Home
> Motoring > Motability
Motability
Click here for open letter from Jim Wheelton, Chairman
of Disabled Motorists Federation
Click here for an overview of the adapted vehicle
market
Any household with a disabled member will be even more dependent on their car than the rest of the population - and the overwhelming majority of us are pretty much hooked anyway, even without being Jeremy Clarkson-style petrolheads. Not surprising, then, that the motoring section of Independent Living is very popular with site visitors, and equally unsurprisingly, particularly in these tough time, we have had some comments lately about the funding of a converted vehicle, and some questions about the role of Motability in the way that prices have risen recently.
15th July 2009
New developments in the market for WAVs
Regular visitors will know of the concerns we have raised about the cost of motoring for wheelchair users. So we are really happy to be able to spread some good news for once! Motability has this month launched the "Nearly New WAV Scheme", an extension of their contract hire scheme, which enables customers to select a pre-owned wheelchair accessible vehicle, at a more attractive price.
Vehicles on the scheme have been chosen from amongst those which are returned before the end of their original contract, and they are all low mileage, excellent condition and less than 18 months old. The contract is for three years, and includes the same benefits as the new vehicle contract - servicing, breakdown cover, insurance, etc.
These nearly new vehicles are supplied through the companies which convert standard cars to make them wheelchair accessible, and two of the most established, Aspect Conversions and Constables Mobility, have got together to offer customers access to a choice of nearly new WAVs in the most convenient way, online.
You can view currently available stock here: www.nearlynewwavs.co.uk
A view from the Disabled Motorists Federation
The open letter we received from the Disabled Motorists Federation expresses their concerns about the way in which disabled motorists are being squeezed in the current situation:
Letter from Jim Wheelton, Chairman of Disabled Motorists Federation:
Sir/Madam
We have received several concerned enquiries about the Motability scheme recently in connection with their rates and charges. Had Motability been a normal business or charity we would not be bothering you about this matter, we would simply be advising members and disabled people to go elsewhere. But, as I am sure you are fully aware, they are in fact a government sponsored organisation which is supposed to exist in order to assist disabled people to gain mobility. Perhaps I could give an example or two:-
The Renault Scenic was a very popular vehicle that used to have a down payment set at around £1000, this has now shot up to £3195, well beyond the pocket of most of the present disabled drivers of this vehicle. (We have made enquiries and it would appear that the present increases are due to 6000 odd vehicles which have been returned at the end of lease and been unable to be sold due to recent fuel costs (Why this should be a factor today is beyond me as these costs have fallen considerably), and the credit crunch. Our concern is that the very people most in need of these vehicles are wheelchair users, who require a larger vehicle in order to be able to get their wheelchair in. These sort of increases, if spread across the board, would make the scheme unusable for many of the people that it was set up to help.
Motability have in recent years set up finance to assist disabled people to obtain other mobility aids such as vehicles, power wheelchairs, disability scooters and stair-lifts on hire-purchase schemes. Because Motability are a government sponsored charity many disabled people go to this scheme thinking that, since the government effectively fund it, it must be the best. In actual fact the rates work out at over 17% in most cases, more than many credit cards are charging. Most high street banks charge less than 6%, if you are credit-worthy, today.
We bring these concerns to your notice in the hope that you might be able to look into what is happening, both on hire-purchase rates and down payment costs under the scheme, before these facts become common knowledge since the scheme is seen as a government scheme, and we are sure the government does not wish to be seen to be ripping off the disabled.
Jim Wheelton
Chairman Disabled Motorists Federation
Read on for our overview of the adapted vehicle market, following interviews with industry insiders:
The market for adapted vehicles
Over the last three years or so, Motability have really focused on getting as many people onto the scheme as possible, with the intention that they would crack the 500,000 mark in terms of vehicles on live contract.
They managed this, and currently sit at around 505,000 which is of course very good.
With the advent of subsidised adaptations, lots of new things came in, in the case of simple push/pull hand controls and similar, some at zero cost. This made things very easy for people and made the choice to go with the scheme or not a very simple one.
The problem of course is that all of the vehicles on the contract hire scheme have a drawback – at the end of the lease they have to be sold on. At the current time it is in the region of 500 cars per day that are returned to Motability, and as such, 500 a day really need to be sold.
Obviously when there is such a large amount of vehicles and money tied up in the live fleet, even a slight blip to the used car market causes some real pain, especially when the whole business model is based around accurate residual values.
Early terminations of vehicles mid-lease can also cause Motability problems.
A major problem currently is wheelchair accessible vehicles
One of the problems Motability have at the moment is wheelchair accessible vehicles.
Ever since they introduced transparent pricing, and started encouraging WAV suppliers to wage price wars against each other, prices have fallen massively. For example, a vehicle such as a Kangoo went from a typical price five years ago of around £4000 down to £0.00, and with an improvement on basic equipment too.
This was excellent in terms of numbers of WAVs supplied, and a lot of companies involved made back the discounts they gave by simply supplying a larger volume of vehicles, so complaints from most corners of the market were very slow at first.
The problem with WAVs is that a very strict balance previously existed – you could get one on Motability, but usually it was prohibitively expensive, so a lot of people purchased second-hand ones, or got a grant to help them get a vehicle. Others managed to get smaller vehicles for slightly less money, but ultimately it was a fine balancing act.
WAVs made good money at auction because a used WAV made sense to a lot of people in terms of cost and value for money rather than the Motability scheme. It also made money for used vehicle dealers in the process - so they kept buying the ones that Motability had for sale.
Death of the second-hand market
With the advent of WAVs for £0.00, and a good selection of them too, Motability effectively killed off the second-hand market. Why would you spend £10,000+ on a used vehicle when you could have a brand new one for five years without having to find a deposit or apply for a grant?
Motability apparently didn’t see the bigger picture, and spent over a year supplying a huge amount of WAVs for nil advance payments. A lot of these vehicles are now coming back through early terminations, plus the usual WAVs at the end of lease. They now go to auction and they don’t come close to their projected value.
I spoke to a used vehicle dealer recently, and they picked up a year-old Kangoo with 7,000 miles on it for £4,500. To give you an idea of how much things have changed, a year ago this would have sold for £8,000+ at auction.
The upshot of all this is that Motability have had no choice but to raise advance payments this year. I predict with a great deal of confidence that the remaining three quarters of the year will see like-on-like increases to advance payments, and WAVs especially will see big price rises. From a choice of over 20 in December 2008, there is now not a single WAV on the scheme for no advance payment.
What Motability need to do is to keep vehicles cheap on the scheme, but also make sure they don’t make them so cheap that it affects the used market. They are stuck between wanting more people on the scheme, and not wanting to make too much of a dent in used sales.
WAVs have been down-valued by the scheme
To this extent, this year they need to start ensuring that their major loss vehicles – WAVs - gain some value back. By making a lot of cars £ zero advance payment, they have convinced people that these cars are actually worth less than they are. People now see WAVs as a generic thing at a low cost, and Motability need to ensure that this doesn’t continue to their detriment, and as such, prices need to rise.
Prices also need to rise on standard vehicles to offset the losses on the scheme as a whole. There will always be a selection of no advance payment cars in each sector (small, estate, MPV etc) but they need to make sure there are vehicles that are slightly better, at slightly higher prices and that dealers are "selling up" so that not everything on the scheme is just seen as a "Motability car".
Good value for purchasers?
The package offered on Motabiity's Contract Hire Scheme is the best it has ever been. Mileage allowance is up, the inspections at end of lease are not as harsh, and replacement tyres etc are supplied without the hassles they used to have. The scheme remains very viable for most people if they are after middle-of-the-road "nothing special" vehicles.
However, the car market is in trouble, so prices for new cars and private leases are falling rapidly. This means that for people who want specific vehicles or more exclusive marques, the scheme really doesn’t make good financial sense. In fact, for an average couple of say, 40 -50 years old, who would have a very cheap insurance cost, the scheme really can be beaten in terms of the private deals that are out there.
Yes you would have to pay your own breakdown cover and insurance, but with vehicle warranties getting better as standard, and service intervals getting longer, the scheme really isn’t always the best deal for everyone any more.
Expensive Hire Purchase Scheme
On the other hand, Motability's Hire Purchase scheme really isn’t good. At an APR of 12% for a new vehicle, the scheme is probably really only attractive to people who can’t obtain credit from anywhere else.
So the next year will become an interesting one for potential customers. There will be better and better deals on private vehicles as the industry gets more desperate, and I’m pretty confident that quarter on quarter we will see scheme prices rising. Taking into account that the allowance is currently running at about £205 a month, there will be some real choices for customers as to where to put their money to get the most from it.
Essentially, if you are after a small cheap car and need more than one driver insuring and no worries, then the Motability scheme is great. But I think for those that fall outside that bracket, then it will definitely be worth exploring other options. I know one or two people who now buy a new car every year with VAT exemption, and then sell the car after a year's worth of motoring for a price including VAT, and basically lose no money at all. And constantly have a new car! Most cars come with warranties and breakdown cover for at least a year included when new, so they pretty much get the same cover Motability offer, but without the disability-friendly trimmings!
If you would like to share any experiences of buying an adapted vehicle, send us the details by email.
You can find information about adapted vehicles, driving controls and access aids in our motoring section.
You can read about the work of the Disabled Motorists Federation here