Fleet diesel dominance to decline as government publishes air quality plans

Diesel’s share of the UK new car market is set to decline as fleets take a more “open-minded approach” to petrol-engined cars and demand for plug-in and hybrid models increases under pressure from potential tax changes and introduction of a network of Clean Air Zones in towns and cities nationwide.

Clear Air Zones are expected to be introduced by local authorities that have breached air quality standards and they are the central focus of the government’s long-awaited plans to reduce nitrogen dioxide (NO2) levels nationally.

The Clean Air Zones – around 80 local authorities have been identified by the government as having roads with concentrations of nitrogen dioxide forecasted at above legal levels – were the key plank in the Department for Environment, Food and Rural Affairs’ long-awaited Air Quality Plan published this month.

The government hopes that its proposals, which are out consultation to June 15 with the final Plan expected to be published by July 31, will reduce the impact of diesel vehicles, and accelerate the move to cleaner transport, notably plug-in vehicles. At that time it will also confirm the local authorities which will formally and legally be required to develop and implement comprehensive Clean Air Zone plans.

Simultaneously, the government announced in the Spring Budget, it would continue to explore the appropriate tax treatment for diesel vehicles with any changes announced in the Autumn 2017 Budget.

Additionally, the government has signalled that it wants public sector fleets to move away from operating diesel vehicles and has called on businesses to follow that lead highlighting corporate social responsibilities.

Furthermore, the government says it will consult separately on regulatory changes to support the uptake of alternatively fuelled (non-diesel) vans.

The government said: “Vans spend much of their time driving around our towns and cities and over 96% of them are diesel powered so there is a pressing need to support innovative new solutions.”

It suggests that one way of achieving that was to encourage the uptake of cleaner fuels in delivery vehicle fleets. Proposals include:

  • Increasing the weight limit of alternatively-fuelled vans that can be driven on a category B driving licence in the UK
  • Exempting certain alternatively-fuelled vans from goods vehicle operator licensing requirements in Britain
  • Introducing roadworthiness testing for electric vans in Britain.

All those developments have led the consulting arm of motor industry date suppliers and forecasters CAP HPI to conclude in its new ‘Petrol versus Diesel’ report: “It is clear that the fleet market is concerned enough about future diesel values to reduce their exposure to them. As we start to see restrictions in the use of diesel vehicles in our cities, used buyers will become increasingly wary of the technology and this will impact residual values.

“As these disadvantages begin to outweigh the benefits of diesel vehicles – and the increasing awareness of total cost of ownership is already putting paid to this – we will start to see a vicious circle of declining used demand and declining residual values.”

With some fleets are opening up their ranges to petrol, the report continues: “With declining diesel residual values starting to become apparent, fleets are moving to balance their portfolios to reduce their exposure to falling diesel residuals. Similarly, there is an increased demand for low and zero-emission vehicles from businesses wanting to show themselves as environmentally aware.

“At the same time, end-users are also looking to shift away from diesel. With benefit-in-kind taxation on company cars planned to increase over the remainder of the decade, more and more company car user-choosers are looking at low and zero-emission alternatives, some of which offer a better deal for company car drivers.”

However, Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association, said: “Diesel vehicles remain a vital part of the fleet mix though, as diesel engines are the most energy-efficient internal combustion engines. It is often the most appropriate powertrain for long distance journeys and non-urban freight transportation, and the latest Euro6 diesel engines have made some major gains in reducing harmful NOx (nitrogen oxide) emissions.”

Five cities – Birmingham, Leeds, Nottingham, Derby and Southampton – are already required to introduce Clean Air Zones under the government’s 2015 UK Air Quality Plan. Additionally local authorities in Greater Manchester and in Bristol and South Gloucestershire have secured Air Quality Grant funding to develop Clean Air Zone proposals.

The government says it will work closely with local authorities with a view to them finalising detailed proposals covering entry and charging criteria to the Clean Air Zones within 18 months for introduction in 2020 or sooner if possible.

The government is recommending that the minimum emission standard for Clean Air Zones are: Cars and vans, Euro6 diesel or Euro4 petrol; HGVs, buses and coaches, Euro V1; and motorcycles/mopeds, Euro3. Vehicles that do not meet those standards could be charged to enter a Clean Air Zone. The suggested entry criteria mirrors that of the Ultra-Low Emission Zone scheduled to be introduced in central London in September 2019.

Implementation of each Clean Air Zone must be approved by the government before it can go ahead. A framework document outlining a range of measures that should be incorporated within a Clean Air Zone to improve the urban environment and thus move towns and cities to what the government calls “a low emission economy” includes:

  • Exploring innovative retrofitting technologies targeted at local bus, taxi or HGV fleets. That and new fuels;
  • Buying ultra-low emission vehicles and encouraging local transport operators to do the same;
  • Encouraging private uptake of ultra-low emission vehicles via ensuring adequate chargepoints for plug-in vehicles;
  • Encouraging use of public transport, cycling, walking, park and ride schemes, and car sharing;
  • Improving road layouts and junctions to optimise traffic flow, for example by considering removal of road humps;
  • Working with local businesses and neighbouring authorities to ensure a consistent approach; and
  • Charging certain types of vehicles to enter or move within the Clean Air Zone.

However, the government argues that charging for Zone entry should be treated by local authorities as a last resort, pointing out it should only be used where local authorities fail to identify equally effective alternatives. However, there is concern as to how effective non-charging Clean Air Zones would be in persuading drivers to stay out of those areas.

If local authorities conclude that charging was the only way to achieve compliance in the shortest possible time, they will be required to set out the detail of: the roads and classes of vehicles subject to a charge, what the charges will be, the manner in which charges would be made, collected, recorded and paid, the hours during which charges would apply, exemptions and reduced rates from charges and enforcement regimes and penalties for non-payment of charges. Automatic number plate recognition (ANPR) would be used for the operation of charging Clean Air Zones.

The government says that local authorities should set the level of charge for vehicles entering a zone appropriate to their local circumstances. The level of charge would be within upper and lower bands, which the government says it will publish at a later date.

Other measures to improve air quality suggested in the raft of government documents published include:

  • Reducing speed limits notably on motorways from 70mph to 60mph, although the documents say further monitoring in real world conditions was required
  • Improved vehicle labelling to encourage a shift of purchasing behaviour away from new diesel vehicles to alternative vehicle types
  • Influencing driver behaviour through eco-driving schemes.

The government’s proposals also say that local authorities and other public bodies operating within a Clean Air Zone should ensure the fleet they operate, or are operated on their behalf, and ideally in the wider authority, meets the standards for the Zone.

The government also believes the arrival of Clean Air Zones give local fleets the opportunity to demonstrate how new technologies and approaches could go further than the standard implemented.

It says that the use of ultra-low emission vehicles, alternative fuels and approaches to ‘grey fleet’ – employees driving their own cars on work-related journeys – could all demonstrate a lead.

The documents go on to say: “This might include working with staff on engagement and incentive schemes to reduce vehicle use, such as car clubs and car sharing schemes, cycling incentives and facilities, or flexible working practices.”

The government also says that it is “determined to lead by example” and was taking action to ensure its operations and purchasing power supported reductions in NO2 and other pollutants.

The government is currently busy updating its Buying Standards for vehicles, which set down minimum mandatory and best practice standards requirements for cars, vans, buses and trucks, and they will focus on encouraging the purchase of ultra-low emission vehicles where appropriate and low NO2 emission models.

Additionally, the government says it will work with the Energy Savings Trust and with local authorities to promote the use of Government Buying Standards throughout local government, the wider public sector and beyond in order to “avoid purchasing diesel vehicles wherever possible”. It says the Standards should be used as the “starting point for fleet procurement and operations”.

Businesses, suggests the government, could also play an important role in improving air quality through both how they operate and through influencing their employees’ behaviour.

The government says: “Improving air quality should be considered an important part of corporate responsibility and sustainability. Businesses which make improvements should be supported and rewarded for their action creating a virtuous circle where the city becomes an attractive place for businesses and their customers.”

The Air Quality Plan proposals recommends that: “Local authorities should work with local businesses to explain the aims of a Clean Air Zone and encourage the uptake of programmes to address air quality. Authorities should encourage businesses to take a lead and work with their local communities.”

That may include:

  • Working with SMEs and other businesses to help them understand their options for adapting to a Clean Air Zone, and the support available to them
  • Engaging business participation in environmental sustainability and training programmes, for example to improve driver behaviour, and campaigns to raise employee awareness
  • Working with local employers to increase awareness in their staff about local public transport choices and alternatives, and initiatives such as car clubs and car sharing
  • Encouraging businesses to commit to use only their cleanest vehicles in a Clean Air Zone
  • Encouraging businesses to commit, when buying new vehicles, to purchase those in line with or higher than Clean Air Zone standards
  • Encouraging businesses to adopt approaches to operations that can support a Clean Air Zone
  • Encouraging large taxi or private hire users, such as universities and hospitals, to require ultra-low emission vehicles within their contracts and promote travel planning to minimise use.
  • Encouraging the uptake of business recognition schemes such as Go Ultra Low Company status, ECO stars, Logistics Car Reduction Scheme and Fleet Operator Recognition Scheme
  • Developing delivery service plans with local businesses.

The consultation document and related papers, which applies to England, Scotland, Wales and Northern Ireland, can be viewed at https://consult.defra.gov.uk/airquality/air-quality-plan-for-tackling-nitrogen-dioxide/

The FSGB view

The clock is ticking for fleets that pollute. Following the 2002 changes in company car benefit-in-kind tax to a regime based on carbon dioxide emissions, diesel has been the default fleet position. It is clear that government policy is to change that yet, as the likes of the Society of Motor Manufacturers and Traders and the British Vehicle Rental and Leasing Association highlight, Euro6 diesel engines are the most energy-efficient internal combustion engines and often the most appropriate powertrain for long distance journeys and non-urban freight transportation so diesel vehicles remain a vital part of the fleet mix, but probably not retaining the dominant position they have held. However, in the new ultra-low emission environment company car decision-making based on whole life costs and fitness for purpose must remain absolute when vehicle replacement is on the agenda. The alternative to diesel vans is less clear cut as petrol-engined models are virtually non-existent and electric models for most fleets are not currently operationally viable. Therefore, diesel will remain first choice but van fleets should look to introduce Euro6 models to ensure they don’t fall foul of any future Clean Air Zone entry criteria.

Fleets to face big changes if MoT regulations are revised

The government is now considering responses to its proposal to extend the time when cars and vans require a first MoT from three to four years – although there are demands that large vans are tested annually.

Any changes could have far-reaching implications for fleets in terms of both operating costs and an even greater focus on ensuring vehicles are roadworthy.

Both the Society of Motor Manufacturers and Traders (SMMT) and the Retail Motor Industry Federation (RMIF) have called for the status quo to be maintained – an annual MoT when a vehicle is three years old.

However, while the British Vehicle Rental and Leasing Association (BVRLA) supports the government’s MoT extension proposal for new cars from three to four years and some vans, it opposes the same move for class 7 vans (those weighing 3,000- 3,500kg).

The Association recommends that the date of the first MoT test for large vans should be cut to one year after first registration, in order to address any potential safety considerations. Such a move could significantly impact on fleet operating costs.

The Department for Transport has proposed three options:

  • No change, maintaining the current period for vehicles requiring a first MoT at three years
  • Extending the first MoT for all vehicles currently requiring one at three years, to four years
  • As option two, but excluding vans in classes 4 (up to 3000kg) and 7, where the current MoT three-year first test timing will be maintained

The government says its preference is for either the second or third options.

In making the proposal, the government has calculated that vehicle owners could collectively save more than £100 million every year.

The SMMT says extending the time when cars and vans require a first MoT from three to four years would have a significant impact on vehicle safety. It also suggested that new technology in cars such as tyre pressure monitoring systems, lane departure warning or wet weather tyre performance, was making cars safer.

Simultaneously, the SMMT suggested that delaying a vehicle’s first MoT could reduce road safety with almost 500,000 more cars potentially in an unfit condition driving freely and unchecked on UK roads as a total of 17% of all models taking their first MoT at three years old did not meet minimum safety requirements.

It pointed out that while new technology-based systems helped prevent or mitigate accidents, they did not change the fundamental underlying operation of wear and tear products such as tyres and brakes, which continued to require regular checks and maintenance.

The RMIF shares that view and, while it agreed that modern cars were better built than ever before, factors such as the condition of Britain’s roads combined with high mileages meant vehicles should be checked more by mechanics.

Mike Hawes, SMMT chief executiveconcluded: “The MoT is an essential check on the safety and roadworthiness of vehicles. Extending the first test for cars from three to four years poses a serious risk to road safety and vehicles’ environmental performance.”

Although the SMMT and RMIF highlight that safety should come ahead of deregulation, cost saving or convenience, the BVRLA has warned that, while supporting the extension proposal it should not apply to large vans.

Gerry Keaney, chief executive of the BVRLA, said: “Modern cars are safer than ever. As such, we believe the proposed extension before the first MoT test is required can be implemented without risk to public safety.”

Nevertheless, with work-related road safety high up on fleet decision-makers’ agendas any move to a first MoT at four years would require an even greater focus on risk management, particularly in terms of vehicle service, maintenance and repair management.

However, Mr Keaney continued: “Van traffic is growing, and these vehicles’ average annual mileages are significantly higher than the average car on UK roads. At a time when the government’s own data shows large vans have appalling first time pass rates, the BVRLA believes these vehicles should be getting tested every year, not every three or four years.

“Many large vans fail their first MoT because they have not been well maintained and have substandard brakes, so they pose a real risk to road safety.”

If the BVRLA’s call wins government support it will undoubtedly increase operating costs for businesses running class 7 vans. That could mean that some organisations consider downsizing to class 4 vans, which are excluded from the organisation’s proposal.

The consultation has now closed and civil servants are studying responses. A decision on whether to retain the current MoT rules or change them will be one of the first considerations for the next Transport Secretary appointed following the June 8 general election.

The FSGB view

Whatever the government decides in respect of when vehicles should undergo an MoT, managing the roadworthiness of a vehicle comes down to influencing, measuring and improving driver performance. Drivers, whether at the wheel of a car or a van, are the single biggest influence on fleet operating costs. MoT failures for large vans are, according to data from the Driver and Vehicle Standards Agency worryingly high, but that is down to a failure of fleets to have in place a daily regime of vehicle checks undertaken by drivers. What’s more, MoT pass rates for all cars and smaller vans are far from perfect. Efficiently and effectively managing drivers and vehicles on a daily basis means that not only will operating costs reduce, but the frequency of an MoT will simply result in the updating of a mandatory record as a ‘pass’ should be recorded every time.

London to introduce Ultra-Low Emission Zone in April 2019

The world’s first Ultra-Low Emission Zone (ULEZ) will be introduced in central London from April 8, 2019 – 17 months earlier than the previously announced September 7, 2020 start date.

Fleet operators should check the emission standards of their current vehicles – particularly ensuring that replacement programmes mean Euro6 diesel emission standards will be met by the time of the ULEZ’s introduction – or they will pay the price for entry. Typically petrol-engined cars operated by fleets will be of an age that they meet entry eligibility.

The ULEZ will cover the same area as the capital’s existing congestion charging zone. Petrol vehicles that don’t meet Euro4 emission standards and diesel vehicles that do not meet Euro6 emission standards will have to pay a ULEZ daily fee (£12.50 for cars, vans and motorbikes; £100 for buses, coaches and HGVs) to drive in the zone, 24 hours a day, 365 days a year.

It means petrol cars more than 13 years old in 2019, and diesel cars more than four years old in 2019, are unlikely to meet the new standards. The total cost, with the congestion charge added (during the times of day it is applicable), for drivers with non-compliant cars to drive in central London will be £24 a day (£23 for congestion charge fleet auto pay customers).

London Mayor Sadiq Khan has already confirmed the £10 T-Charge, which will start in October this year. He is now proposing, following a public consultation launched last month that will be replaced by the ULEZ.

Furthermore, the Mayor is proposing to extend the ULEZ across Greater London for heavy diesel vehicles, including buses, coaches and lorries, in 2020, and up to the North and South Circular roads for cars, vans, minibuses and motorcycles in 2021.

In launching the consultation, the Mayor said he was committed to taking ambitious action to protect Londoners from the damaging health impacts of air pollution from toxic vehicle emissions.

The ULEZ will apply to all vehicle types, except black taxis. It is estimated that introducing the initiative in central London will result in nearly a 50% reduction in road transport NOx emissions in 2020.

Once the Mayor has finished consulting on the current ULEZ proposals in June, he will start consulting on actions that will expand the scheme in 2020 and again 12 months later.

The Mayor said that the planned timescales would provide Londoners, motorists coming into the capital from elsewhere and businesses which will be affected, sufficient time to take the necessary steps to prepare for the new standards. They also reflected the minimum amount of time needed for Transport for London to consult on and implement such technically complex schemes over such large parts of the capital.

Mr Khan said: “The air in London is lethal and I will not stand by and do nothing. I am introducing a new T-Charge this October and subject to consultation, I want to introduce the ULEZ in central London in April 2019. This alone will mean the capital has the toughest emission standard of any world city.

“But the scale of our air quality challenge is so big that I need to go further. I want to expand the ULEZ from 2020 for heavy vehicles such as buses, coaches and lorries so that all of London will benefit from cleaner air. Then from 2021, I want to expand it up to the North and South Circular roads for light vehicles, including cars and vans. These measures will help improve the air that millions of Londoners breathe.

“I want to announce my intention to consult on these proposals in good time so that business and those affected by new charges will have time to make changes they need to adapt to our low emission requirements.”

If a vehicle does not meet the ULEZ emissions standards and the daily charge is not paid, a Penalty Charge Notice (PCN) will be issued payable by the registered owner or operator. The penalty would be in addition to any congestion charge or Low Emission Zone penalties received. For motorcycles, cars, vans and minibuses the penalty is £130 (reduced to £65 if paid within 14 days) and for HGVs, coaches and buses it will be £1,000 (reduced to £500 if paid within 14 days).

The consultation on the start date of the central London ULEZ runs until June 25. Other proposals will be consulted on later this year.

The T-Charge (Toxicity Charge) will be introduced on October 23. It applies to vehicles, including cars, vans, minibuses, buses, coaches and HGVs, that do not meet Euro4 standards, typically those diesel and petrol vehicles registered before 2006. It will operate on top of, and during the same operating times, as the congestion charge (Monday to Friday 7am-6pm).

Taking a car abroad on holiday this summer: the rules have changed

Many company car drivers will be taking to continental roads this summer as they take their families on summer holidays and, depending on countries being visited, new rules have come into force.

New European Union regulations mean member states, including the UK, have to share information on drivers relating to traffic offences – with significant implications for fleets. The so-called Cross-Border Enforcement Directive, actually came into force two years ago, but the UK secured a derogation giving it until this month (May) to implement the change.

Critically, there are widespread implications for fleets and drivers as there are differences in member state laws around whether the driver or the registered keeper of a vehicle is responsible following an offence.

Meanwhile, company car drivers journeying to Paris, Lyon and Grenoble must display vehicle emissions stickers in their vehicles following the launch by the cities of the Crit’Air scheme. It is expected that a further 22 French towns and cities will introduce the system by 2020.

That is all in addition to company car drivers ensuring they have the correct vehicle ownership documentation with them, which must be carried by law when journeying abroad in most European countries.

In the case of a company car being owned by the driver’s employer that means being in possession of the vehicle’s registration document (V5C). However, if the vehicle is leased or hired than a Vehicle on Hire certificate (VE103) must be carried instead, which gives the owner’s permission for the vehicle to be driven overseas.

The Directive enables European Union drivers to be potentially identified for offences committed in a member state other than the one where their vehicle is registered.

In practical terms, the Directive provides member states access to each other’s vehicle registration data via an electronic information system to exchange the necessary information in which the offence was committed and the country in which the vehicle was registered.

Once the vehicle owner’s name and address are known, a letter to the presumed offender may be sent.

The Directive covers the eight most common traffic offences: Speeding, failing to use a seatbelt, failing to stop at a red traffic light, drink-driving, driving while under the influence of drugs, failing to wear a safety helmet, the use of a forbidden lane and illegally using a mobile telephone or any other communication devices while driving.

But the Directive does not harmonise either the nature of the offences, nor the system of sanctions for the offences. So it is the national rules in the member state of offence, which continue to apply regarding both the nature of the offence and sanctions.

RAC spokesman Simon Williams said how the new law would work was unclear. He explained: “Unfortunately the application of the Directive is simply not practical. In the UK it is the driver of a speeding vehicle who receives penalty points whereas in France it is the vehicle’s registered keeper who is deemed to be responsible. This means a French person caught speeding in the UK could get away with the offence if they were not the registered keeper of the vehicle concerned, as the French equivalent of the DVLA can only pass details of the offence to the keeper. This may make prosecution extremely hard for UK authorities.

“And if a UK driver is caught speeding in France in a vehicle they are not the owner of, they too might get away with the fine as the registered keeper in the UK would be pursued by the French authorities to pay. While the keeper can state in response they were not the driver, the big question is: will French authorities pursue and fine keepers who claim they weren’t driving at the time?”

The RAC said it had been advised by the Department for Transport that there was no transfer of penalty points to UK drivers’ licences for speeding offences committed abroad.

Nevertheless, said Mr Williams: “We strongly recommend every motorist travelling to Europe by car familiarises themselves with the local rules of the road as it is ultimately their responsibility to do so.”

Meanwhile, the Crit’Air scheme is designed to tackle pollution and requires all vehicles – cars, commercial vehicles, motorbikes and buses – to display a windscreen sticker, or vignette, according to how much they pollute.

The Crit’Air system is used on days when air quality is poor to prevent the worst polluting vehicles from driving in affected cities.

Stickers, which cost £3.60 (€4.18) each including postage, come in six categories and cover the very cleanest electric or hydrogen-powered vehicles (Crit’Air green sticker) to the dirtiest (Crit’Air 5 grey sticker). These relate to the six European Union emission standards for cars – dating back to 1992 when Euro1 was introduced. The penalty for failure to display a sticker is an on-the-spot fine of between €68-135 (£58 to £117). Vignettes can be ordered from the official Crit’Air website – www.certificat-air.gouv.fr/ – and should be delivered within 30 days. To apply for a sticker online drivers must know their vehicle’s European Emissions Standard. The fine for a failure to display a sticker is up to £117.

The FSGB view

Our advice is simple. If you know that you will be taking your company car – or your own car – abroad this summer then ensure you are in possession of the correct documentation as soon as possible. It takes times for documents to be applied for and processed and leaving it to the final days before departure could cause unnecessary stress and upheaval if the correct paperwork does not arrive in time.

No Brexit tariff-free trade deal could trigger huge increase in vehicle and component costs

A failure by the government to secure a tariff-free trade deal as it negotiates the UK’s exit from the European Union will increase the price of new cars and vans by thousands of pounds and also raise the cost of replacement parts.

“Some £1,500” could be added to the cost of every new car sold in the country, according to the Society of Motor Manufacturers and Traders (SMMT) if trade tariffs were implemented on the UK as a result of Brexit; the European Automobile Manufacturer’s Association (ACEA) has calculated that the price of light commercial vehicles could rise by 10-22%, cars by 10% and the cost of parts and components by 2.5-4.5% for parts based on current tariff levels; while a study by the PA Consulting Group calculates an average £2,372 rise in new car prices.

The price rise warnings come because a failure by the UK government to secure a tariff-free trade deal during Brexit negotiations would mean the adoption of World Trade Organisation (WTO) rules, which the SMMT called “the worst foreseeable outcome” for the UK automotive industry.

Not only would the imposition of trade tariffs hit the price of news vehicles and components, but they would also impact on the competitiveness of the UK motor industry.

The SMMT said the UK government and the European Union needed to reach a deal which “avoided tariffs, harmonised regulation and ensured the European and UK automotive industries remained the engine for growth, innovation and jobs”.

The SMMT continued: “We need a trade policy aligned to a strong industrial strategy that supports the specific needs of the sector for all the investment, reshoring and export opportunities. We need an outcome that maintains growth, innovation, consumer choice and the long-term future of the industry.”

The PA Consulting Group report – ‘Brexit: The Impact on the Automotive Supply Chain’ -countered that it would be up to manufacturers if they chose to pass all the additional tariff costs on to buyers.