PRA RESPONDS TO RAC STATEMENT

Published 24/03/2015 00:00:00 in Press Releases

“The PRA is encouraged by the volume increase in February -  which shows that there has been an overall improvement in the economy, and that motorists are taking advantage of much lower pump prices (approx. 20ppl lower) than in March 2014”. comments Brian Madderson, Chairman of the Petrol Retailers Association (PRA).

Following statements from the RAC suggesting that businesses are “being taken for a ride by the fuel retailers”, and that “the prevailing view is that businesses are less price sensitive than consumers”, the PRA believes these comments fail to acknowledge the increasing impact of fuel cards. These fuel cards which are used by a significant number of businesses highlights the alarming lack of research by some motoring organisations. Transactions made on fuel cards in the UK will mainly be diesel due to the tax incentives. The total UK fuel card market is now worth over 8 billion litres per annum.

HGV’s and other business vehicles that utilize some form of bunker card will be purchasing fuel not at pump prices, but typically at prices based on a Platts related weekly lagged rate, plus a small handling fee for the retailer - often less than 1ppl.  Experian Catalist has advised that over 70% of hi-speed offset diesel pump facilities for HGV’s, large vans and buses are located on independent forecourts. Most of this traffic will be purchasing with fuel cards.

Many LCV’s and company cars will be also be utilizing a fuel card based on Platts related pricing.  One major oil company recently confirmed to the PRA that the vast majority of their card customers now purchase fuel on a Platts related basis (not at full pump price).

Madderson continued, “Due to the way that fuel cards work, the majority of transactions are re-purchased at an agreed rate and the retailer then receives a ‘card commission’ for that transaction. Rates for fuel cards have not significantly changed since the schemes started some 25-30 years ago, and the margin returns back to the retailer for the fuel transaction are minimal.

 “Therefore the independent retailer often selling up to 4 grades of road fuel, has to obtain a financially acceptable average margin to ensure that the business is producing sustainable returns.

“Currently the margin available on petrol is extremely low - and so higher margins may be taken on diesel after adjusting for the severe margin depressing effect of fuel cards to the independent retailer sector.”

 

ENDS

NOTES TO EDITORS:

Rupal Rawal, Communications Officer
Tel: 020 7307 3412
Mob: 07528 977 157
Press Office direct line: 020 7307 3422
Press Office fax: 020 7307 3406

Web: www.rmif.co.uk  Email: rupal.rawal@rmif.co.uk

The Retail Motor Industry represents the interests of operators in England, Wales, Northern Ireland and the Isle of Man providing sales and services to motorists and businesses. The RMI has a formal association with the independent Scottish Motor Trade Association which represents the retail motor industry in Scotland.

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