Examination of Witnesses (Questions 20
TUESDAY 23 OCTOBER 2001
20. Could you give some indication of what is
involved in making that jump?
(Mr Evans) Licensing, premises for storing vehicles,
employing technicians who know what they are doing, dismantling,
taking things apart, accounting to the local authority, depolluting
where necessary and having to satisfy the regulations as to the
recycling of parts and all the rest of it. It is a big exercise.
Also, disposal of the waste metal and other parts from a vehicle
which in some respects could not be reused.
21. If they did not become ATFs, would they
be losing out financially because of it?
(Mr Hood) I do not think the situation has changed
dramatically from what currently happens in that an independent
dealer will sell the customer a different car and will immediately
send the old car to the motor auctions. They still see the motor
auction as the next link in the chain to get rid of the vehicle
and the motor auction will sell that car for a few quid and the
scrapper would take it away.
Sir Robert Smith
22. To clarify why the independent repairer
is going to be affected, is it commercial reasons? The only way
they will be able to do business is to be willing to take them?
They are not going to be forced to take them?
(Mr Evans) I think it will be the commercial consideration,
yes. They have a customer base and the one thing that distinguishes
others in the minds of independent repairers anyway is that the
independent repairer provides a service to the local community
and therefore would not want to say, for example, "I cannot
23. Before I start, I should draw attention
to the fact that I chaired the all party motor group and played
a part in the SMMT secretariat. I would like to explore the issue
of positive and negative values. What do you think the mechanism
should be for differentiating between what is a positive value
for a vehicle and what is a negative value?
(Mr Evans) It is a judgment. If an owner of a vehicle
is still around to discuss the question, has not been involved
in an accident and is not lying in a hospital somewhere, that
owner is going to think it is worth more than anybody else does.
It is a natural thing. Whether or not a vehicle has no value,
negative value or positive value will depend on the individual
circumstances in any particular case. What the measure of this
will be I do not know. It will be for the technicians and experts
to decide whether there is anything salvageable in a vehicle,
whether it has any worth so far as the reuse of parts is concerned
or indeed whether it is capable of being repaired either at all
or economically. All those factors will weigh in the balance.
Currently insurance companies do a lot of this. I am not sure
to what extent they will want to be involved after this regime
comes into play. Maybe they will have to change what they do.
I do not know but you are probably going to hear evidence from
24. In a number of the schemes that have been
put forward by a number of bodies, including yourselves, the issue
of what is positive value and what is negative value is fairly
central to that. Given, as you have said, that it is not an exact
science, who ultimately will decide? You have referred to technicians.
To a dealer there may be one view; to a shredder there may be
another view; to a dismantler there may be another view; to the
end user there may be a view; to the manufacturer there may be
a view; the government, through some mechanism or other, may have
a view. At the end of the day, does your federation have a view
of who is the final arbiter on whether an ELV has positive value
or negative value?
(Mr Hood) It is a very subjective issue, is it not,
to decide on what is or is not? A ten year old, low cost car that
fails its MOT for structural reasons could have a relatively low
cost. However, there are indications in the body repair world
that insurers are writing off relatively new cars because both
air bags have exploded in a relatively low impact accident. The
damage to the vehicle may only be around the £300, £400
or £500 mark, but because the air bags have exploded and
need to be replaced that sends the write-off value of the car
over the threshold. They are disposing of relatively new, relatively
undamaged cars. That car will have a perceived very high value.
Say the back end would be reusable; the panels and the mechanical
25. Whether something is reusable is not the
same as whether or not it has a positive value or a negative value.
There may well be through the course of the chain things that
are entirely reusable. The issue is whether, for different players
in the chain, it is economic to reuse them. It is not just a question
about the amounts of money involved; it is a question of who stands
the cost ultimately. If there are different players who reckon
something has a negative value or a positive value to them or
a positive value to someone else, at the end of the daymaybe
you do not have a viewwho ultimately needs to be the arbiter
and say, "Someone has to stand the cost of that. There is
a cost rather than a benefit"?
(Mr Hood) That is a good question. I do not think
there is a straightforward answer to that. There are so many players
involved and so many different interests.
26. Are there not statistics on it?
(Mr Hood) On negative and positive value of end of
(Mr Hood) Not at the moment.
28. There must be statistics available about
insurance write-offs as a proportion of the whole?
(Mr Hood) Yes, there are.
29. Can you help us on that?
(Mr Hood) I can furnish the Committee with the statistics.
30. It is just for a working premise on which
we can work today. In your experience, what proportion of the
cars that have come through your hands are insurance write-offs
as against genuinely clapped out vehicles?
(Mr Hood) The incidence of write-offs as accident
damaged vehicles is growing for the reasons that I just mentioned.
In some areas, it is up to 20 per cent of the turnover of a bodyshop's
business. It is a very worrying trend because if a vehicle is
written off there is no repair there for the repairer. That is
the only statistic that I can give you. Write-offs are increasing.
Chairman: It seems to be a case for having cheaper
air bags. That is probably beyond the wit and intelligence of
car manufacturers because it is so self-evident.
31. If you are in a situation where, as you
say, air bags have exploded and the insurance company wants to
write the car off, does that make it an ELV?
(Mr Hood) Not necessarily. It could be taken away
and repaired. If someone has a car that they feel very strongly
about and they cherish their car and they are told by an insurance
engineer, "I am sorry; your car is written off", they
will say, "I love that car. It means so much to me. I want
it to be repaired." If they stump up the difference, the
car can be repaired.
32. If the car is totally stripped, at some
point it becomes a series of parts presumably?
(Mr Hood) Yes.
33. I am wondering about the definition of an
ELV. At what point does it become one?
(Mr Hood) Again, that subjectivity comes into play.
An unscrupulous dealer, whether franchised or independent, may
persuade someone that their car has come to the end of its natural
life just so they may obtain a sale. That is something we ought
to be very wary of. Once this directive is well known and in the
public eye, that could happen. The evidence there would suggest
that some form of regulation through an organisation like the
RMIF could be in place and we could then police the garage industry
and weed out these unscrupulous operators.
34. I wanted to pursue positive and negative
value a little. Submissions we have had I think mainly from the
manufacturers have definitely said things like the government
should ensure there is an implementation of a regime between positive
and negative. It sounds, from what you are saying, far too subjective
and this is a key issue. You are saying you are undecided about
what would be the best way of determining positive and negative
and that it could be variable.
(Mr Evans) It is a complex argument. There is a vehicle
inspectorate which carries out supervision of MOT testing. Sometimes
a vehicle which is put in for an MOT test is regarded as beyond
the capability of the MOT test station to carry out a test on
the vehicle because of its condition. It may be there is an extension
of that which could be used, if required, to assist in determining
whether a vehicle is or is not of any value. I am afraid we have
not an answer to this. We shall obviously have to think about
this because many of our members will be affected in one way or
35. We have dealt so far with the natural progression
of vehicles through the chain. I would like to come on to abandoned
vehicles where there is no obvious ownership. You mentioned in
your submission that there is an increasing problem of abandoned
vehicles and I seem to remember a figure of 130 on occasions at
auction. What do you think can be done to tackle this issue of
(Mr Evans) I suppose people will become aware of their
responsibilities. Local authorities apparently are unable to cope
with abandoned vehicles and there was a debate in the House last
evening, I understand, on this subject when it arose really over
abandoned vehicles but moved on to end of life vehicles. The figure
that you quote from our submission was 130 a month average, where
customers who had put their vehicle into auction and not sold
them feel dejected about it and wash their hands of the vehicle.
Someone has to deal with it so it is abandoned. You see in laybys
and other places vehicles which have either caught fire and the
owners have run away or for one reason or another they have been
dumped. It is a serious problem and people's awareness of their
responsibilities from an environmental point of view, as well
as a regime that will allow dismantlers, shredders, dealers, whoever
is going to be dealing with these things in the chain, will all
have an interest in disposing of these vehicles. Nevertheless,
the consumer has a responsibility. The owner of any other good
would do somethingput it in the dustbin or throw it in
a hedge or whateverbut a vehicle is a vehicle and that
makes it different because it is not something you can hide anywhere.
It is a tricky thing to deal with.
36. Your faith in human nature is perhaps greater
than mine. People do have a responsibility now and I am curious
to know how you think that the directive can help this process.
(Mr Evans) Perhaps I am naive but if the legislators
think that something is neededi.e., an end of life directive
which emanates from Brusselsthere is a responsibility attaching
to the government, to local authorities, to see that this is not
a problem. I do not have the solution but I would hope that they
37. In item 11 referring to abandoned vehicles
in the submission you do say that abandoned vehicles will hopefully
be much reduced by the ELV directive. Dealing with them does cost.
Can you give an outline for the basis for that point in the submission?
(Mr Evans) I read somewhereit may have been
a comment by the vehicle manufacturersthat they estimate
that it will cost £300 per vehicle to deal with it in the
manner prescribed. If you take 1.5 million vehicles a year ending
up as end of life vehicles, the arithmetic of that comes out at
something like £450 million. If that is the scale, it is
an enormous problem. I mentioned the Dutch example where a levy
was imposed on the purchaser of a car which was a form of tax.
It started off at, say, the equivalent of £100 and lasted
for a while. Because it was all running successfully, it was possible
to reduce that to something like half or £50, say, equivalent.
That money was put into a fund in order to cope with recycling
as well as end of life vehicles. They seem to have found a formula
38. They have cheaper cars to start with so
they might not find it quite as unattractive.
(Mr Evans) They do have an advantage in the Netherlands
and in certain other countries in the European Union because of
a variety of factors. The fact is that is an example which we
might look at to see if there is anything in it that would be
suitable for us. We were talking about abandoned vehicles. It
is a terribly complex problem and, yes, it is a problem which
everybody has a part to play in.
39. Looking again at dumped vehicles, presumably
the costs involved are not only for disposing of them but for
picking them up? I know that is a very significant cost for local
authorities. Could you explain what you would like to see done
in respect of dumped vehicles?
(Mr Evans) One of the problems local authorities have
is the ability to move in and deal with the problem promptly.
There are inhibitions in this respect, I gather, and local authorities
are anxious to improve on that so that they can put into operation
whatever may be needed to get rid of a vehicle, wherever it happens
to be. That would be a tremendous improvement in the arrangements
because you will have seen no doubt that vehicles do lie around
for a long time. Nobody seems to be taking any interest in them.
The fact that the police seem to have issued signs saying "Police
Aware" to stop people ringing up and saying, "Look,
there is a vehicle there" goes along with what I am saying
about the inability to act promptly. That would be a tremendous
1 Note by witness: Consideration must also be given
to the impact upon the UK vehicle body repair industry where a
greater proportion of parts used in the repair process will be
recycled. Great care must be taken in the storage and handling
and transportation of (especially body panels) to ensure a consistency
of quality and fit. Doors, for example will need to have been
stripped and to bare metal in readiness for subsequent use. Additional
costs, therefore, will be involved. Back