7:23 am, November 1, 2022
It’s the biggest fleet in the whole of the UK, buying and selling an incredible 630,000 cars.
In fact the scheme is so large it accounts for an incredible 12 per cent of all new cars registered in the UK every year.
But what is Motability? How does it work? And does it make any money? Here, we take an in-depth look at the charity.
What is Motability?
Motability is a charity that was set up to provide cars in the easiest and most affordable way for those who get a mobility allowance.
The scheme allows those on the benefit to swap that government cash for a car which will include insurance, up to three named drivers, servicing and maintenance costs. All members of the scheme need to pay for is the fuel that they use.
Even people who don’t drive can get a car on the scheme – so members can get a vehicle and be driven around by friends or family. While learners are eligible too and can also apply to get a car under the scheme.
Who owns Motability?
Motability is an independent charity that runs the mobility scheme for disabled people. It does not cost the government money, it is instead funded by disabled people who choose to spend their mobility allowance to pay for the cost of their car lease.
The charity publishes its own accounts and is run by a team of directors and staff who get paid by the charity to do the work. Details of how much money the charity makes and how much it pays directors are detailed in this article.
Does Motability get special deals on cars?
Yes it does. One car manufacturer insider told us that the Motability deals are the ‘most costly business it does’ because of the discounts the charity demands. That’s why you’ll not find all car manufacturers offer vehicles under the scheme – some have decided that it is better for them to sell those cars to retail buyers for full margins.
What is a mobility allowance?
A mobility allowance comes via several different schemes but recipients of the following can use the money to pay for their cars under the scheme:
- Enhanced Rate of the Mobility Component of Personal Independence Payment
- Higher Rate Mobility Component of the Disability Living Allowance
- Higher Rate Mobility Component of Child Disability Payment (Scotland)
- War Pensioners’ Mobility Supplement
- Armed Forces Independence Payment
Some two million people in the UK currently receive the higher rate mobility allowance which can be used on the Motability scheme.
How does Motability work?
For those people who are granted a mobility allowance by the government, they can choose to use some of it to go towards the costs of a new car. They can choose between using some of the allowance, all of it, or topping it up with their own money to pay for a car – and the model they choose depends on how much they decide to spend.
In essence, the government provides people with a mobility allowance and this is used to fund the scheme. Motability has a fleet of cars worth £8.7bn.
Any money the charity makes is reinvested into the scheme to make it cheaper – reducing the cost of cars, powered wheelchairs and scooters available to users.
At the end of the lease the cars – usually three years old – are returned to Motability which then remarkets them on to car dealers.
Motability makes money by buying the cars from manufacturers at heavily discounted rates and then selling them at the end of the leases at market rate to car dealers and the motor trade. It’s a highly profitable operation, thanks in no small part to the discounts it demands from car makers.
How do Motability customers pay for the car?
There are different levels of cars available on Motability – and what users choose dictates what they will pay.
Some cars cost less than the weekly mobility allowance which means beneficiaries of that get to keep the difference, some cars cost the same as the allowance meaning there is nothing left over and it’s all used to pay for the car, while some vehicles cost more than the allowance so users need to top up the difference.
Motability cars are paid for directly by the payments users get for their mobility allowance from the government.
How does Motability work with car dealers?
Motability customers have to order their car from a car dealership, but it is more of an admin role than a sales visit.
Car dealers understand how Motability customers pay for their cars and have specially trained staff to deal with the process. Some car manufacturers include Motability sales as part of a car dealers’ targets, and some don’t.
‘We don’t treat Motability customers any differently apart from the fact they speak to a specially trained sales person in our showrooms,’ said one car dealer group boss.
What do car dealers think of motability?
Car dealers have specialist trained sales people in each showroom that deals specifically with Motability customers. They understand how the process works and can guide people through the process. They can offer a test drive of a car and when they’ve chosen can help deal with the process of ordering the car.
‘There is no negotiation with a Motability customer, the price is fixed as part of the scheme and they only pay for the extras they want,’ explained one car dealer we spoke to.
What cars does Motability offer in 2022?
There’s a huge selection of cars to choose from on the scheme with 24 car manufacturers listed on the official website.
The car manufacturers included are:
- Audi
- Citroen
- DS
- Dacia
- Fiat
- Ford
- Honda
- Hyundai
- Kia
- Lexus
- MG
- Mini
- Mazda
- Nissan
- Peugeot
- Renault
- Seat
- Skoda
- Smart
- SsangYong
- Suzuki
- Toyota
- Vauxhall
- Volkswagen
Can you get a BMW, Mercedes or Range Rover on Motability?
Not all manufacturers offer cars via the Motability scheme. The main reason for this is the scheme requires car makers to sell their models at heavily discounted trade prices, or ‘fleet deals’.
Motability is the largest fleet operator in the UK and negotiates hard to get the best discounts – that doesn’t suit all manufacturers who may be able to sell their cars for more money to normal retail customers.
With the well-documented issues with new car production, fewer new cars have been available to sell. This has meant car manufacturers have pulled back from a lot of high volume, low return fleet deals in recent times to focus instead on selling cars for full margin to traditional retail customers.
Manufacturers like BMW, Mercedes and Land Rover, which makes the Range Rover, do not offer cars on the Motability scheme.
Can you get an electric car on Motability?
Yes, there are a variety of electric cars on the Motability scheme. Currently the following electric cars are available on Motability:
- Citroen e-C4
- Citroen e-Berlingo
- Fiat 500 Electric
- Honda E
- Smart ForTwo Electric
- Peugeot e-2008
- Vauxhall Mokka Electric
- Vauxhall Corsa Electric
- Peugeot e-208
- Mini Electric
- Renault Zoe
- Renailt Megane Electric
- Nissan Leaf
- Vauxhall Vivaro Life Electric
- Vauxhall Combo Life Electric
The list changes regularly so it is worth checking the scheme’s website for the latest offers.
Most of the electric cars require an additional advance payment when bought on the Motability scheme but are available if users sacrifice all of their Mobility Allowance.
A Smart ForTwo electric requires no advance payment, however a Honda E requires users to stump up £5,999 in advance.
Are there delays with cars on Motability?
There is currently a global new car shortage that is affecting pretty much all car manufacturers. Motability currently suggests users check their preferred cars are available for delivery before placing an order as ‘comparable cars from different manufacturers may be available sooner’. They can do this by calling a car dealer.
Why are there less cars on Motability than usual?
Again, this goes down to the fact that car manufacturers are struggling to make enough. Semiconductor shortages and other part issues across the world, plus a knock on impact from Covid, has meant car manufacturers are struggling to make enough cars. Some cars have even been removed from manufacturer line-ups completely.
Because of these supply issues, car manufacturers are prioritising higher margin sales – so that means Motability has less cars on offer. The scheme demands big discounts from the car manufacturers and when supply is short, and they can sell them for more elsewhere, many have pulled back from the scheme.
How long will there be problems with availability of cars on Motability?
Experts predict that the supply problems affecting new car production could last well into 2023. Some are even predicting supply shortages could last into the year after that. All the time there are issues producing enough new cars, the reduction in the number of cars available on the Motability scheme will continue.
Can you choose optional extras on cars on Motability?
Yes, users can, but members of the scheme have to pay extra for these at the start of the lease. Heated seats, privacy glass and other things you won’t get as standard on the car will need to be paid for separately.
How many cars does Motability run under the scheme?
In 2021, accounts for the charity show it wrote 219,092 finance agreements for cars. That took the total of cars on the main scheme to 631,299.
If you add in the other cars funded by different schemes the charity also offers, the total number of cars run by Motability was a staggering 648,927 in 2021.
How many people work for Motability?
The charity had 1,095 staff employed in 2021, up from 1,076 in 2020. This number excludes executive directors. Staff were paid £69.3m during 2021, equating to an average pay packet of £63,287 including pensions and social security costs.
How much money does Motability make?
The latest accounts available for Motability Operations Limited for the year ending September 30, 2021, show the company made a profit of £526.6m in 2021 – up from £101.8m in 2020. The profits are held within the company and used for the benefit of the scheme.
During the year, the company made charitable donations of £170m – up from £52m in 2020.
Revenue for the year was £4.49bn.
How much does Motability pay its directors?
In 2021, Motability’s highest paid director – assumed to be its chief executive officer – was paid a combined total of £966,152. This included a base salary of £437k, a bonus of £194k, a deferred bonus of £206k and pension contributions of £109k. He also received £18k in other benefits.
In total the charity paid its directors £3.4m in 2021 with £1.6m of that salary, nearly £1.5m in bonuses as well as pension contributions and other benefits.
What is the Motability Good Condition Bonus?
This is an initiative by the scheme that incentivises users to return their cars in good condition. If they are well looked after the scheme will pay out £250 at the end of a three year lease, and £550 at the end of a five year lease.
In reviewing the scheme, Motability has found that some customers are ‘taking such good care of their vehicles’ that it plans to pay out an early Good Condition Bonus. As such it has decided to hand out some of the money it puts aside for the bonuses early.
Anyone who ordered a Motability car before October 1 2022 will receive a £350 bonus. ‘This is because the vehicle was ordered when a higher amount of Good Condition Bonus was built into the lease,’ says Motability. Cars ordered after October 1, 2022, will not receive the payment.
Motability says the early payments are designed to help users through the cost of living crisis.
Do all car dealers work with Motability?
If a car manufacturer offers cars under the Motability scheme, then their dealers will have to offer guidance to Motability users.
Can you buy the car at the end of a Motability lease?
Yes you can, but it can only be discussed in the final three months of the lease. The reason for this will be the scheme will then have a more accurate idea of how much it is worth. The car will likely be sold at market rate.
Can you haggle with Motability?
No. Car dealers are purely administering the scheme and as such the prices they are paid for the cars are set. The scheme does the haggling for users with the car manufacturers when they agree to buy the cars in the first place. Motability places such large orders it gets big discounts as a result and these are passed on to all scheme users.
