10th January 2018

Telematics’ role in reassuring buyers amidst the UK’s used car scandal

Buying a used car is for many people one of the largest purchases or financial commitments they will make in their lifetime. Although industry voices and indeed well-meaning relatives and friends usually encourage caution to anyone on the verge of shaking hands on a car they think ticks all the boxes, emotions can sometimes cloud decisions.

Wise steps such as paying for HPI history checks, scrutinising V5C log books, servicing schedules and receipts can understandably feel daunting, over the top and boring to many used car buyers – but the scandal that has just started brewing highlights how important such details are.

The ‘used car scandal’ that is emerging is big news here in the UK, with headlines including AOL’s ‘Motorists in line for compensation if mis-sold an ex-rental’1, Autocar’s ‘Rental and fleet car mis-selling scandal could lead to compensation’2 and, perhaps the most frankly, ‘Second-hand car owners could be in line for a refund’ from the Daily Post3.

One previous owner, or at least as few former custodians as possible, has long been a key feature to look for in a used car, but it’s not uncommon for a car’s log book to show that it was previously a business fleet vehicle leased through a contract hire agreement, or a vehicle registered to a rental firm.

Thanks to a new ruling by the Advertising Standards Authority (ASA), people who have unknowingly bought a former company or rental vehicle as a result of misleading advertising and dealer communication could be entitled to 25-to-100% compensation in respect of the price they paid.

The ruling has come on the back of the ASA siding with a car buyer called Ashley Rumbold who discovered that two approved used cars advertised on a well-known Italian car manufacturer’s website were actually ex-fleet vehicles used for contractor training and company car purposes despite being advertised with one previous owner4.

While it’s fair to say that very small used car businesses don’t always offer as comprehensive a service as franchised main dealers, multi-site independent retailers and car supermarkets by way of background checks and detailed pre-sale inspections, the emerging used car scandal will certainly get the full spectrum of car sales outlets hurrying to tighten up their advertisements.

Law firms have reportedly started receiving communication from upwards of 200 motorists per week who feel they have been mis-sold cars in regard to the ASA’s ruling, the seller having breached Consumer Protection for Unfair Trading Regulations 20085. The ASA will keep the SMMT closely updated on how the so-called used car scandal develops, and a dedicated litigation website has even been set up by the aforementioned Ashley Rumbold who has been campaigning for tougher used car sales regulation for 7 years6.

His website, UsedCarScandal.co.uk, states that 400,000 ex-hire (rental) cars were sold dishonestly in 2009 and this figure doesn’t even include former company cars and lease vehicles. With personal contract hire (PCH) having become increasingly popular over the last few years and with used car auctions commonly selling former rental, company and lease vehicles including vans, his action group is indeed correct in saying that there are millions of potentially affected cars out there. Their website outlines steps to take in order to discern if multiple drivers have likely used a vehicle despite it having been sold with a low number of previous owners, a tell-tale sign being a Ltd company listed as an owner.

Although a used car may have been mis-sold in terms of previous owners, we concur with the SMMT’s sentiments that “ex fleet vehicles can be a great used car choice, if as with any other vehicle it can be demonstrated they have been maintained and serviced properly and offer good value for money.”

“The BVRLA has very clear guidelines on how company fleet and personal leasing vehicles are to be treated. Organisations that lease cars in particular are increasingly mindful of the de-hire charges they will incur from funders if any damage has been sustained, with even minor blemishes resulting in penalties”, explains Craig Davy from Vehicle Consulting. “Because of this, many organisations set out clear HR guidelines on how the vehicles they provide are to be driven, the end result being that their users take greater care of them”, he adds.

As motoring journalist Jim Holder today explained to various media outlets, company and rental vehicles are typically serviced very thoroughly, perhaps excessively so in some cases, while is ultimately much more advantageous for a used car buyer than a vehicle that has been neglected. Fleet managers commonly check tyres, windscreens, electronic systems, exhausts and an array of other vehicle facets on a regular basis, as they are responsible for the safety of the people who drive them and also in ensuring that the cars or vans in question run as efficiently as possible for financial and environmental reasons. However, we agree with voices such as Dealflo that complete transparency is needed throughout the automotive industry7.

As the UK’s leading telematics firm, we like the notion of used cars from the rental sector being advertised with a “bill of health” that shows how they’ve been driven, rather like the colourful EPC that will be familiar to anyone having bought or sold a property in recent years.

Growing numbers of organisations of all types have been harnessing telematics, from more traditional ‘black box’ hardware-based systems to completely smartphone app-based solutions like Appy Fleet, which provides an extremely cost-effective route into this highly advantageous technology. One of the telematics’ benefits is that it discourages bad driving by scoring each driver’s performance on the road, and gamifies the process so that drivers vie to rank as the smoothest and safest on the fleet. Rental firms are increasingly leveraging telematics, too, so that anyone who rents such a vehicle is fully aware that their driving style is being monitored and recorded. More responsible driver behaviour naturally reduces vehicle wear and tear, accidents and damage, which is all good news for future buyers of such cars on the used market.

While it’s clearly unacceptable that some used car buyers have unwittingly bought vehicles with more previous owners than advertised, ex-rental and former company cars can often represent excellent purchases due to the fastidious procedures involved, and telematics can clearly also play a key role in reassuring used car-buying customers of the future.

 

 

Sources:

1, 6. https://www.aol.co.uk/cars/2018/01/08/motorists-in-line-for-compensation-if-mis-sold-an-ex-rental/

  1. https://www.autocar.co.uk/car-news/new-cars/rental-and-fleet-car-mis-selling-scandal-could-lead-compensation
  2. http://www.dailypost.co.uk/news/motoring/motoring-news/second-hand-car-owners-could-14128919
  3. http://www.autoexpress.co.uk/car-news/102191/buyers-sold-ex-rental-or-company-cars-without-warning-to-get-compensation
  4. http://www.legislation.gov.uk/uksi/2008/1277/contents/made
  5. https://usedcarscandal.co.uk/
  6. https://www.verdict.co.uk/motor-finance-online/news/used-car-scandal-headlines-increases-need-transparency-dealflo/