mercer. "But that means working with the HR department to make sure the policy is fairly and evenly applied."

On the other hand, the simpler and more cost-effective solution would be to make sure cars are properly looked after in the first place. You should make that a New Year resolution for the year ahead.