Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



  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 help you."

Richard Burden

  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 them.

  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 parts.

  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 day—maybe you do not have a view—who 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.

Mr Djanogly

  26. Are there not statistics on it?
  (Mr Hood) On negative and positive value of end of life vehicles?

  27. Yes.
  (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.

Mr Djanogly

  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.[1]

  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.

Linda Perham

  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 another.

Mrs Lawrence

  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 abandoned vehicles?
  (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 something—put it in the dustbin or throw it in a hedge or whatever—but 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 needed—i.e., an end of life directive which emanates from Brussels—there 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 would.

  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 somewhere—it may have been a comment by the vehicle manufacturers—that 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 which works.


  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.

Mr Djanogly

  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 help.

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

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