- CALL FOR ADVANCE COMMISSIONS TO BE REVIEWED
- DCA COMPENSATION COULD BLOW HOLE IN TREASURY BUDGET
- HOW PISCES WILL BREATHE NEW LIFE INTO THE STOCK MARKET
- GOVERNMENT: ‘TOO BAD’ THAT TAX COSTS ARE RISING
- WEEK AHEAD: Aston Martin FY results
- OEMs IN RENEWED HYBRID DRIVE
- BMW PAUSES MINI OXFORD EV PLAN
- US RETAILERS MAKE TARIFF CONTINGENCY PLANS
- NISSAN CREDIT RATING DOWNGRADED TO JUNK
- OPINION: Hybrid car confusion
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Call for advance commissions to be reviewed
In a new twist to the car finance commission cases, advance commissions paid to car retailers “may have encouraged them to push costlier loans on to consumers” by encouraging sales staff to “funnel contracts to these specific loan providers regardless of whether it resulted in more expensive payments for the buyer”.
It has now been revealed that campaigners are calling for advance commissions to be investigated.
The Guardian has seen court documents showing that lenders have paid commission to retailers in lump sums upfront, which campaigners say “total millions of pounds”.
The filings claim that “these advance commission arrangements were not explicitly disclosed to borrowers and “created stark conflicts of interest’”.
A county court hearing last year revealed that Lloyds’ Black Horse was paying advance commissions until at least April 2024. Santander is still offering advance commissions, according to its website, and Barclays’ motor finance division offered them until it was closed in 2019.
As well as not being referenced in either of the cases heading to the Supreme Court, advance commissions are also not mentioned in the FCA’s ongoing investigation into DCAs.
The Finance and Leasing Association claimed the FCA had “examined motor finance commission arrangements in every detail over the last seven years and has not flagged this as an area of concern”.
However, Lady Sharon Bowles, a member of the Lords financial services regulation committee, argues that advance commissions need to be reviewed. Last month, she pushed FCA chief executive Nikhil Rathi about their existence during a committee hearing.
“This is surely a matter that should be the subject of more investigation and ruling somewhere, even if not explicitly in the Supreme Court case.”
DCA compensation could blow hole in Treasury budget
Potential commission payments for discretionary commission arrangements could blow a £5.5bn hole in the public finances, Treasury officials have warned.
Major firms could use compensation payments to legally cut their corporate tax bills – and restrictions imposed by George Osborne in 2015 to stop “banking companies” from deducting PPI compensation payments from their tax bills may not apply. This is because even high street lenders mostly conduct their car finance business through subsidiaries.
RBS Capital believes two thirds of car finance loans are issued by “non-bank” lenders. It has estimated a total compensation bill of £33bn if the Court of Appeal’s ruling is upheld, leading to a £5bn loss for the Treasury.
Even if it is overturned by the Supreme Court, it still estimates a potential hit of £17bn, leading to a £3bn loss of corporation tax receipts.
How Pisces will breathe new life into the stock market
A new trading system called Pisces (private intermittent securities and exchange system) aims to breath fresh life into London’s stock market. It allows private companies to sell shares for a limited time without the formality of having to list them on the London Stock Exchange via public offerings.
It is similar to the Nasdaq’s Private Market, which has operated since 2013.
FCA consultation on Pisces recently closed, and there are hopes it will launch by July.
Government: ‘too bad’ that tax costs are rising
Five Guys chief executive John Eckbert says the chain will face a £4m hit from increases to employers’ National Insurance contributions from April – and, when his lobbyists raised the issue with government, the feedback they got was “well, too bad”.
Raising the earnings threshold from £9,100 to £5k will be particularly painful for firms that rely on part-time workers.
“It seemed to me that the unintended consequences of the policy probably had not been thoroughly thought through,” he said.
WEEK AHEAD
Wednesday, Aston Martin full year
Wednesday, BRC shop price index
Friday, NFDA Winter 2025 Dealer Attitude Survey closes
3–4 March, Automotive Leadership Network Spring Programme at Luton Hoo.
DATA INSIGHT
OEMs in renewed hybrid drive
+9%: year-on-year global new model launches of ICE and hybrid vehicles in 2025. Hybrid launches alone will rise 43%.
Mercedes-Benz last week revealed plans to launch 19 petrol models between 2025–2027… versus 17 EVs.
BMW pauses Mini Oxford EV plan
£600m: investment to produce electric Mini Cooper and Aceman now under review at Mini Plant Oxford. The deal included £60m of taxpayer subsidies.
Government sources say the pause is not due to the ZEV Mandate, but BMW being hit hard by EU tariffs on models it makes in China. BMW wants to see if it can “get any flex out of our EV mandate”.
GLOBAL AUTO
US retailers make tariff contingency plans
The six publically traded US auto retailers are already making contingency plans to soften the blow of any tariffs on cars, steel, aluminium and other imports. It is hoped stocks of new vehicles, along with aftersales revenue, will help retailers get through the short-term uncertainty.
“I probably never thought I’d be saying I’m glad I have an extra 20 days of inventory over most of the industry,” said Lithia Motors CEO Bryan DeBoer; Lithia held 59 days’ supply at the end of 2024.
Nissan credit rating downgraded to junk
Moody’s has downgraded Nissan Motor Co’s credit rating to junk status and retained its negative outlook. The credit rating firm cited Nissan’s weak profitability that’s driven by an ageing line-up, a lack of hybrid offerings, ballooning US incentives and slumping Chinese demand.
It also warned of “execution risk” in CEO Makoto Uchida’s latest recovery plan, his third since taking office in late 2019.
OPINION
Hybrid car confusion
Having spent a couple of hours in a new car showroom this week while my car was serviced, it was hugely enlightening to earwig on the sales calls being handled in the background.
The theme shining through was that the vast majority of calls required some sort of explanation about electrification, particularly when it came to hybrids rather than fully electric cars.
Firstly, it was clear that customers who have time to call or take calls in the middle of the working week are mostly retirees.
With that in mind, you have to ask, can your sales team explain the practical difference between, for example, a mild hybrid, a full hybrid, a self-charging hybrid and a plug-in hybrid, in terms that their grandparents would understand?
The staff in the showroom I was overhearing were doing a very good job, had the patience of saints and knew what they were talking about, but were also clearly hampered by the language, or rather, marketing speak, imposed by the manufacturer.
Having to call a hybrid vehicle an electrified car surely only confuses people when the only fuel that drivers put in the car is petrol?
Yes, owners like to say they’ve got a hybrid because it makes them sound like they’ve gone for a more eco-friendly option; and it is when compared to their previous car. But to go anywhere near the word ‘hybrid’ in conjunctions with ‘electric’ just stores up problems for the future.
This isn’t just a brand-by-brand problem, it’s an industry-wide issue. Most car buyers don’t really pay attention to the car industry unless they’re actively looking to change vehicle. And that means looking at what’s on offer only every three years or so.
Yes, there’s been lots of talk in the national media about fully electric cars, but little about hybrids. Which means the language is new to most in-market private buyers.
Now, I know it’s pointless trying to fully standardise the language around electrification, but wouldn’t it be better if there were a few key terms the industry as a whole could stick to? That way, car buyers stand a fractionally higher chance of being able to make an informed choice about their next car, and sales staff in the showroom would stand a better chance of selling more cars.
Education is clearly the answer, but in such a cost-constrained market, is it possible?
Tristan Young
Editorial Director
Get in touch: tristan@autosunday.co.uk
ISSN 2977-6597