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‘Safety-decontented’ company cars to bring risk and RV issues, warns AFP

Fleets are being warned to think carefully before buying new company cars with reduced safety specifications, as the semiconductor shortage rumbles on.

In response to the semiconductor shortage, some carmakers are sacrificing ‘non-core’ safety equipment

The Association of Fleet Professionals (AFP) said that while opting for such vehicles might help circumvent the current lengthy lead times, it brings issues from ethics through to risk management responsibilities and future residual values.

With the semiconductor shortage now expected to carry on well into 2022, fleets are facing “worst-ever” vehicle delays – FleetCheck warned earlier this year that delivery times of up to a year are becoming common.

In response, carmakers such as Ford and Volvo are building vehicles with fewer semiconductor chips, sacrificing advanced driver assistance technologies, such as lane departure warning and rear parking sensors.

But while the AFP says such features might be described as non-core safety equipment, fleets opting for such vehicles could be exposed in a number of areas.

Paul Hollick, AFP, chair: “Our view is that fleets should think carefully before buying these vehicles. From a risk management point of view, there is a moral and potentially also a legal issue in terms of operating some vehicles that are known to be potentially less safe than would normally be the case.”

But they could bring an impact to residual values too.

“Although safety equipment has not historically had a significant effect on vehicle residual values, the trade will know that these are ‘decontented’ cars and are likely to price them according in three or four years at disposal time. The impact on overall operating costs is difficult to assess,” continued Hollick.

He added that the ongoing vehicle shortages caused by the semiconductor shortage were prompting a range of issues for fleets.

“There are predictable problems such as ensuring that cars and vans that are being operated for longer are maintained to a level that ensures they remain fit for purpose. This is relatively simple but can be expensive and does require a lot of attention to detail.

“However, probably the most frustrating issues are the delays that are being caused to fleet electrification programmes. There are relatively large numbers of drivers with an EV on order who are facing the prospect of driving their existing diesel for another 6-12 months.

“Not only is there annoyance at the enthusiasm for EV adoption that exists being hindered but the practical fact that much higher benefit-in-kind taxation bills are being paid for much longer than expected. Additionally, many of these new EVs will now have life cycles that end beyond the current Benefit-in-Kind taxation tables, which adds a further layer of uncertainty.”

Speaking earlier this month to Autocar, Thatcham Research urged car buyers to hold fire on buying models with reduced safety equipment during the semiconductor shortage.

Matthew Avery, director of insurance research, commented: “We understand manufacturers are trying to shift metal and buyers are anxious for cars, but we wouldn’t want them to specify those vehicles. We would ask consumers to wait: when it comes to safety equipment, we think you should hold back because this technology may save your life.”

Earlier this year, the AFP warned operators to start planning ahead for potential disruption to new vehicle supplies.

Key advice for fleets includes initially asking manufacturers and leasing companies about how existing deliveries and future lead times are affected. Where vehicles are required to fill a gap, then short- or medium-term hire may be the best option, assuming vehicles are available. And it’s also called for the auto sector to keep fleets in the loop.

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.

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