Glos Guy, APs are not getting higher because people are handing back vehicles. It’s dealerships who get the advance payment so it’s not exactly motability losing out. Motability may lose out on the back end depending on the vehicle and mileage but I’d say 50% of customers do way below avg miles which will then add to value of a car come sale time. It’s all swings and roundabouts and motability are cash rich so I’m sure they can absorb a few losses of a vehicle. yes I was happy changing vehicles as I meant I got to keep more in my pocket so I guess that is all that mattered
Hi Azzy. I didn’t say that it’s the sole reason and, in the overall scheme of things, it will be a very small proportion of their costs, but as AP’s are the net costs to Motability of the total costs of running the car (including the profit that they make per lease) less the sacrificed benefits over 3 years that the customer surrenders (almost £10k in the case of PIP), it is an inevitability that the costs that they incur through early surrenders are wrapped up within all of that. It would be a very poorly thought through business model if it didn’t include all fixed and variable costs and given the vast profits that Motability Operations make I very much doubt that they are poor at business modelling!
I am prepared to be corrected, but I’m pretty sure that your comment that the dealers keep the AP is incorrect. My understanding is that the AP goes to Motability Operations. The dealer gets a fixed cash payment per order (it’s a few hundred pounds from memory), plus they benefit from each Motability order counting towards their dealership and manufacturer incentive targets, which can be significant They also benefit from the margin that they make on optional extras, as they are nothing to do with Motability Operations but, as I say, the AP is not retained by them as it goes to Motability Operations.