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Motability is in business to make money I think we can agree on that but do they keep a list of much each customer brings into the company?
There are many who look after their cars very well and others who don’t. This could affect the price received on the sale of the car at the end of the lease.
Obviously if you have a wheelchair or a scooter its likely there will be dents, chips, scrapes etc that are unavoidable.
Mileage, a car that comes back after three years with 60,000 miles on the clock is likely to sell for less than one with 15,000 so a fairly big financial discrepancy in this instance.
Customers who return lease after lease, if you have been a customer for years, even decades, it’s likely you have helped towards operating profits during this time. Where as those who dip in and out don’t offer so much to the business.
So do Motability look at this or do they just look at the bottom line?
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There are notes on each scheme users accounts, that mention how many early terminations and the like you may have had.
Motability allow upto 60,ooo miles as part of the contract and a mileage charge if you go over, so unlikely there are concerns here, as it within the contract.
Bumps chips and dents are covered by the GCB/GCP, so I guess it will be noted if you aren’t permitted this payment.
Even if the 60,000 limit and the extra cost, if you go over it, is part of the contract, it still is a big difference if someone is handing back a car that has only done between 10,000 and 15,000 miles. Which means that the person has had less use out of the car, giving Motability a significantly higher profit on the car, the same as if the person puts optional extras on the car.
I am not sure if Motability have to respond to FOI’s, but if they do then there is nothing to stop people asking for a copy of any information that Motability hold on their records regarding the person’s car history, if it is held.
Years ago (pre 2000) I colleague of mine was banned from Motability as he had not taken care of his car during his lease.
I don’t know how long that lasted, but it’s always stuck with me – just take reasonable care of your car and you’ll be fine.
Another factor is the type of car you get. We have a ULEZ complaint mild hybrid petrol estate. It’s very much in demand, we estimated Motability paid around £20-£21k for it. It’s done 17,000 miles in almost 3 years, they are being advertised for over £19,000 on Autotrader. Motability will make a pretty penny on our car. We should be classed as diamond customers for the amount of money we make them.
I lived around the corner from someone who had at least 4 Motability cars whilst I knew him. The most any of them had done when returned was 2100 miles (that is two thousand and one hundred) . He hardly used the cars, instead he just parked the car outside his house to prevent anyone else using the space.
He was (and still his) well known in the area for all the wrong reasons !
Motability finance us a car based on 60k miles over 3 years and if we return it in good condition, we get a bonus. This is what they base their bottom line on. If we return the car with 5k on the clock in showroom condition, we don’t get extra rewards.
Motability keep a comprehensive record of each customer and every contact made with them. Standard for any large organisation. The only things relevant to them are any aspects that raise a flag ie excessively high mileage on more than one car, excessive insurance claims, or as Big Nanas mentioned, returning cars as skips.
Motobility have hundreds of thousands of cars on the fleet so work on formulae so most of us sail along unnoticed unless we raise a flag. Being better than they expect will not bring any extra reward!If Motability are able to sell the car on after 3 or 5 years and get over 40% (used just as a rough example for the exercise) above the book price for a 3 or 5 year old car in good condition with average mileage Is there then a case for the Motability customer to get a 25% return on any further profit made over and above the book price + 20% that Motability made in extra profit.
For example if the returned car was expected to fetch £10,000 which was built in to the original AP residual calculation and goes on to get £14,000 due to the exceptionally low mileage, showroom condition and option extras paid by the customer.
Then allowing Motability to get £12,000 (including the book price plus an extra 20%) and then split any further profit 75% (Motability) and 25% (the customer) giving Motability an extra £1,500 totalling £13,500 and giving the customer a further £500 towards their next car.
I hope the calculation makes sense to people, as a rough example.
I don’t understand why mileage is in the equsion, because Motability calculate what the expected value after 3 or 5 years, the AP required, based on 20, ooo miles per annum or 60,000 miles after 3 years. Regardless whether someone sends the vehicle back with 15,000 or 60,ooo we will get £250. Motability will ever get the amount they expect based on £60,000 miles or more if a vehicle is returned with average mileage, swings and roundabouts. However in most cases they will be getting a greater amount in return, as I imagine only a few users do get near to the maimum allowed mileage.
Glass’s guide, which is what the trade use, still base “average” mileage on 12,000 miles a year. The RAC on the other hand base it 10400 miles, roughly 28 miles per day. However this isn’t as clear cut as first seems, because the mileage is spltt across the fuel types to come up with that figure – 12,500 miles a year for diesel cars, 9,400 for electric cars and 7,500 for petrol cars, which is bullsh!t in most cases.
I do between 13,000 & 15,000 miles a year or an average of 14,000 a year 42,000 over 3.
Kezo, I am surprised at you, I thought you had more experience than to make a statement like that. .
Are you seriously trying to tell us that Motability or a dealer or a private sale is ever going to (ask) get as much for your 42,000 mile car or a 60,000 miles car (all other things being equal) as Motability, a dealer or a private sale is going to get back on a car that has only done 12,000 miles, so how could millage possibly, not be a factor in my point and Motability’s resale value and profit.
I think you are putting up a point of view coming from someone that does 42,000 miles and had good use wearing out the parts rather than some more disabled or/and less mobile person who has only been able to get the 12,000 use out of their car, which beyond doubt Motability will get a better return on.
I am not knocking anybody who is able to use their car to their benefit and get as many miles out of it, in fact that is great and what it is there for, but please don’t try and tell us it will be as profitable to Motability reselling it as the person’s car, who does much less mileage such as 12,000 miles, (all other things being equal) and consequently gets less value and use from their car.
Remember, millage consideration was only part of my point and suggestion. I will be interested to hear from more people and it would be helpful and relevant to hear what milage other contributors do per year, to put the suggestion into perspective.
Kezo, I am surprised at you, I thought you had more experience than to make a statement like that. . Are you seriously trying to tell us that Motability or a dealer or a private sale is ever going to (ask) get as much for your 42,000 mile car or a 60,000 miles car (all other things being equal) as Motability, a dealer or a private sale is going to get back on a car that has only done 12,000 miles, so how could millage possibly, not be a factor in my point and Motability’s resale value and profit. I think you are putting up a point of view coming from someone that does 42,000 miles and had good use wearing out the parts rather than some more disabled or/and less mobile person who has only been able to get the 12,000 use out of their car, which beyond doubt Motability will get a better return on. I am not knocking anybody who is able to use their car to their benefit and get as many miles out of it, in fact that is great and what it is there for, but please don’t try and tell us it will be as profitable to Motability reselling it as the person’s car, who does much less mileage such as 12,000 miles, (all other things being equal) and consequently gets less value and use from their car. Remember, millage consideration was only part of my point and suggestion. I will be interested to hear from more people and it would be helpful and relevant to hear what milage other contributors do per year, to put the suggestion into perspective.
I think you may have misread my comment 🙂
Of course a vehicle with with lower (average) mileage will command a higher resale value but, thats not really what I’m getting at – Motability work out the figures including AP, based on a 3yr contract of 20,000 miles and the return they expect to get for the vehicle after 3yrs forgetting lease extensions. Due to how motability work out their figures, a vehicle with low mileage, will return more value, than a vehicle that had covered what was within the contract. Correct me if I’m wrong here but, I would imagine a larger amout of vehicles are returned at the end of the lease with average or below miles on them. This has nothing to do with how your or I or even Tom, Dick or Harry enjoy or benifit from having a scheme car. It simply means Motabilty will in a larger majority of cases be getting a better return for the vehicle, than the contract specifies or within their initial financing firgures.
As for us, we drive a near 500mile journey every 3 weeks to see my sick father, take my daughter who is the claimant out every weekend, either to the caravan or on long drives as it calms here, giving here some peace and quite getting away from it all, which she loves nothing more. We also take her to school and back, which unfortunately isn’t just around the corner, and thats not including everyday travelling for shopping going for a meal etc, the mileage soon racks up. Yet I stay within the contract and my cars go back basically as new.!
Kezo, you did not have to explain or justify, your milage or your usage in your second response, as it is totally your business and exactly part of why Motability exists.
However you did not explain in your response, your original response which stated that “I do not understand why milage is in the equation” of course it must exist in the equation, and all I am saying is that for Motability Operations who make over a Million pounds a year profit and have over a Billion pounds in profit in the bank (excluding counting their fleet) based on their buying, leasing to Motability customers with their AP’s, and profitable sales on of their members cars, then why can’t that be reflected on and distributed on to each Motability contract with their customer/members and let their customers benefit from them having a low millage, keeping their cars in pristine conation and adding costly optional extra to their cars, which increases the value to Motability selling on the cars, but has no additional financial benefit beyond the basic £250 GCB to their customers, who they were set up in 1977 to provide for.
However you did not explain in your response, your original response which stated that “I do not understand why milage is in the equation”
By that, I simply meant, I see no point of mileage being in the equation of discussion, simply because mileage allowance stated within in the contract, will be in excess of what most scheme users will travel with 3yrs.
Of course it must exist within the contract as is excess mileage charge, as it is with other leasing companies
all I am saying is that for Motability Operations who make over a Million pounds a year profit and have over a Billion pounds in profit in the bank (excluding counting their fleet) based on their buying, leasing to Motability customers with their AP’s, and profitable sales on of their members cars, then why can’t that be reflected on and distributed on to each Motability contract with their customer/members and let their customers benefit from them having a low millage, keeping their cars in pristine conation and adding costly optional extra to their cars, which increases the value to Motability selling on the cars, but has no additional financial benefit beyond the basic £250 GCB to their customers, who they were set up in 1977 to provide for.
I think you are looking to deep into what my comment meant to get across. However to answer this, it would mean Motability doing individual contracts, individual AP’s with additional paperwork to that of a blanket one size fits all contract. Who is going to do this paperwork, the dealer and would they want an additional for doing so? The better and easiest way of achieving this would be keeping to a one size fits all contract but, lowering the mileage allowance, to 10,ooo, 15,000 or whatever is deemed appropiate. Those who then exceed “x” limit pay a excess mileage charge. Either way it makes little difference to me due to what I deem a prioity, must every 3 weeks, which has effectively doubled my normal visits and one day my mileage will effectively revert back to around average.
Kezo You constantly seem to unintentionally or intentionally seem to miss the basic fact that irrelevant of the contract, I am suggesting that we need to move forward, that if a person uses significantly less millage (huge contributary of the value of any second hand car sale), or/and keeping it in near showroom condition and possibly adding hundreds or even thousands of pound of optional extras, then when that Motability customer hands back that car, surely they should financially gain beyond the basic £250 GCB. Also when Motability sells on that car, especially if it is to the original customer, the customer should also benefit. But if the original customer who then wants to go on and buy their car, they not have to pay a financial excess for any of the three beneficial, factors that they have contributed to the value of the car.
Kezo You constantly seem to unintentionally or intentionally seem to miss the basic fact that irrelevant of the contract, I am suggesting that we need to move forward, that if a person uses significantly less millage (huge contributary of the value of any second hand car sale), or/and keeping it in near showroom condition and possibly adding hundreds or even thousands of pound of optional extras, then when that Motability customer hands back that car, surely they should financially gain beyond the basic £250 GCB. Also when Motability sells on that car, especially if it is to the original customer, the customer should also benefit. But if the original customer who then wants to go on and buy their car, they not have to pay a financial excess for any of the three beneficial, factors that they have contributed to the value of the car.
The second part of my comment covered this but, what would you do? As regardless to any changes made, will definately involve new or change of contract T&C’s at next lease, whether individual based, reduced mileage allowance or you get £1000gcb and I get £250 for doing more miles. would this then, need to be tiered. to account for low, mid and high milers?
Adding hundreds or thousands of extra options, is optional at the users discretion. However I think you will find, Motability see it as an external affair between you and the dealer. Neither are covered by insurance in the event of a loss or write off. The only way I can see options being covered in this sense, is if they are listed as optional packs but, that is up to the manufacture to offer them to motability.
Equally if a car has too low a mileage below average, it can have a similar knock on effect to its value as acar with a average or just above mileage on. What is often a overlooked downside of a low mileage car, is that it has most likely spent its time starting and stopping around town and because it has done such short journeys it doesn’t have a chance to get to operating temperature. This can wear components faster than a car that has spent its life getting upto temperature on lnger journeys or cruising on a motorway. It could also mean it may have spent more time in car parks, where door dings and scratches are more likely to occur. You could argue a low mileage car will be more likely to get a better price than a car that has a higher than average mileage, but this is by no means guaranteed. Thats not taking into account the majority of Motability cars go to private traders or auctions at a lower price anyway.
If the car is sold to the original customer, I agree there should be some financial incentives but Motability won’t look at it like that, rather as they are loosing a customer.
I have been saying for years that low mileage members should be paid an additional amount similar to the good condition bonus. High-mileage drivers should not necessarily be charged extra they could be the base mileage and anything less than 60,000 miles over the three years could be given money back. Groups of 0-5000, 5000-10,000 and 10,000-15,000 would seem fair.
The only person who got all his work done by Friday was Robinson Crusoe.
Anything i post over three lines long please assume it is an article lol.I have been saying for years that low mileage members should be paid an additional amount similar to the good condition bonus. High-mileage drivers should not necessarily be charged extra they could be the base mileage and anything less than 60,000 miles over the three years could be given money back. Groups of 0-5000, 5000-10,000 and 10,000-15,000 would seem fair.
I agree but, it can be complicated from a selling point of view, a very low mileage car can have equal wear to the running gear as a car with 3 or 4 times the mileage and have a knock on effect to it overall value. If I were buying a 3 year old car and one had 10,ooo on the clock and the other 30-40 I’d buy the higher mileage one, soley because of the chances of it being run at operating temperature more frequeently than in stop start traffic. Dealers aren’t daft.
I doubt Motability will do 5,000 mile increments, it wouuld have to be upto 20, 40 and 60k miles. Would the reward be great enough to be worth the change?
Kezo, I think you are over thinking this millage thing. I merely said it was a factor, like if someone adds a panoramic roof and leather seats, that car is going to fetch a higher price, so why should Motability Operations be the only one to benefit and I think we can acknowledge that they benefit big style to the tune of over One Million a year.
There is absolutely no additional paper work by any dealer, (or any calculation of milage) as all I am talking about is the final price and what that extra profit was and the only extra work is by Motability giving a percentage back to the customer of excessive profiteering. I am quite sure Motability Operations is able to cope with the very slight extra paperwork, they have the Billions to higher a few extra staff.
At the end of the day no one needs to be able to put their finger on why the car made x profit over the book price, they will only need to know it did, as there could be many factors and we know that at present Motability Operations are the only one to financially benefit from it.
There are so many factors to consider when deciding whether to buy a 3 year old car with 60,000 (I don’t consider that high mileage – BTW) miles on the clock or one with 15,000 miles. For a start service history and condition are far more important than a number on the dash. IMO over a 3-5 year period motability tries to skimp on a lot of maintenance issues between customer and dealers anyway. Mileage has no indication as to how good the car will be. It doesn’t tell you if it has been regularly revved high from cold, banging over potholes and ‘sleeping policemen’ etc or a garaged car that came out once a month for a good long trip. Mileage only matters when it affects the ability to buy a warranty. Short journeys in the old days only mattered because of fat carbs and petrol washing down the bores but modern injection really only delivers enough fuel to burn efficiently otherwise it would wreck the cat. Common sense tells us to drive under a certain rpm until the car is warm but most cars are warm within a few miles so seriously, what difference is there going to be. Low mileage does not mean it is a better car any more than it means a high milage car is going to be more reliable. Of course – that is part of the gamble you take buying a second hand car, you simply don’t know.
All the above of course requires Motability to individually manage (micro-manage) each returned vehicle and the realisation each individual vehicle makes – which they don’t. Nor could they really be expected to do it for circa 3000 vehicles per week (based on their stated buying of 200,000 vehicles per annum on a reasonably static customer base). They are all aggregated.
Rather than individually managing Fred Blog’s returned Ford Focus (very low mileage VGC etc), it is sent to auction as part of a batch (if the dealers don’t want first dibs via the mfl Direct scheme).
This auction batch will have an overall expected price.
So, whilst Fred Blogg’s returned Focus may exceed the expected price at auction, Joe Smith’s 60.000 mile Focus may not etc etc.
However, to add in a further illustration, what if it is a quiet auction day (lots of stock but few buyers) when Fred’s Focus is sold and only sells for a minimum price. Yet, Joe’s crap Focus is sold the following day with loads of buyers and less stock present and exceeds its expected price?
This is why returns are aggregated.
It is the way big businesses do it to even out variables (thus cash flow) and keep costs down by not micro-managing each individual vehicle.
In Motability’s evolutionary circle, it also equates to the GCB also being aggregated (provided the vehicle meets the minimum condition based on the dealership’s ‘ticky box’ report). It doesn’t matter if Fred’s vehicle way exceeds the minimum condition necessary to generate the GCB and Joe’s simply meets the minimum condition. All get paid the same GCB.
For Motability to individually micro-manage each returned vehicle at such volumes would cost Motability (and ultimately the customer) a fortune.
If you’re not happy that, as a low mileage customer, you’re not adequately rewarded or recompensed then don’t agree to the contract and lease your vehicle through a commercial leasing company instead. Agreeing and contracting to a low mileage will get you better figures figures with a commercial leasing company. We all have a choice.
I merely said it was a factor, like if someone adds a panoramic roof and leather seats, that car is going to fetch a higher price, so why should Motability Operations be the only one to benefit and I think we can acknowledge that they benefit big style to the tune of over One Million a year.
lt is well known that, not all added options fitted to a vehicle will guarantee an increase in value when you come to sell, especially cosmetic ones. Choice of paint does.
Even Motability state “Optional extras are not included with the lease but you can add optional extras if you wish. You will be responsible for the costs of this.”
However in many area’s we are stuck between a rock and a hard place, that in many cases we don’t get the luxury of choosing fully speced top of the range cars.
There is absolutely no additional paper work by any dealer, (or any calculation of milage) as all I am talking about is the final price and what that extra profit was and the only extra work is by Motability giving a percentage back to the customer of excessive profiteering. I am quite sure Motability Operations is able to cope with the very slight extra paperwork, they have the Billions to higher a few extra staff. At the end of the day no one needs to be able to put their finger on why the car made x profit over the book price, they will only need to know it did, as there could be many factors and we know that at present Motability Operations are the only one to financially benefit from it.
It is fallacy to believe Motability will get over the book price, it would simply lower the profit margin of the selling dealer agains’t an equivalent car. Motability may think this is the case and try it on, but its one of the reasons main dealers don’t buy scheme vehicles. The vehicle is then offered to a trader and then an auction if they aren’t interested. it does not need secnd guessing an auction returns the least amount.
We know Motability buy’s its vehicles at a discounted price from the manufacturer and doesn’t pay the VAT element. What we can surmise and I’m not alone here, is we pay the depreciation or part of, based on the low payments we make in comparison to other leasing companies. Motablity after 3yrs then sell the vehical at book price based on what the car would of cost retail. The difference is then what they actually paid for the vehicle, The VAT saved and what we paid of that period, minus any grants. I would imagine that accounts to a tidy sum and I’m one of the first to complain about their profits and pay structure.
But, whilst I agree we should be getting more than the now £250 GCP or whatever they call it now as the £600 was nicer. However are we actually being greedy, after all its an incentive to return our cars in good condition. If the majority returned vehicle in bad condition, I would imagine it would have a negative effect on AP’s. We also get more favourable terms compared to if we leased privately.
What I definately don’t agree with is, the amount of money that goes to charity external to the scheme. I strongly believe, this money should be going back into the scheme in some way. Whether that is to lower AP’s provide us with more choice or even a the possibilty of a new car payment at each renewal, even if linked to how you return your vehicle.
I don’t know mate 🙂
All the above of course requires Motability to individually manage (micro-manage) each returned vehicle and the realisation each individual vehicle makes – which they don’t. Nor could they really be expected to do it for circa 3000 vehicles per week (based on their stated buying of 200,000 vehicles per annum on a reasonably static customer base). They are all aggregated. Rather than individually managing Fred Blog’s returned Ford Focus (very low mileage VGC etc), it is sent to auction as part of a batch (if the dealers don’t want first dibs via the mfl Direct scheme). This auction batch will have an overall expected price. So, whilst Fred Blogg’s returned Focus may exceed the expected price at auction, Joe Smith’s 60.000 mile Focus may not etc etc. However, to add in a further illustration, what if it is a quiet auction day (lots of stock but few buyers) when Fred’s Focus is sold and only sells for a minimum price. Yet, Joe’s crap Focus is sold the following day with loads of buyers and less stock present and exceeds its expected price? This is why returns are aggregated. It is the way big businesses do it to even out variables (thus cash flow) and keep costs down by not micro-managing each individual vehicle. In Motability’s evolutionary circle, it also equates to the GCB also being aggregated (provided the vehicle meets the minimum condition based on the dealership’s ‘ticky box’ report). It doesn’t matter if Fred’s vehicle way exceeds the minimum condition necessary to generate the GCB and Joe’s simply meets the minimum condition. All get paid the same GCB. For Motability to individually micro-manage each returned vehicle at such volumes would cost Motability (and ultimately the customer) a fortune.
Thank you BG for your perfectly simplified comment 🙂
I really don’t think it would be too difficult to work a system that would reward members who don’t use their car that often. When the sales guy checks the car to pay the GCB he has a look and says by the way the car has done X mileage. The agent who takes the GCB then adds on an LMB (low mileage bonus) seems simple to me.
If you have ever tried to buy your Motability vehicle the first thing they ask before giving you a price is “what is the mileage” so they are using it to adjust the price, up or down depending on how many miles its done, because they know the mileage affects the price.
As ever guys let’s not take this personally, it’s only members tossing ideas out there and fuelling discussion no offence is meant to high mileage users.
The only person who got all his work done by Friday was Robinson Crusoe.
Anything i post over three lines long please assume it is an article lol.I really don’t think it would be too difficult to work a system that would reward members who don’t use their car that often. When the sales guy checks the car to pay the GCB he has a look and says by the way the car has done X mileage. The agent who takes the GCB then adds on an LMB (low mileage bonus) seems simple to me. If you have ever tried to buy your Motability vehicle the first thing they ask before giving you a price is “what is the mileage” so they are using it to adjust the price, up or down depending on how many miles its done, because they know the mileage affects the price. As ever guys let’s not take this personally, it’s only members tossing ideas out there and fuelling discussion no offence is meant to high mileage users.
As @BigDave said, there is no guarantee that the lower mileage vehicle will command a higher return.
The scheme is exclusive for disabled people claiming elligable benifits, to become mobile. Should we really be discussing this, making the low mileage gang feel more priviledged, w chen Motabilty have an inclusive deal, that happens to allow 20,000 miles. How many users actually do that mileage. Its a drop in the ocean in comparison and will have little to no affect how Motability run a business overall. Above all each scheme user willingly under no pressure sign up to Motability contract T&C’s
It could be said those that do ultra low mileage aren’t taking full benifit of the scheme and would be better value to get a taxi or cat a bus. Thats not for me to decide!
We are going down a dangerous road, because it won’t end here, where one group feel they should be more privileged than the next. Where will this lead next – believing some are more privileged and should get more in return, just because they dont tow a caravan or one should get more in return, just because the next has had an early termination for health reasons the…..
Dangerous road!
Kezo has made a very valid point here. This post has galloped along with lots of speculation using data we know nothing about and some suggestions which aren’t practical in the real business world.
However, the premise of more money for less mileage used goes against the grain of what Motability is. It provides vehicles to people based on medical criteria, not financial. Whatever your circumstances, you qualify solely on medical eligibility. Everyone is equal in choice, AP and GCB. To seek to reward/incentivise individually is wrong.
This service get attacked in the media and you can imagine the headline writing itself. ‘Free mobility car user wants more money because he hardly uses it’.As Kezo said, Dangerous road.
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