Selling Environmentally Friendly Cars - tap into the green economy

Selling Environmentally Friendly Cars
     - tap into the green economy




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Published by
Miljöfordon Syd
Editor: Jonas Lööf


The authors
Jonas Lööf
Jonas is the founder member of the regional Clean Vehicle Association, ‘Miljöfordon Syd’,
where he also acts as Operations Manager. He is editor for ”Clean Vehicle”, an information
paper with the aim to increase the knowledge and interest about clean vehicles, biofuels
and better use of our cars by the public. He managed the project ‘CO2- Effective Car
Dealers in Kalmar County’, the results of which are the basis for the EU-project, ‘Clean
Drive’. This aims to encourage car dealers to sell more energy efficient and climate friendly
cars all over Europe.

Mattias Goldmann
Mattias Goldmann has a background as a member of the board, municipal inspector and
press officer for Green Motorists. He has worked to develop emission-reducing projects in
East Africa and has a political background from municipality to national parliament levels.
He was previously a freelance journalist for a variety of publications, including “Teknikens
Värld” (a technical magazine) and Auto Zeitung. In his youth he practiced in a garage.
Mattias has one of the largest collections of car brochures in Sweden.




The sole responsibility for the content of this report lies with the authors. It does not
necessarily reflect the opinion of the European Union. Neither the EACI nor the
European Commission are responsible for any use that may be made of the
information contained therein.




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The Clean Vehicle Boom – forgotten heroes

The environmental movement has repeatedly been honored to have played a critical role
in the green car boom in Sweden. However, the most important players we find are at car
dealers like; European Motor, Carstedts, Bilia, Hermibil, Holmgrens, and many other
showrooms across the country. Without these car dealers, the Clean Vehicle boom would
still be a writing-desk product with a few enthusiasts who wanted to combine driving with
environmental considerations.

Think of car dealers and the probability that you think "environmental hero" is quite small.
It is a big underestimate and misjudgment. This book is based on meetings with hundreds
of dealers, with a huge experience of how to sell cars and encourage repeat business. For
many dealers, it is a vocation rather than a profession to sell the car, and more and more
are interested in selling cars that their grandchildren can also be proud of.

A recent major change to the car market has been the impact of the environmental car.
Clean cars under the conventional definition have in recent years accounted for about one
third of new sales, sometimes more than that. At a time when government benefits are
being eroded, there is a falling market share trend, municipalities with their own incentives
however, maintain sales figures that are significantly higher than in those without local
incentives.

The environmental car phenomenon is still a new and different challenge for the industry.
Motor vehicle sales are no longer about selling that which can only solve individual or
family problems, but also those of society. According to The Swedish Environmental
Protection Agency, Road Transport Administration and the Consumer Agency; a gas car
powered by biogas reduces the carbon footprint by 80 percent, and the fuel-efficient
diesel and petrol cars by 40 percent compared with the conventional car; the ethanol car
then halve the climate impact!

Today's definition of clean vehicles and the current market for these vehicles is not yet
distinctly defined. Consumers are becoming more aware and making increasing demands.
Local authorities, parliament and the government tightens definitions and highlights an
increasing number of specifications for what a clean vehicle is. The Swedish Consumer
Agency is working to implement an EU-energy label of vehicles much like that in place for
our refrigerators. The EU Commission sets tough demands on all new car sales, which on
average will be down to 130 grams of carbon dioxide per kilometer by 2012. This
requirement separates the wheat from the chaff among dealers, which of them will
actively contribute to the goal and who will drag their feet? But it is not only about
tightening up what we already know to expect. Now electric cars and hybrids will also be
introduced, with new demands on the car salesman – and, not least, new opportunities.

The car dealers that pioneer with new technologies and meet new consumer and
regulatory requirements will fare much better than those that, at the last moment, to try to
convert.

This handbook gives practical tips for car dealers who want to help move the car forward
as a part of the solution, rather than part of the problem. How the motor vehicle is
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designed, how the cars are advertised, what is true and false in the debate, what
accessories are appropriate to highlight and how all the staff are involved are just some of
many important questions. This publication examines all of these drawing upon the
research into concrete examples from the Swedish motor trade

Together we make the car greener!
Mattias Goldmann and Jonas Lööf




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Content
  The authors ........................................................................................................................................ 2
  The Clean Vehicle Boom – forgotten heroes................................................................................... 3

Content ......................................................................................5
  Environment sells!............................................................................................................................. 7
  What car should I sell?...................................................................................................................... 8
   2010 Swedish Car Sale Statistics ............................................................................................... 8
   2009 UK Car Sale Statistics ......................................................................................................... 8
   The top 10 most popular cars sold in the UK 2010 ................................................................ 9
   Newly sold clean vehicles by type ............................................................................................ 9
  What is a green car?........................................................................................................................ 10
   Government vehicle purchases .............................................................................................. 11
  Green car benefits ........................................................................................................................... 12
    Vehicle Excise Duty ................................................................................................................... 12
    Electric Vehicle – Financial Supports ..................................................................................... 13
    Exemptions from Congestion Charge ................................................................................... 13
    Parking benefits ......................................................................................................................... 13
    Fuel price .................................................................................................................................... 14
    Fuel efficient versions ............................................................................................................... 14
    Taxation of different fuels ........................................................................................................ 15
    Trade-in Value ............................................................................................................................ 15
    Image ........................................................................................................................................... 16
  Electric cars ..................................................................................................................................... 16
    Financial incentives ................................................................................................................... 17
    Information ................................................................................................................................. 17
    Charging stations/stands ......................................................................................................... 18
    Customer groups ....................................................................................................................... 19
    Sell, lease or a combination? ................................................................................................... 20
  Light duty vehicles .......................................................................................................................... 20
  Conversion of existing cars into renewable fuels ........................................................................ 22
  Influencing the general agent ......................................................................................................... 22
  Affect the manufacturer .................................................................................................................. 23
  The Showroom ................................................................................................................................. 24
    The impact of the showroom .................................................................................................. 24
    How do the customers find the showroom? ........................................................................ 26
    Train the salesmen .................................................................................................................... 26
    Involve all employees ............................................................................................................... 27
  Company Cars ................................................................................................................................. 28
  What are your goals? ...................................................................................................................... 29


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Environmental Awards .................................................................................................................... 31
VIP arrangements ............................................................................................................................ 31
Events ............................................................................................................................................... 32
Sponsorship ..................................................................................................................................... 32
Environmental information on the Web ......................................................................................... 33
Environmental information in the showroom................................................................................ 33
Advertising ....................................................................................................................................... 34
Accessories – After Sales Service ................................................................................................. 35
  Positive equipment ................................................................................................................... 35
  Inconclusive equipment........................................................................................................... 38
Negative equipment......................................................................................................................... 38
  Complementary Activities ....................................................................................................... 39
Offers ................................................................................................................................................ 40
  Climate compensation ............................................................................................................. 42
  Membership ............................................................................................................................... 42
  Economical incentives and benefits for green car owners ................................................ 42
Used cars ......................................................................................................................................... 43
Online shopping .............................................................................................................................. 43
Service .............................................................................................................................................. 43
  Materials ...................................................................................................................................... 44
  Sorting (Recycling) .................................................................................................................... 44
  Collection .................................................................................................................................... 44
  Replacement vehicle................................................................................................................. 44
Environmental work in a holistic perspective ............................................................................... 44
  Increased sale of green cars..................................................................................................... 46
  Increased sales of cars with lower carbon emissions .......................................................... 46
  Environmental control of the entire business ...................................................................... 47
  Better use of the cars ................................................................................................................ 47
Frequently asked questions ........................................................................................................... 48
  General questions about green-cars...................................................................................... 48
  Questions about fuels ............................................................................................................... 50
  What about filling stations abroad? ....................................................................................... 53
  Questions about electric cars .................................................................................................. 53
  Questions about fuel-efficient petrol and diesel cars ......................................................... 55
Good examples ................................................................................................................................ 56
  Eco-driving race – increase interest in green cars and the environment ........................ 58
  Annual review of municipal and county councils fleet-vehicles....................................... 60
  Read more................................................................................................................................... 62
Thanks .............................................................................................................................................. 62




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Environment sells!
When the company with a good reputation in social responsibility and quality work are
faced with environmental questions about their use of fuel-guzzling vehicles as company
cars, a damaging hypocrisy will be revealed. Top politicians who do not drive green cars
will also be hung out. When business managers are interviewed in magazines and
newspapers often their choice of car is presented as a symbol of their green responsibility.

In recent years it has been possible for both individuals and businesses to gain positive
recognition for choosing a green car. However as the popularity of the green car grows,
the green car owner draws less attention by merely having such a vehicle. The green
vehicle is becoming a social norm and this means there is a growing general expectation in
society that you have one. The pressure is on to meet this expectation and there are
negative implications in terms of public image for those who choose models that do not
reflect the emerging social standards.

The dealer helps its customers make the right choice. Otherwise, the customer will not
return, and the customer's acquaintances will also choose another car dealership.
Therefore, car dealers must understand this new logic and act upon it.

The UK car dealership can of course enjoy the fact that it is becoming more and more
unusual to have to guide the customers towards the green car. It is not often perceived as
weird or less attractive anymore. Many businesses and industries have already decided to
phase out non-green vehicles. Public bodies are moving to electric vehicles or using
biofuels in their vehicles. More and more Local Authorities will phase out completely the
fossil-fuel powered cars and government authorities should in principle just purchase and
lease clean cars.

The environmental version is no longer the exception but the rule for several car models.
Examples from Sweden show that the Ford Focus is more common in the ethanol than the
petrol version, likewise the Saab 9-3. The Volvo V70, is the best-selling car in Sweden,
particularly the green car ethanol and diesel versions, with the petrol version rapidly
becoming redundant. Volkswagen Passat is the second-best selling car in Sweden, and it is
the gas version that dominates. Two out of three Mercedes B-Class sold have the extension
NGT; Natural Gas Technology.

The green car trend is here to stay - and those who have most to offer in the area attract
more customers. As the market develops, the bar is also raised for the minimal
environmental requirements, and selling arguments.


“The green car trend is here to stay - and those who have most to offer in the area
attracts more customers”




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What car should I sell?

Traditionally, the environmentalists have asked the car dealers to sell vehicles that are so
small, light and with as weak engines as possible. It is no longer generally true. An ethanol-
powered Ford Focus Flexifuel has much lower environmental impact than a diesel-
powered Ford Fiesta (the top selling car in the UK); a biogas-powered Opel Zafira has
significantly lower environmental impact than a petrol-powered Opel Corsa. This is good
news for the car-dealer business, because it means that it is not necessarily worse to sell a
larger and more expensive car than one that is smaller and cheaper.
To sell cars with a bigger environmental focus is thus no threat for the car dealers’
economy.

If your usual car manufacturer currently does not have a brand that offers green car rated
cars in popular categories, consider supplementing with any of the other brands that are
big on green cars. If your car dealer company sells several brands and some of them are
not future-proof, giving the range a high proportion of large, heavy and fuel-guzzling cars,
consider leaving that brand behind.

If you are selling green versions of the models, which also have conventional petrol and
diesel versions the example the Ford Dealers from Sweden could be considered. They
order the Ford Focus and Ford C-Max in the petrol version only by request, but stock large
volumes of Flexifuel versions.

2010 Swedish Car Sale Statistics
Facts about the 289,684 new cars sold in Sweden in 2010 (figures for 2009 in parentheses).

       •   131 grams of carbon dioxide per kilometer on average emissions
       •   A and B Rate cars (lowest CO2 emissions) account for 79% of new car sales
       •   64% run only on diesel fuel
       •   Hybrid, electric and flexifuel vehicles accounted for 4.5% of sales in 2010.

2009 UK Car Sale Statistics
   •   Full year registrations down 6.4% to 1,994,999 units, the lowest level since 1995:
           o Petrol 1,147,580 units
           o Diesel 832,456 units
           o Other 14,963 units
   •   Average new car CO2 emissions fell by 5.4% on the 2008 level to 149.5g/km in 2009
       and then 3.5% to 144.2g/km in 2010.
   •   A and B rate cars accounted 6.5% market share in 2009 and 8.7% market share in
       2010
   •   Alternative Fuel Vehicles’ (petrol/electric, petrol/gas, electric, petrol/alcohol) market
       share rose to a new high of 0.8% in 2009, from 0.7% in 2008. (EU goal 5.75% 2010)
   •   Approximately 285,000 cars over 10 years old were removed from UK roads
       through the Car Scrappage Incentive Scheme.


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The top 10 most popular cars sold in the UK 2010

                                                   CO2 emissions
Place         Vehicle               Number 2010        from
                                                      (g/km)
 1          Ford Fiesta               103,013            95
 2        Vauxhall Astra              80,646            104
 3          Ford Focus                77,804            109
 4        Vauxhall Corsa              77,398             94
 5       Volkswagon Golf              58,116             99
 6       Volkswagon Polo              45,517             91
 7         Peugeot 207                42,185             98
 8         BMW 3 Series               42,020            109
 9             Mini                   41,883             99
 10      Nissan Quashqai              39,048            125




Newly sold clean vehicles by type




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What is a green car?
The confusions about what a green car actually is have been huge. That is because the
green car boom is largely emerged from local initiatives, a “down-up perspective”. In
Europe some municipalities themselves have been defining what a green car is, to give
these vehicles local benefits such as free parking and by asking for those cars qualifying for
local benefits when they are purchasing more environmentally friendly vehicles.
The situation was understandable but not acceptable. For consumers, it was hard to know
what really defined a green car. Car-dealers found it difficult to advertise their green cars
and critics have been easily able to dismiss the phenomenon with, "You do not even know
what you're talking about."

In the UK for now there is no formal definition of what a green car is. However, the
introduction of the Motor Tax Bands could guide you to suggest that a green car in the UK
is one which fits into Bands A to D i.e. currently below 130gC02/km. Due to these vehicles
paying zero road tax in their first year of use. Alternatively, it could be argued that only
Band A cars are green cars, as these currently have zero road tax for the life of the vehicle.
At an EU level the aim is for a 130gCO2/km target by 2012 – which is inline with the first
suggestion above.
Green cars can be essentially classified into the following types
                       - Local emission conventionally fuelled vehicles (petrol/diesel) that
                          have lower than 130gC02/km emission levels
                       - Electric vehicles
                       - Flexi-fuel vehicles which can run on renewable biofuels
                       - Hybrid vehicles that have lower than 130gC02/km emission levels

Other definitions and regulations may emerge including
   • More car sizes. A fuel consumption of 4 litres petrol/100 km is impressive for a mid-
       size car such as a Toyota Prius, but not for a mini-car such as Smart. It is also
       impressive with a fuel consumption of 4.5 litres diesel / 100 km for a big car such as
       Volvo V70 and Volkswagen Passat. Therefore it is reasonable to introduce different
       car-sizes, which was already discussed when the clean vehicle definition was first
       introduced.

    • Safety. The green car should have at least four stars in Euro NCAP, or similar, to get
      green car benefits, and anti-skid control system (as ABS) should be standard
      equipment.

    • Lower limit on the emissions of fossil carbon dioxide. The current requirement of
      120 grams of carbon dioxide per kilometer will reasonably be reduced, perhaps to
      100 grams. It affects mainly the many diesel vehicles emission just below 120 grams
      per kilometer.

    • Increased efficiency requirements. Vehicles powered by renewable fuels will
      probably not be allowed to have emissions of carbon dioxide in excess of the


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average car, which means about 180 grams of carbon dioxide per kilometer. The
        requirement affects the gas and ethanol vehicles with high fuel consumption.

     • Stricter requirements for nitrogen oxides. Today's demands for particle purification
       supplemented with reasonable requirements for nitrogen oxides, which imposes
       some form of treatment. The requirement affects diesel cars.

     • Noise. It is likely that we for the first time get noise requirements of new green cars,
       around 73 dB for petrol cars and slightly higher for diesel vehicles.

There are currently tax incentives schemes for individuals and companies to invest in
electric vehicles including
        • Tax incentives for business to purchase electric vehicles. Electric vehicles have
           zero percent company’s car tax.
        • Assistance for individuals purchasing electric vehicles including a £5,000 grant.


Government vehicle purchases
Government agencies are buying only a few thousand cars a year, so it's not really a
particularly important market for car sales, except in small towns where a relocated
government agency can be a dominant buyer. However, the state purchasing and leasing
requirements are a benchmark for the rest of society, and the demands placed on the state
vehicle purchases are likely to become general a few years later. It is therefore important
for the car dealers to be aware of the new demands on government cars.

An example from Sweden of the public procurement definitions for vehicles is outlined
below

The basic requirement for the definition is that the cars must meet EURO IV (cars registered before
01.01.2011) and EURO V (cars registered from 01.01.2011) or alternatively “EURO Electricity Hybrid” or
EURO “Electricity”. For EURO IV – diesel cars it is also necessary to meet- particulate emissions lower than
5 mg / km. In addition:

• Conventional cars (including hybrid cars): Petrol and diesel cars with carbon emissions that are not
exceeding 120 grams per km.

• Alternative fuel-powered cars: Cars that can run on fuels other than gasoline, diesel or LPG
and which have a fuel consumption not exceeding 9.2 litres of gasoline equivalent / 100 km or
9,7 Nm3 (with atmospheric pressure) of gas / 100 km.

• Electric cars: A car belonging to the class “EURO Electricity” and an electric energy consumption per 100
kilometers which does not exceed 37 kWh (kilowatt-hours).

There are other additional requirements in relation to safety, noise etc. also included.




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Green car benefits
Every car dealer with clean vehicles in their range should be highly aware of the green car
benefits. It is easier said than done as they change over time, there are different benefits
for different customer groups and to supplement the national benefits are a number of
local ones. Below is a description of the main current benefits in the UK.


Vehicle Excise Duty

Car tax is designed to try to encourage car buyers to purchase more environmentally
friendly cars, with lower car tax for environmentally friendly cars.

Cars registered on or after 1 March 2001 (based on fuel type and CO2 emissions).




First year rates

Cars registered on or after 1st April 2010 (base on fuel type and CO2 emissions).

From 1 April 2010, anyone buying a new car will pay a different rate of vehicle tax for the
first tax disc. These are known as 'first year rates'.




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Vehicles in bands A to D pay zero road tax in the first year.

From the second tax disc onwards, the standard rate of vehicle tax will apply. This will send
a stronger signal to the buyer about the environmental implications of their car purchase
and will only apply to new cars, not already registered cars. Rates below are only payable
for a vehicle’s first tax disc taken out at first registration.

How the tax bands are applied:
Before a new model is put on sale in Europe, it must undergo a series of tests to ensure
that it has achieved approved standards regarding safety, environmental impact, etc. This
process is called Type Approval and each car achieving the approved standards is issued
with a Certificate of Conformity.
Among the details included on the Certificate of Conformity is the level of CO2 emissions of
the car. This is the information that will be used for taxation purpose.

Electric Vehicle – Financial Supports
Since January 2011 the Department for Transport provides Plug-in electric car grants worth
£5,000 against the cost of low-carbon vehicles including fully electric or plug-in hybrid
cars. The grant fund has been capped at £43m but this will allow over 8,000 people to
claim the full £5,000. The UK has substantial resources of wind and ocean energy
accessible to it. By storing these intermittent supplies of wind and ocean power, highly
efficient Electric Vehicles therefore offer the UK the opportunity to supply a significant
proportion of its transport energy needs from its own energy resources while substantially
reducing the associated CO2 footprint.

Advances in Lithium battery technology has led to the current development of passenger
electric vehicles by mainstream suppliers such as Renault, Nissan and Mitsubishi. With
ranges of 160km on a single domestic overnight charge and fuel cost savings of up to 70%
based on night time electricity prices, the fleet of vehicles emerging will have significant
appeal to consumers.

Exemptions from Congestion Charge
Cars which emit 100g/km or less of CO2 and that meet the Euro 5 standard for air quality
qualify for 100 per cent discount on the London Congestion charge.
Some electric and plug-in hybrids are also exempt from the charge. To qualify for this
discount, the vehicle must be registered with the Driver Licensing and Vehicle Agency
(DVLA) and have a fuel type of 'electric'. Alternatively, it can be a 'plug-in hybrid' vehicle
and listed on the TfL-approved list of eligible vehicles.

Parking benefits
Some Local Authorities offer 100% discounts on residential parking permits for green
vehicles. The City of London ran a successful trial of free parking for all green vehicles from
2001 until 2008, but this was stopped as it was thought to be adding to vehicle congestion
in the city.

Many Local Authorities in different EU Countries provide free or reduce parking for green
cars, based on a permit system (mainly). The benefits are different, with limitations in time

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(how long one can park for free in almost all municipalities) and in location (where to park)
- in quite a few.

The benefit is not just about money. Many still believe that this means inconvenience and
trouble to choose a green car - parking privileges disprove this. He who has a green car
might not be so worried about parking controls, and does not need to change money for
parking meters or suspend their meetings to put "more money in the meter." This part of
the benefit is difficult to evaluate, but is a clear added value to be highlighted!

Every car dealership with clean vehicles in the program should review if there might be an
opportunity to engage with their Local Authorities to provide car benefits like free parking.
They can then promote this as part of their sale of green cars.

Fuel price
By April 2013, fuel suppliers in the UK will have to include an average of 5% biofuels (fuels
derived from sustainable sources) in their annual fuel sales. The Obligation will be on the
companies in question and at no cost to the taxpayer. Consumers will not be obliged to
modify their vehicles in any way.

100% Biofuels benefit from a reduction in fuel duty of 20p per litre over the sulphur-free
diesel rate.

Fuel efficient versions
DRIVe, Blue Motion, Blue Efficiency, Efficient Dynamics, Greenline ... just about every brand
now offers fuel-efficient versions of their basic models. The concept varies, but these
models generally consist of a lower chassis and refined aerodynamics, low rolling
resistance tyres and higher tyre pressure, and in some cases, Start-Stop technology,
modified valve or other engine modifications. The additional cost varies from a few
hundred to pounds to well over £1,000. Many fuel efficient versions, but far from all, meet
the green car definition. Most are diesel cars but there are also efficient versions using
other fuels.

For the car dealer, the efficient versions provide higher profits because the price is higher
and margins are usually the same. But sales are also a challenge because in many cases it is
difficult to recoup the additional cost in the form of a reduced fuel bill - saving only
centilitres; the savings are only around a £100 euro per year. For those with the fuel
efficient versions, which do not meet the green car definition the trump card is the
exemption from vehicle tax which is high for diesels. For efficient versions that do not
meet the green car definition this is the selling point rather the pleasure of having to fill up
very rarely, the feeling of responsibility towards the environment and the assumption of a
higher resale value when you come to sell.

Many car tests of fuel efficient versions end up with questioning: "Why sell the non-
efficient versions at all?" For non-motor journalists, the choice of the efficient version is not
that obvious. The cars with hard pumping, low rolling resistance tyres can be perceived as
less comfortable, the higher gear ratio can cause the car to feel slow. To be successful in



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selling the fuel efficient version, it is particularly important that the car dealer explains the
technology and gives the customer time to become familiar with it.

Taxation of different fuels
Fuel tax in the UK is constantly changing and has risen steadily over the last 15 years.
Biofuels benefit from a reduction in fuel duty of 20p per litre over the sulphur-free diesel rate.

The following table provides an overview of the make up of the tax as a proportion of fuel
prices in the UK.
                                        Petrol @ £1.33 per litre            Diesel @ £1.38 per litre
              VAT                                £0.22                               £0.23
              Duty                               £0.58                               £0.58
           Total Tax                             £0.80                               £0.81
          Pre-tax Price                          £0.53                               £0.57


      Tax as a percentage                         61%                                59%


Trade-in Value
Which cars are worth the most in the future - those that consume more or those that are
more fuel efficient? Those that can only run on fossil petrol and diesel, or those that can
also run on renewable fuels? The answer is obvious: The green car has on average a higher
resale value than the non-green car and sold in greater numbers, leaving the exhibition
hall faster than non-green-cars. Research in Sweden has confirmed cars running on
biofuels having resale values 10% higher than fossil fuel cars.

The petrol and diesel cars that are so fuel efficient that they have emissions below
120gCO2/km also have a higher resale value than similar models whose emissions are
above the limit (over 120 gram CO2/km). Most of the extra cost of cars such as Volvo's
efficient DRIVe models or similar Volkswagen Blue Motion may be paid back when it is
sold, and while you own it, you experience lower fuel costs. The market for these fuel
efficient diesel cars is still so new that there are no clear figures yet. However, it has been
possible to compare one of the very first green-cars, the Audi A2 in 2001 in the fuel
efficient diesel version (1.2 TDI, 61 hp), with the same car, non-green car rated and with a
bigger diesel engine (1.4 TDI, 75 hp). After 100.000 km the fuel efficient version with the
smaller engine was worth €9,800 compared to €8,050 for the more powerful diesel version.
This is also much more than for a newer, bigger and more powerful diesel car, with lower
mileage.

When it comes to used electric cars, there are so few available that it is difficult to assess
the resale value yet. The condition of the batteries is the most important issue to check to
be able to define the resale values for an electric vehicle: The electric motor and the
gearbox (which is usually much simpler than for cars with an internal combustion engine)
are even after some time almost as new. Most electric cars are “short mileage cars” because
of the short range. When batteries need replacing, it's a great investment to trade up, so
great that many electric cars ten years old or more will be forthcoming even though they

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are otherwise fresh. If the previous owner replaces the battery, the car may have about the
same value as its gasoline counterpart, but this still means that the first owner takes on
much of the cost.

Generally, a high resale value is of course good for the car dealership. Certainly, you pay
more for the cars you trade in when the customer buys a new car, but above all you get
more when selling them. In addition, it is good to be able to show the above figures to
those who are hesitating to buy a new green car, on the basis that it is sometimes
suggested that green cars would mean lower resale values than other cars.

Image
It is more and more common for the media, interest groups and others to comment on
which cars companies or prominent politicians use. Thus, it has quickly become a risk
factor to choose models that are not perceived as "politically correct" and which do not
conform to the environmentally-friendly image you want to convey. To take such a risk is
now quite unnecessary because there are eco-friendly cars in each size class available from
most major car companies.

Hertz has been awarded, by the Green Motorists, the Environmental Best Car Hire
Company three years in a row, thanks to a high proportion of green cars. Across the EU
there is competition among municipalities to be the best in the area of sustainable
transport. In Sweden, Knivsta was beating the drums when the Miljöfordon Syd's national
municipality survey showed that they, together with Lessebo municipality were first to
reach 100 percent green passenger cars, while the Stockholm Environment Vice Mayor
shone in front of television cameras after being appointed the best green car municipality
in a survey by the Green Motorists.

The public’s attention to energy efficiency, environmental issues and cost efficiency was
highlighted by media and public comment on Government Ministers recently arriving
individually in large vehicles to a meeting. This is now changing with the use of green
vehicles and other modes of transport being the norm.

For the car dealer who wants to help customers to achieve a positive image and avoid
criticism, it is worthwhile to highlight such examples.

Electric cars
2011 is the first year when major brands will start selling electric cars in the regular car
market - until now electric cars were either sold by the odd brand or only delivered in the
form of test fleets. To sell an electric car will be quite different from selling other types of
cars, including other types of green cars. The electric car will not be able to compete on
selling price during the first few years, because most electric cars are more than £10,000
more expensive than the equivalent petrol or diesel car. For the dealer it is instead
important to present a long-term vision where the car's low operating costs are discussed.

For some brands the batteries are let/rented separately from the car, in order to reduce the
perception of high new-car prices, and play down the issue of battery life and the cost of
replacing them. It is understood, however, that the electric car has a significant additional

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cost that other cars do not have. Price comparisons with the conventional car are not
completely fair because it is slightly smaller. On the other hand, it has better performance
and greater luggage space.

It is important to compare, where possible, an electric car with a green/fuel efficient
version of the same car (or similar type) as those who are thinking about electric cars are
not likely to be considering purchasing a fuel-guzzling petrol car. As a result, the
advantage of electric cars in the form of cheaper fuel remains rather small. The profit of
course increases the more you drive, but electric cars have a limited range per charge.
Combine that with the fact that in the coming years there will be limited fast charge
outlets, and it becomes unreasonable to expect much more than 10 000 – 15 000 km per
year for an electric vehicle (there is also a limit on the rent for the car battery in this
example).

It is often cited that the electric car will have lower operating costs, because the electric
motor has fewer moving parts, but at least initially, the service costs are expected to be
higher for the electric car. Long term, however, the electric car will have lower
maintenance costs and longer service intervals, because it has fewer moving parts and
hence less wear.

Financial incentives
As previously stated there is a £5,000 grant (up to maximum 25% of the value of the car) in
place for electric vehicles available until April 2013 or for the first 8,000 applicants.
The grant covers certain types of cars:
   • electric vehicles (EVs) – these run completely on batteries and are plugged into the
        mains to be recharged
   • plug-in hybrid electric vehicles (PHEVs) – these use a petrol or diesel engine
        combined with a battery that plugs into the mains
   • hydrogen fuel cell vehicles and other technologies may be considered
The first nine cars to become eligible for the grant are:
   • Mitsubishi iMiEV                                    • Tata Vista EV
   • smart fortwo electric drive                         • Toyota Prius Plug-in
   • Peugeot iON                                         • Vauxhall Ampera
   • Citroen CZero                                       • Chevrolet Volt
   • Nissan Leaf

Information
Levels of knowledge about electric vehicles remain low and this is a unique opportunity for
the car dealerships to work together with municipalities, energy companies and the
environmental movement. It gives greater credibility to the municipality or energy-
company who may account for part of the bill. It is not likely for you to achieve this at the
launch of the next fuel guzzling SUV!

Electric vehicle demonstrations are still so new that they generate positive press articles
(except in the very largest cities), and - perhaps there is a connection here - local politicians
and local celebrities participate gladly in a test drive of electric cars. To date, the availability
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of electric cars is so small that hardly any municipality has been seen to be favouring a
particular brand.

Brands of electric cars on the program - now or just around the corner - have also, in many
cases chosen to very publicly sign memoranda of understanding with municipalities and
energy companies. In most cases these are not particularly binding on either party, but is
mostly about getting the message out that you want to stimulate the development of a
local electric car market.


Charging stations/stands
Source London is set to deliver 1,300 publicly accessible charge points in London by 2013.
This is higher than the number of petrol stations in the same area. In addition electric
vehicles can of course be charged at home.

Currently in the UK there are over 700 charge points with 400 in London. The number of
charging points has more than doubled in the past year. London, the Newcastle area and
Oxford are the best served cities with charging infrastructure in the UK. 61% of towns and
cities with a population over 120,000 have no public charging infrastructure at all.

Charging points are also being installed by councils across the UK and private sector
organisations such as supermarkets, Waitrose, Asda, Sainsbury and Tesco have all installed
charging points over the last quarter and this will encourage electric vehicle users to
charge their cars while carrying out other activities.


Plugged in Places (PiPs)

The Government is supporting the ‘Plugged-In Places’ programme. To inform wider roll
out of infrastructure as mainstream electric vehicles come to the UK. The scheme offers
match-funding to consortia of businesses and public sector partners to support the
installation of electric vehicle recharging infrastructure in lead places across the UK.

Data derived from the programme about how drivers use and recharge their electric
vehicles will provide the necessary evidence base to shape the design of a national system
of recharging infrastructure.
The Government is supporting eight Plugged-In Places:
    • East of England
    • Greater Manchester
    • London
    • Midlands
    • Milton Keynes
    • North East
    • Northern Ireland
    • Scotland




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For car dealerships this is a difficult balancing act. On the one hand, it is important to
emphasize that the electric car can be "refueled" wherever there is a charging contact. On
the other hand, many people have "range anxiety," they worry that the range will be too
short and need to be re-assured by seeing the charging stations at shopping malls, the
large parking lots and similar.


Customer groups
So far, those who have bought electric cars have been a narrow, well-defined group of
customers who basically decided to run an electric car, despite the cost. High additional
costs, inadequate security and poor range have not been an obstacle. This client group is
very narrow, including energy companies and wealthy environmentalists. Electric car
sales have not even reached one hundred cars a year.
For the next step, and for the electric car market to be of interest to the normal car
dealers, the customer group needs to be widened substantially, which should become
possible with the new generation of electric cars that are about to become available,
where you do not have to compromise with the security, where the pricing is more
reasonable and the range is perceived as adequate for everyday use. Among the potential
customers that car sales should turn to early are:
    • Municipalities. Municipalities dominate the electric car purchases to date. They
         see the symbolic value of having a number of electric cars in operation, and are
         relatively price insensitive if they have decided to buy electric cars.

   •   Energy companies. Both the major electricity companies of the smaller
       municipalities have been out of the starting blocks early in the transition to
       electric cars. They see of course a new market for electricity which they want to
       realise.

   •   Inner City dwellers in the upper middle class. The inner urbanite has often
       relatively short journeys, which fits well for the electric car. More affluent
       households have more than one car, and can complement the electric car with a
       car for long trips. In larger cities it is also easier to imagine supplementing the
       electric car through occasionally renting a car, or joining a carpool.

   •   Housing in rural areas. No electric car marketing has hitherto marketed electric
       cars in rural areas, but here is an interesting group of customers because whilst it
       could be long distances to the closest fuel station they have power outlets on the
       corner of the house.

   •   Taxis. With taxis long distances may seem impossible to reconcile with electric
       cars’ short range, but if there are fast charging stations it will clearly be possible for
       them to replace a large portion of their vehicles to electric cars.




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Sell, lease or a combination?
The electric car is a new phenomenon and the automotive industry has not quite decided
how the offer to the customer should look. Three main lines can be distinguished:

   •   Lease the car. Citroën and Peugeot seem to want to stick to primarily leasing cars
       with a guaranteed trade-in value, which gives a fixed and affordable monthly rate
       and security for the customer who does not need to worry about battery life or its
       trade-in value.

   •   Sell the car, lease the batteries. Renault has at least initially opted for this
       approach, which makes the car's purchase price comparable to petrol or diesel
       cars, while the cost of batteries can be compared with the monthly cost of fuel.
       Thus, the customer no longer needs to worry about battery life, while car dealers
       can continue with a focus on selling cars.

   •   Sell the car, including batteries. Nissan, Tesla, Think, and many others have
       chosen this path - which is the same way that car dealers in general are operating.
       The car dealer business will not assume responsibility for such maintenance of the
       batteries. In order to reduce customer concerns included batteries and power
       trains are often covered by a long warranty, which in some cases can be extended
       at additional cost.

Depending on which direction has been chosen, the strategy for marketing will be
different. Sell the car with battery - the similarities of buying any other kind of car will be
stressed. Sell the car with batteries excluded - stress that the only thing that really can feel
new and untested for many (electric motors we already are familiarly with every day long)
is taken care of for the customer. If the car is leased with a guaranteed trade-in value, it
underlines how much safer it is for the customer, compared to other brands where those
who want an electric car have to take a major responsibility for both batteries and trade-
in value.


Light duty vehicles
Many dealers also sell light duty vehicles, although it is usually divided physically in the
showroom, and with different sales men for each. In the light duty vehicle side, the
environmental evolution is less advanced, but next year, a rapid shift is likely to occur. It
depends on several factors:

   •   EU's future emissions standards for light duty vehicles, vans and pick-ups
   •   Rising fuel prices that are steering the transport industry towards more
       economical vehicles
   •   More stringent environmental requirements from purchasers

The EU is expected to decide that light duty vehicles, per brand on average, shall emit a
maximum of 175 grams CO2 per kilometer by 2014-16, complemented by a long-term
target of 95 grams per kilometer in 2020. The actual average was just over 200 grams in
2007. The EU's proposal offers a "super credit" for light commercial vehicles with
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emissions below 50 g CO2/km: they will be count as 2.5 light-duty vehicles in 2014, 1.5
light-duty vehicles in 2015 and a light commercial vehicle from 2016. This gives new
incentives to the motor trade to sell light commercial vehicles with low emissions, and
will particularly enhance the market for light duty vehicles with electric or plug-in hybrid
technology.

A number of Local Authorities are looking at vehicle purchasing and including energy and
environmental performance in the purchasing criteria. This will create new opportunities
and sales for car dealers which stock cleaner light vehicles.

The car dealers have, over the last ten years, sold continuously more powerful motor
vehicles, which have eaten into the technical emissions reductions that would otherwise
have occurred. In recent years there has been a series of smaller diesel-powered light duty
vehicles, whose fuel consumption is so low that they meet the clean vehicle requirements
for passenger cars. It has also seen a series of gas-powered vehicles, mainly vans, and
some electric cars from niche manufacturers being classified as light duty vehicles.

The car dealers have not progressed as far in the environmental marketing of light duty
vehicles as for passenger cars, largely because there have not been the same clear
incentives such as green-car bonus, and now vehicle tax exemption. But when the
transport vehicle's annual mileage is several times longer than passenger cars, the
argument about low fuel costs is much more relevant and should be used more by those
who sell vehicles with emissions down to the 120 gram CO2/km level, which is the border
for clean passenger cars.




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Conversion of existing cars into renewable fuels
It is permissible to convert existing cars to bio-fuel. To gain from any of the extra benefits
(i.e. exemption from congestion charges) the requirements for conversion are such that it
can only be done by approved converting companies - not by individual garage
enthusiasts. So far, the market has not massively taken off, partly because the regulations
are so strict that the investment is too high, both to individuals who want to convert and
for the workshop which will offer conversion.

Influencing the general agent
The dedicated dealer reads many different automotive magazines. Here they may see
models from the dealer's "own" brand, but that does not exist in the UK. Maybe there are
even some brands that are not sold in the UK at all, but that could fill a demand in the
market - such as an electric car from China, which is already sold in the UK.

For car dealers who want models that are not sold in the UK, it is time to move up a gear
in lobbying your agent. Your car dealership of course meets the general agent or the
importer on a regular basis, but how often is it on your initiative, or with concrete
proposals from your side?

If you want to sell clean cars that are in the car manufacturer's program, but not sold in
the UL, you should talk to your general agent. Sometimes there are good reasons why the
cars are not sold here.

In addition to the regular models, it is also good to be able to produce special models
with a clear environmental profile. BMW was named the “Lobbyist of the year” when in
2007 they demonstrated their hydrogen-powered 7-series at a number of high profile
events in Europe. The car is not available commercially, but to show up and get famous
people to test drive it was an important part of brand marketing. The same thing is
happening now with a number of electric cars that are on tour in Ireland the UK a year or
more before they are on general sale. It has not only given extensive positive publicity,
but also was important in establishing early pre-orders for the cars.. In addition, the
demonstration of electric cars has been important for municipalities to invest early in
charging stations and other measures that makes the rest of the market ready when
electric cars become available commercially. It is therefore important that you as a car
dealership are participating in such exhibitions and activities.

Electric car shows are a double-edged sword; on one hand a short-term risk for the
regular sale of cars – some customers may be waiting for the electric cars. It is therefore
important to highlight electric cars as a part of the car company's overall environmental
initiative, next to the other green cars which can already be purchased. "Dream of the
electric car tomorrow, buy a green car today" should be the aim.

Maybe there are vehicles that you determine that the general agent should not sell?
Swedish Toyota has decided to no longer take in some particularly fuel-guzzling vehicles,
where the manufacturer has environmentally friendly alternatives, and others should
follow the same example. Are there cars that risk damaging the green image of the

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brand? If so suggest that you no longer import them. You can of course also take such a
decision locally - no one can force the local car dealership to sell all available models, and
the car dealers choose which ones should be highlighted and which should not.

The head office should of course also be an environmental front-runner from other
perspectives, not least because this is where your brand is judged by most motor
journalists and other key lobbying groups. Many brands are seeking to or already have
achieved relevant environmental standards e.g. ISO 14001. If they can achieve this, then
your general agent can also do so. If they have not started the environmental work
already, propose that they do so.


Affect the manufacturer
Many dealers and importers, have the problem that their brand has very few green car
models on the program, or even none at all. This means that many consumers do not give
the brand a chance, while the consumer's choice to select the brand they want is limited.

The lack of specific fuel-efficient petrol and diesel versions can often be remedied
relatively quickly. Volkswagen has its BlueMotion models which demonstrate that with
relatively simple measures it is possible to lower the fuel consumption by more than ten
percent, which in many cases is enough to fulfill the green car definition maximum of 120
grams of fossil carbon dioxide per kilometre. Nowadays, almost all car brands have their
corresponding fuel efficient version; Blue Efficiency, DRIVe, Efficient Dynamics, Greenline
... Why not decide to completely stop stocking the corresponding non-efficient versions?


>> The manufacturer needs to know that the green car boom has come to stay,
and your general agent is the best way to say it>>




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