Select Committee on Trade and Industry Minutes of Evidence


Memorandum by the Retail Motor Industry Federation

SUMMARY

  1.  The Retail Motor Industry Federation (RMI) welcomes the House of Commons Trade and Industry inquiry into the economic impact of the End of Life Vehicles (ELVs) directive.

  2.  The retail motor industry is concerned about the potential impact of the ELVs directive and is earnestly assessing what this will be depending on what the producers, importers and others opt for, or are obliged to do. It is believed there will be a requirement of sharing of responsibility between those involved including the UK Government, and retailers are anxious that their contribution will not be disproportionate.

  3.  Although members of the RMI are not so much directly involved as economic operators many will have a contribution to make. The RMI has therefore taken an interest in the work of the industry wide ACORD group.

  4.  It is seen as essential that the government ensures there is recognition of the need to differentiate between ELVs with no or negative value and those with positive value.

  5.  In the implementation measures garages must be permitted to provide competitive opportunities to customers by being able to offer an allowance for ELVs before they are consigned to vehicle dismantlers as being of no or negative value, and therefore of commercial significance for reuse of parts.

  6.  It is not yet clear what the responsibilities of dealers will be and the costs but as reliable an assessment as possible will be provided. The implication and cost to recovery operators will require particular analysis.

  7.  The RMI regards it as essential that the UK Government adopts the implementation dates in the directive in step with other member states in the EU, and to allow the economic operators time in which to meet the requirements of the legislation.

  8.  It is essential that disproportionate costs are not transferred to dealers by producers/importers.

  9.  The requirement to provide space for the storage of vehicles if only temporarily, and the environmental demands of dealing with vehicles as hazardous waste, must be taken into account.

  10.  The additional demands on dealers and others to provide information or evidence as to implementation will be significant, and must be taken into account.

  11.  The increasing problem of abandoned vehicles will hopefully be much reduced by the ELVs directive, but dealing with them adds cost.

  1.  The Retail Motor Industry Federation (RMI) welcomes the opportunity of making a submission to the House of Commons Trade and Industry Committee inquiry into the economic impact of the End of Life Vehicles (ELVs) directive.

  2.  The RMI is the leading trade association for the retail motor industry. Formed in 1913, it represents and serves businesses concerned with providing motor industry products and services in England, Wales, Northern Ireland and the Isle of Man. It is one of the largest trade bodies in the UK with approximately 10,500 members made up of large groups, small and medium sized businesses and the very small garage or petrol retailer. The RMI has the following federated organisations:

    National Franchised Dealers Association (NFDA);

    Independent Garage Association and Bodyshop Services Division (IGD/BSD);

    Petrol Retailers Association (PRA);

    Motor Cycle Retailers Association (MRA);

    Motorcycle Rider Training Association (MRTA);

    Cherished Numbers Dealers Association (CNDA);

    Society of Motor Auctions (SMA); and

    Retail Motor Industry Training (ReMIT).

  3.  The RMI intends to respond to the UK Government's consultation paper on the ELVs directive dated August 2001 and has circulated the paper to representative sections of its membership which may be affected. The RMI has not yet been able to collate member contributions and to formulate its response to the paper which is required to be made by 2 November 2001. Although its member interests in the subject matter are relevant, they are not of such significance as those attaching to producers, importers, vehicle dismantlers or shredders.

  4.  The retail motor industry employs approximately 600,000 people with annual sales of £100 billion+. New sales alone amount to £30 billion+ and used cars £15 billion+. The industry raises £30 billion in tax revenue annually. The RMI has members in every community or constituency.

  5.  The NFDA represents 3,500 major businesses covering new and used cars and commercial vehicles. These businesses also carry out repairs and servicing and many of them operate vehicle recovery facilities. All the major retailing groups are in membership, and dealers have a formal contract to represent individual vehicle manufacturers. In addition the RMI represents used vehicle dealers and independent repairers, many of whom also deal in used cars.

  6.  Members of the RMI who will be involved in or affected by the implementation of the provisions of the directive are keen to play their part in the responsibilities which will attach to them under the obligations to be shared by the various parties. It is not yet clear what those responsibilities may be and to some extent will depend on the option selected, and the Government's resolve as regards implementation.

  7.  The RMI regards it as essential that the UK Government adopts the implementation dates in the directive for the introduction of the free vehicle take back obligations as proposed for member states in the European Union, rather than a unilateral and more immediate regime for the UK. This would mean new vehicles with no value or a negative value would be taken back free of charge to the final owner in 2002 and by 2007 for the whole existing vehicle parc. This raises the question of differentiation between ELVs with a positive value and those with no or negative value. The Government should recognise the differences and give effect to them in implementing the directive.

  8.  As the vehicle manufacturers will be required to accept responsibility for the costs of providing cost free take back of ELVs with no or a negative value, franchised dealers in particular will be concerned that those costs or a significant proportion of them are not transferred to them. ELVs with a positive value will not provide a source of revenue for dealers, yet there would be costs to dealers in handling, storing and possibly transporting such vehicles as well as the administrative obligations (record keeping, reporting etc), which by themselves will be significant.

  9.  It appears to the RMI that its members are unlikely to wish to qualify as an authorised treatment facility with all that will entail in terms of cost. To do so merely to be able to issue certificates of destruction would not make economic sense, but if some retailers want to operate as a vehicle dismantler and thereby be in a position to issue certificates of destruction, they should not be discouraged from doing so. The choice would be theirs.

  10.  The RMI is concerned that producers or importers will not be able to impose excessive burdens or costly procedures on dealers, independent repairers or recovery operators in order to lighten the responsibilities which properly attach to them. Dealers representing a particular make or makes of vehicle may be required by the vehicle manufacturer to handle ELVs which will involve their transportation, de-pollution process and storage. The dealers' contribution must be looked at in the round.

  11.  The storage of ELVs until they can be removed to an authorised treatment facility and/or vehicle dismantler will require specific attention. The allocation of dedicated space will be significant. Space is always at a premium. There will also be a cost under the environmental regulations for dealing with ELVs as hazardous waste and transporting them. There will also be onerous responsibilities in keeping appropriate records and providing evidence of dealing with ELVs.

  12.  Dealers have an interest in assisting existing or new potential customers in dealing with an ELV. Once it is established that a vehicle qualifies or might qualify as an ELV, then a customer might be interested in acquiring a replacement vehicle either new or used. In the interests of competition for the benefit of the owner a dealer should be able to negotiate with the owner who has an ELV to take it and then be in a position to dispose of it within the terms of the ELVs directive and associated regulations. This should be organised without incurring prohibitive costs or excessive bureaucracy in discharging the responsibilities. In this way, the customer could expect to have better value than merely having to pass the ELV to a vehicle dismantler or shredder which could be regarded as the last stage. This might be so if the ELV was of no or negative value as well as one of positive value depending on circumstances.

  13.  Specific areas of concern have merged among the RMI membership as follows:

    —  there is an increasing number of abandoned vehicles at garages and in particular car auctions. Cars are just dumped at garages or the owner does not collect or give instructions for repair or whatever. At auction premises, if vehicles are not sold at an auction, owners sometimes do not collect them. The auction company has the problem of disposing of them and under the new requirements of the ELVs directive and environmental regulations, greater costs will be incurred. One of the larger auction companies estimates that it has to dispose of an average of 130 cars a month in this way. There is a significant cost which the RMI will try to quantify, if only as an estimate;

    —  vehicle manufacturers may develop a greater availability of recycled used parts from ELVs to be used in the repair of vehicles. Vehicle dismantlers already have a significant network of distribution of spare parts but it is believed vehicle manufacturers will make greater use of the availability of reusable parts in meeting the recycling targets. This will in turn mean that higher skilled and therefore enhanced cost labour will need to be employed making such parts more expensive. The storage of such parts will impose greater costs. When reusable parts such as door panels are delivered to a bodyshop or repairer they will have to be stripped to bare metal in readiness for subsequent use to resemble a new one prior to preparation and painting in the colour of the vehicle to which it is to be attached. Additional cost will be involved;

    —  with vehicle manufacturers/importers being responsible for the vehicle for the whole of its life, it is thought the manufacturers/importers may seek to "write-off" vehicles at lower values than those accepted by insurance companies to provide higher sales volumes. This will have the effect of releasing more recyclable parts for repairing fewer vehicles capable of repair; and

    —  recovery operators are very concerned about the economic impact of the ELVs directive and environmental regulations on their activities. The RMI has not been able to assess the likely cost but will endeavour to do so. The main problem appears to be that if a recovery operator is called out by a customer or the police to recover an immobilised vehicle or accident damaged vehicle, and tows it to a safe place awaiting instructions as to its disposal, the recovery operator will be saddled with the requirements of the ELVs directive and associated regulations in a number of respects without being able to transfer liability or to avoid the primary responsibility of de-pollution, storing, notifying the local authority environmental department and paying the necessary fee etc. These costs will be significant and will include proper storage after de-pollution pending instructions which may come from the owner or an insurance company—such instructions may result in the recovery operator being required to deliver up the vehicle and not to have any further involvement with it. The costs incurred up to that point will need to be recoverable.

  14.  Members of the RMI are willing to contribute to the debate on a satisfactory solution to the problems associated with the implementation of the ELVs directive and the regulatory framework to be put in place in support.

October 2001


 
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