Government legislation released yesterday (Nov 3) guiding businesses on the rules of the second lockdown have confused the picture further for car dealerships.
Dealerships and their forecourts have been specifically highlighted as premises forced to close from tomorrow under the hastily written rules.
In its list of businesses to shut, the regulations stipulate: ‘Showrooms and other premises, including outdoor areas, used for the sale or hire of caravans, boats or any vehicle which can be propelled by mechanical means, and car washes.’
Car dealers looking to operate click-and-collect have been left confused as to whether this means they can legally let customers on to their premises, including forecourts, to pick up their cars.
Car Dealer spoke to legal experts at Lawgistics and CG Professional and they believe that this changes the click-and-collect model previously thought to be allowed.
They said:
- Car dealers must now only facilitate the handover of a SOLD car to customers – they cannot just take a holding deposit
- Cars should be sold remotely via online or telephone completely. The deal effectively needs to be done BEFORE the customer sees the car
- Test drives will not be allowed
- The cars CANNOT be handed over inside the dealership and there remains an argument that this cannot take place on forecourts either
- To be on the safe side, dealers should hand over the cars in their service and repair areas, which are allowed to remain open
- Or they can deliver the cars to customers’ homes
In a Car Dealer Live special broadcast on November 4, we took a detailed look at click-and-collect and other issues that have been giving dealers headaches, with three legal experts as our special guests.
Nona Bowkis and Kiril Moskovchuk from Lawgistics and CG Professional’s Stacey Turner answered questions submitted by viewers as well as discussing them with host James Baggott.
What’s the position on collections and deliveries?
ST: Deliveries and collections of goods can only take place on placed orders that have taken place at a distance. As long as the deal has been done by electronic means, phone, email, etc, then a dealer can facilitate that delivery, but you can’t conduct any of that sales process on site.
This means that all those sales are going to come under the distance selling regulations.
Can dealers deliver cars to customers who have paid their deposit before lockdown?
NB: Yes, if the deposit’s already been paid I’d imagine that’s fine, so carry on with that. If somebody comes to the dealership to complete the deal, though, that might cross the line.
Does everything have to be done remotely and it’s simply a handover of a car to a customer?
NB: Yes, that’s what these regulations are saying. It is just a pick-up. It is literally a click-and-collect you’d do at Sainsbury’s or Tesco. If some dealers can’t do that remote sales process then they may well have to close.
Bowkis reminded viewers of the stringent fines system: £1,000 for the first offence, £2,000 for the second, £4,000 for the third, and £10,000 for the fourth and subsequent offences.
Are test drives allowed?
ST: The problem that we’ve got is that the regulations state that forecourts must close. Also, the only sales that can take place are those that are already placed orders, and test drives are a pre-sale process.
If we’re looking at a strict interpretation and intention of the government with this legislation, we don’t want customers on site browsing, touching, feeling cars, going through any sort of one-on-one sales process.
What are the reasons for test drives not being allowed?
NB: I don’t think the rules actually specifically say that but it goes back to this thing that the deal has to have been done, and it’s purely a pick-up service, it’s not a have a-look-around-decide-if-you-want-the-car service, which normally a test drive would be part of.
How can dealers stop customers looking round their pitch?
NB: That’s a really good question. I suppose it should be sectioned off like a crime scene almost! As long as they’ve got the correct signs up that makes it clear they’re not open for business, you’d hope that trading standards will take a sensible approach and dealers aren’t fined if a random member of the public walking round the cars on his forecourt.
Where can dealers hand over their cars?
NB: The legislation say customers can’t come inside, but does that mean inside your closed area including your forecourt, or inside like a normal regular person would interpret as inside a room? Maybe they could do it on their forecourt. It’s not clear.
But a part three to this schedule refers to storage and distribution facilities including delivery, drop-off or collection points, so there’s our click-and-collect, where the facilities are in the premises of a business included here, and here it includes car repairs and MOT centres, so yes, in the service area is fine.
It says car parks, so if you’ve got a car park perhaps next door that’s fine as well.
ST: I’m really comfortable with the handover happening on the forecourt, because we have the exception allowing them being open for the delivery of distance sales.
Does the service reception have to be sectioned off if it’s in a car showroom?
JB: No, but you shouldn’t let customers start looking round your cars.
Can a customer do a bank transfer for the balance while they’re on the site?
NB:Â There may be room to do such things, but where exactly are you going to do it? It says they can’t enter the premises to pick their car up, and the definition of premises includes other outside areas as well.
Even with the handover, if you’ve got a couple of papers to sign why can’t you jump in the showroom? It’s absurd to say it’s got to be absolutely closed. If it is hacking down with rain, who is going to want to stand outside and do a final bit of paperwork on what is already ordered and paid for online?
Are valeting areas service areas and can they be used for handovers?
NB: It doesn’t mention valet areas, it says car repairs and MOT areas, so how far can you stretch a valeting area to be a car repair area? Probably not very far.
ST: It does say car washes are defined as having to close, so I think we’ll be stuck on that one, unfortunately.
What if a customer comes to pick up a car and needs to use the toilet?
ST: The strict letter of the law is no. But are you telling me if that customer is disabled, for example, would the government want you to put them to harm and say no? It’s a very very difficult one, but strictly speaking I would be saying the showroom is closed and we don’t have any facilities for use, unfortunately.
If there is a sales site and workshop on separate premises and the workshop is used for handover, would the journey between the premises be allowed?
NB: I think that’s allowed. For the customer, absolutely no problem, and for the business I think that’s probably sensible to say yes that’s fine as well.
If a dealer is close to the Scottish border, can they deliver over the border?
KM: Travel for work purposes is still allowed, so I would have thought that would be permissible still.
ST: I would agree that that’s OK. And don’t forget it’s only guidance from Nicola Sturgeon, it’s not legislation.
Can a customer drop off a part-ex at the same time as collecting a car?
NB: If the part-exchange is part of the deal that’s already been done then that has to be a yes.
What do dealers need to be aware of with the distance selling regulations?
NB: They have to give the right paperwork and it needs to tell the customer how they can return that vehicle, because otherwise that customer has up to a year and 14 days to return that vehicle.
And remember, this is not like the Short-Term Right To Reject under the Consumer Rights Act where there has to be a fault, this is just ‘I’ve changed my mind, I don’t want this vehicle, I don’t like the colour any more, I’ve lost my job and I can’t afford it’, whatever.
ST: And dealers just need to make sure that they’re being sent electronically, and that it’s clear that they’ve got 14 days to return the car for whatever reason.
Can dealers give customers the option to either leave a deposit and collect the car post-lockdown, or pay in full and collect the car ‘unseen’ when payment has been received?
ST: As long as it’s clear that it’s a holding deposit and the deal will be concluded face to face post-lockdown then that would convert it into a normal face-to-face sale.
However, if the deal is done at a distance and the customer picks it up then it’s distance selling and that’s the end of it.
Could a dealer deliver a bike or car to a customer to demo from their home?
ST: My view again is that if it’s a test drive, that it’s a pre-sales conclusion, it’s part of the sales process, and the government are saying that’s not something that they want to encourage during lockdown, because you’re still creating that contact that’s browsing.
Are distance sales rules different for business to business?
NB: Yes, the distance sales rules come from the Consumer Contract Regulations so they only apply to business-to-consumer sales, not business-to-business sales.
And finally, two questions that were emailed in after the broadcast:
Can dealers still lend courtesy vehicles to service customers?
ST: I would say yes to courtesy cars as it’s part of the service, and yes to sanitisation/cleaning on the basis that it falls in line with Covid protocols.
NB: I agree with Stacey. It’s car wash businesses which must shut. Sanitising, etc, should continue as normal as per Covid risk assessments.
See the broadcast in full at the top of this page.
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Was it a typo when you said consumers have a year and 14 days to reject a vehicle under distance selling. I thought it was just 14?