If you run company vehicles, I bet you have been faced with the scenario where a car is involved in an accident, but repairable, yet the driver is adamant he or she doesn’t want it back. And that’s a right dilemma.

Who am I to force them to continue driving a vehicle, the safety of which they feel has been compromised? What if I do persuade them to take it and somehow they are involved in a second major incident, because the car didn’t hold up so well, and are hurt?

Aside from the moral issue, you can bet there would be financial implications for the company, possibly resulting in a massive insurance claim and perhaps bad publicity. Sometimes you know damn well the driver has been looking for an excuse to offload the vehicle and choose something else, but if you refuse the request, they simply throw the health and safety line at you, and so it’s easier to cave in and reallocate them something else. And then you are stuck with a car which, frequently, no-one else wants either.

In the retail market, a survey of 1500 motorists found that nearly half replaced a car following even minor damage, and 15% took the write off money and didn’t replace the car at all. The inference was that there was a lack of confidence in the repaired vehicle, although equally it may just be a need to cut down on costs, or changing personal circumstances.

But the repair industry listened to concerns about poorly repaired vehicles. When the PAS (Publicly Available Specification) 125 accreditation was proposed, about seven years ago, I took a tour of Thatcham, where I was amazed by the challenges of safely fitting together several differing metals, in order to avoid a weaker end product. I came away wondering why I had made so much fuss about minor overspray on a panel when there could be so much worse lurking underneath, and I would have no idea. The purpose of PAS 125 was to specify safe vehicle damage repair processes, and it is now overseen by a committee drawn widely from key members of the repair community.

However it is a voluntary code and of course there are seasoned bodyshop repairers who protest that they have repaired cars for years, kept themselves up to date with new processes, and don’t see why should they bother with all the additional auditing and cost. Others accept that accreditation by an industry standard is key to obtaining customer confidence and use it as a differentiator in a competitive marketplace.

To some extent, I can see the problem from both sides of the fence. Insurance companies are being pressed to squeeze premiums yet pay for safe repairs. Repairers are encouraged to spend money on accreditation as well as constantly tooling up for new ways of working. Then the accident management companies come along, acting in fleets’ best interests, and expect them to have all of the standards but at no extra cost to the customer. There are too many parties with an interest at stake.

PAS 125 licence holders are regularly audited to ensure continuing compliance in line with an accredited quality management system. The system was embraced, and developed, and is now continuing to evolve into a full British Standard which will carry the BSI Kitemark.

All the time the industry looks after itself effectively, there should be no need for further government regulation. So it’s disappointing that whilst all that good work is happening, the issues of poor repair by any old Joe who fancies setting up as a bodyshop (as opposed to a decent repairer who chooses not to take up PAS125), are being passed from pillar to post as no-one will take responsibility for a clamp down.

I’d like to think this is less of a problem for fleet, where professionalism dictates appointing quality suppliers, but those poorly repaired vehicles may still shunt into ours out on the open road and the results aren’t going to be pretty.

As 2012 drew to a close, most car manufacturers were celebrating a strong year of retail sales growth in the UK. Against a backdrop of ongoing financial unrest and the economy contracting in the final quarter, the UK was recording a rise of 103,000 units, or 5.3%, compared to 2011 while pan-European figures showed a 7.9% decline and more than one million fewer cars sold in 2012 than the year before.

For the UK, it’s the biggest year-on-year growth since 2001, the largest sales figure since 2008 and makes it the only one of the “Big Five” European markets to grow at all during 2012. From a 63,000-unit lead, France dropped to the third largest European car market last year, while the UK became the second-largest market with a 104,600-unit lead over its neighbour.

While the implication is that the UK has become an island of stability, it’s caused a few raised eyebrows in the automotive industry, questioning where that extra volume has come from when the economy is struggling to come out of recession.

Has this volume been forced, with pre-registrations and volume redirected from a stagnant southern Europe, meaning we are yet again going to be hit with oversupply, with vast fields of unsold cars which, when they eventually hit the market, will destabilise values and cause some of the funding issues the industry saw five years ago? Have we learned any lessons from the past, or will the carmakers just keep repeating their mistakes, which could cost fleets millions of pounds?

But the SMMT is bullish about the growth. It says a favourable exchange rate has made it easier to be competitive in the UK, and it’s natural for manufacturers to focus on regions that are performing well. British buyers, the SMMT explains, are benefiting from attractive deals because they show a willingness to buy a new car in the first place.

One fleet industry expert, who didn’t want to be named, told Fleet World there was more to it than that: ‘The growth is due to very cheap product,’ he says. ‘Like five-year finance with no deposit, and all the other subsidised schemes available. You’d be stupid not to buy a new car.

‘It’s meant new is a better proposition than used. Used cars up to 18 months old have taken a massive hit, and what’s hurt the most is manufacturers are shoving out what’s left as pre-registered stock with a sufficient discount to compete with the new cars.’

Tracking this can be difficult. Not all pre-registered stock is being pushed out through auctions and dealers. One industry insider reports several manufacturers had been balancing their figures by registering cars at the end of the month, then delivering them the following month. These aren’t classed as pre-registered stock, and haven’t proved problematic for customers placing large orders, but each car becomes a depreciating asset as soon as it has been registered, with a knock-on effect for residuals.

Darren Wiseman, general manager – Manheim Seller Advance, says it’s altered the shape of the used market already: ‘The supply of nearly-new stock certainly rose last year, with an increase of 10% above 2011 figures. Due to the plate changeover, this increase peaked at 64% in October. We also saw a 10% growth in residual values in 2012,’ he explains.

‘The volume of nearly new stock is likely to continue to be buoyant throughout 2013. With low stock and high demand a continued trend, we expect residual values to hold up well.’

Limited supply is easing as post-recession 2010 and 2011 stock starts to filter through. Car supermarkets have had a strong start to the year, and Manheim’s data shows shortages of premium, retail-ready stock contributed to 75% of vehicles selling at their first time through auction during 2012.

Figures from BCA are also showing limited effects on residual values so far. During December, average values for nearly new stock climbed from £1,808 to £22,337, more than £2,000 higher than the same month in 2011. Across the whole year, average ages for nearly new cars fell slightly while performance against CAP dropped from 101.67% to 100.46%. Overall, average values were up 4.7% over the year to a new industry high.

BCA’s communications director, Tony Gannon, isn’t foreseeing any significant drops in the near future. Stock shortages haven’t dented the desirability of nearly new cars and, with the used car market totalling over seven million units, an influx of pre-registered cars can be absorbed into the market with limited effects on average values. As such, in the longer term these are likely to remain stable, he says.

Indeed, some view heavy retail discounts as a short-term way to limit a downward spin on residual values. One insider explains: ‘It’s been a great year, but costly for manufacturers. If you look at some of the manufacturers’ results, it’s difficult to work out what this discounting has cost them but it’s interest-free for five years and better for maintaining residual values. Theirs have risen because they’ve pulled out of heavily discounted markets.’

But the approach is clearly not sustainable. Discounts on new cars are likely to remain, but there’s a feeling in the industry that the growth in retail sales can only plateau. The fleet industry is watching closely: ‘We have always had a level of pre-registrations in the UK, but it looks like this was rising last year, so this is nothing new,’ says David Brennan, managing director at LeasePlan UK.

‘The impact on used values will be limited to the relative increase in pre-registrations, and at the moment there is a shortage of used car stock combined with fragile demand. This is currently in balance – any significant increase in pre-registrations could affect this.’

There’s also a possibility that fluctuations in exchange rates could have an effect on ongoing supply into the UK. This is favouring competitive imports at the moment, and helping manufacturers to offer high discounts. But Dr Paul Niewenhuis, director of the Centre for Automotive Industry Research at Cardiff University, says growth markets outside Europe aren’t always the solution.

He comments: ‘If you can send stuff to the growth markets in Asia and the BRICs, that is obviously worth a try, however, not all manufacturers can do this. Even those who manufacture there cannot easily import from the EU, or at least not competitively – for example Volkswagen in China and Fiat in Brazil. However, for the specialists, this is clearly what is keeping them going: Jaguar Land Rover and the Germans are thriving on sales in Asia, and to a lesser extent North America, which is showing some growth.’

But even within the UK, pressure is mounting on new car sales. Peter Cooke, KPMG professor of automotive management at Buckingham University, says buyers are increasingly questioning the need to own a car at all. Rising fuel and taxation costs and less disposable income are making it an unaffordable luxury for a lot of families, and in some parts of the UK buyers are facing a choice between food or fuel. Cooke expects this to continue for at least five years.

‘We’re coming up to a subtle change in the market, where the role of cars will be challenged. The car used to be the ultimate objective, now new is nice to have, used is good to have, but they cost so much to run, and people are aware of what they’re being taxed on.’

In the longer term, there may have to be difficult decisions made about coping with over-supply: ‘Ford has bitten the bullet, Renault has bitten the bullet, General Motors will as well in terms of bringing medium-term production in line with the market,’ Cooke explains.

‘Ford has been very brave being the first to jump, shutting its factory in Genk, moving Transit production from its historical site in Southampton, and we will see more of this over the next 18 months.’

Amid ongoing economic issues in the UK, there are clearly incentives encouraging buyers both in fleet and retail to replace vehicles, which has in turn contributed to last year’s market growth. But with demand still strong for good quality used vehicles, this has had little effect on average values, which have now reached record highs. Provided 2013 doesn’t bring even heavier discounts, the feeling for the short term is that there’s little for fleets to worry about and some good deals to be had.