£5 gallon looms again as petrol rises 26% in 12 months

Petrol prices are set to soar past 110p a litre – £5 a gallon – in the run-up to Christmas, according to industry experts.

It means that forecourt petrol prices will be at their highest since September last year and signals a 16% rise since the start of 2009.

And drivers will suffer further price rise misery on January 1, 2010 when pump prices rise again as the Government increases VAT back to 17.5% from 15%.

Experts blamed the price rises on speculators, who are stockpiling massive amounts of oil, as well as the falling value of sterling and September’s fuel duty increase.

The last time petrol prices were so high the price of a barrel of oil was $100. Now a barrel of oil costs just below $80.

The consumer website petrolprices.com has calculated that the cost of filling up an average family car with unleaded petrol will be £60.50 next month – £12.15 more than a year ago.

An AA spokesman said: “To the average driver, this is madness. Why are prices in an oil glut not falling rather than soaring to level never seen before at this time of year?

“We’ve got massive surpluses of oil, but it is being stockpiled at near record levels to keep the price up.”

With oil companies raising forecourt prices swiftly when the cost of crude oil rises, an RAC spokesman accused them of being slow to react when the price of oil drops.

A spokesman said: “It’s about time oil companies became more transparent with their pricing so that motorists can understand why these price rises happen.”

The AA says that the average price of a litre of petrol is currently 108.6p with a litre of diesel costing 109.8p. In January the average price of a litre of petrol, according to the AA, was 86.6p with a litre of diesel costing 98.7p. Prices reached their peak last July when a litre of petrol cost 119.5p and a litre of diesel cost 133.1p. (Daily Mail/AA: November 17).

GM chiefs hints that Vauxhall’s Ellesmere Port plant is secure

General Motors has given its strongest hint yet that the future of Vauxhall’s Ellesmere Port plant, which employs 2,100 people, is safe.

The manufacturer’s president and chief executive Fritz Henderson would not comment on the number of likely job losses as a he completes a restructuring of GM’s Vauxhall/Opel business.

However, he gave a strong vote of confidence in the Ellesmere Port plant, which has just started production of the new Vauxhall Astra.

Mr Henderson said: “Ellesmere Port is the lead plant building our new Astra. If that’s not a better signal about the future of the plant, I don’t know what it.

“I’ve been there a number of times and the team has done a remarkable job. We feel very good about the plant – so good that we made it the lead plant for the Astra. Actions speak louder than words.”

But, he did not comment on the future of Vauxhall’s Luton plant, which makes the Vivaro van in a joint venture with Renault and is perceived to be more vulnerable because its contract to assemble the vehicle expires in 2013.

Today (Tuesday, November 17), interim GM Europe Nick Reilly met Business Secretary Lord Mandelson to discuss Vauxhall’s future.

An announcement on the restructuring of Vauxhall/Opel is expected within a few weeks. (The Times: November 17).

Cost of motoring falls, but cash-strapped drivers feel no benefit

The cost of motoring for Britain’s 30 million drivers has fallen 5% (£123) in 2009 to £2,219 (2008: £2,342), according to RAC’s annual Cost of Motoring Index.

But, despite this small reduction, an RAC poll reveals that eight out of 10 cash-strapped motorists still believe that the cost of running their car has risen.

And in response nearly half of the 1,193 drivers surveyed (45%) have been making significant changes to their motoring lifestyle over the last year, such as reducing their car ownership and moving towards a one car household.

The drop in the cost of motoring has been driven primarily by the price of fuel. While the price of petrol and diesel has fluctuated over the last 12 months, costs have fallen overall by 10% to £1,184 per year (2008: 1,322). Diesel in particular has become much cheaper, with prices falling 14%.

The Index focuses on the day to day running costs that have a tangible impact on motorists’ pockets. This includes road tax, fuel, insurance, maintenance and breakdown cover.

For the first time the 2009 Index also calculates the annual running costs for used cars, which is £2,744, 24% (£525) higher than for new vehicles. The additional cost of maintaining used cars makes up the bulk of the additional cost.

RAC motoring strategist Adrian Tink said: “It’s been a tough year for motorists, and while it’s good news that the costs of running a car have slightly dropped in the past 12 months, it probably won’t feel like it at a time when the family budget is being squeezed from all sides. So despite the drop, the overriding desire for drivers is to cut back where they can.

“We’re seeing motorists really question how they use their cars. The trend towards the one car family shows how people are prepared to make fundamental lifestyle changes for the benefit of themselves, their families and their pockets. But such change for a lot of drivers is still merely an aspiration, with practical difficulties caused by work and family needs or a lack of alternatives, such as inadequate public transport, stopping them in their tyre tracks.” (RAC: November 17).

Pendragon reports trading ahead of expectations

The UK’s largest car dealer group, Pendragon, has reported trading ahead of plan for the four months to October 31.

The company said the outcome was boosted by the scrappage scheme, good cost control and an improved used car performance.

“We are confident that this year’s results will be in line with our current expectations and ahead of our original plan for the year,” the dealer group said in a statement to the London Stock Exchange.

New car sales at its Evans Halshaw volume marque division were 3% ahead of the same period last year as the scrappage incentive scheme gave a stimulus to sales at the lower priced end of the market. At its Stratstone premium brand division, new car sales were 5.2% ahead.

Pendragon said that used car sales for the period increased 2.9%, with margins showing significant improvement. (AM-Online: November 17).

Mercedes boss predicts tough start to 2010 UK car market

Mercedes-Benz UK managing director Dermot Kelly is forecasting a slow recovery for the UK car market.

“It will come back slowly. If you look at the recession of the 1990s is was like a bath tub: steep in one end and then slow out at the other. That’s pretty much how we see this one,” he said.

“I think we’re five years out before we see a return to 2.3 or 2.4 million units. In terms of the premium sector people still have money and they are still buying if the cars are at the right CO2 levels.”

Mr Kelly expects the recent extension of the scrappage scheme to boost the market during the final quarter of 2009 but warned that it could mark a ‘hiatus’ before the market ‘falls down to quite a low Q1’ in 2010.

He thinks the beginning of next year will be a challenging period for retailers and consumers. VAT is due to go up on January 1 and the new VED rates come into force in April, including the harsh first-year tax regime on all new cars.

Mercedes, like many car brands, will also be factoring in price rises from the start of the New Year.

As a result, Mr Kelly believes some customers will foresee these rises and some of next years’ sales will be pulled into this final quarter.

He concluded: “The exchange rate will drive most brands towards increasing prices in early 2010. The consumer will see all of this and realise that they could save 6% or 7% by buying a car in December rather than March. I think we’ll see a pull ahead of demand into November and December.” (Motor Trader“>Motor Trader: November 17).

Volvo set to increase car sales in 2009

Volvo Car UK is aiming to finish 2009 with increased new car sales, according to Kevin Meeks, network and business development director at Volvo Car UK.

He said: “We will sell more cars this year than last year which in this economic environment is unprecedented.”

Volvo has launched a range of DRIVe cars with lower emissions, refreshed the C70 and C30 range and is launching the S60 in 2010.

The company has also come up with initiatives to boost dealer performance, including Volvo Total Care, a customer relationship management tool and a new service contract programme, whereby customers can choose to pay up front for servicing or on monthly payments. (Motor Trader: November 17).

MP to push for improved fleet safety at Government departments

A senior Labour MP is to push for better fleet safety standards within Government following BusinessCar’s exposé earlier this year, which revealed only one department was implementing best practice on driver licence checks.

Labour party vice chair Dr Stephen Ladyman, a former Transport Minister, is set to formally raise the concerns over Government departments’ poor record of licence checking at-work drivers in parliamentary questions later this month.

Dr Ladyman will table a series of questions to Government departments asking what processes they’re following for employees driving at work, in the wake of

BusinessCar’s investigation this summer that found inconsistencies in driving licence checks, with only one of the 21 departments probed under the Freedom of Information Act following the Government’s best practice advice.

BusinessCar was invited to meet Dr Ladyman in Westminster after its exposé. He said: “I wasn’t surprised they weren’t doing it. It was clear to me when I was transport minister they weren’t doing it.

“The Government car service ought to set an exemplar and be the best practice, but I didn’t find any evidence of that among senior management. And as an MP, no-one has ever checked my licence. When I claim expenses I have to tick a box on the form to say the car’s owned and maintained by me, but that’s it.”

Dr Ladyman has pledged to meet BusinessCar again early next year to discuss the answers provided to his questions.

“A complete victory would be for Government to have best practice guidelines and all departments following them,” he said. (BusinessCar.co.uk: November 17).