With less than three weeks to go until the London ULEZ (Ultra-Low Emissions Zone) comes into force on 8 April, van emissions are a hot topic at the moment.
The disruption caused by changing emissions rules doesn’t stop there. Last year’s switch to the WLTP emissions testing regime for new cars and vans caused disruption to new vehicle supplies across Europe, as the new testing system caused bottlenecks for manufacturers.
The introduction of the ULEZ in London means that anyone who isn’t driving a Euro 6 diesel will face a £12.50 daily charge for driving inside the congestion zone (the area will be expanded in 2021). Realistically, this isn’t a viable choice for daily operation — doing so five days a week would cost £3,250 per year.
Should you switch to rental?
Of course, drivers using rental vans don’t have any of these problems. The majority of hire companies are already operating Euro 6 vans. And increasingly, companies such as Europcar are also offering petrol and electric choices as well.
With cities such as Birmingham and Leeds due to introduce Clean Air Zones in the next few years, the emissions problem isn’t going away. But operators wanting to update their fleet to Euro 6 models may find that supplies are limited and prices rising, even for used models.
Auction group BCA recently held its first dedicated ULEZ van sale, where all vehicles were Euro 6 compliant or electric/hybrid vans. As part of the sale, BCA guaranteed that all vans being sold would be able to enter the Ultra Low Emission Zone without charge.
A total of 148 vehicles went under the hammer, selling an average of 104% of their CAP book price — i.e. they sold for more than their book value. Some used dealers at the auction confirmed that they are now only retailing Euro 6 models.
With such strong demand, used van prices are likely to remain high, in my opinion. I think many van operators could be better off outsourcing their vehicle supply to large rental firms and focusing on their core business.
Indeed, all of this brings to mind a famous quote from oil baron J Paul Getty, once the world’s richest man. Talking about business, Getty said:
“If it appreciates, buy it. If it depreciates, lease it”
There’s no doubt at all what category vehicles fall into. From the day you buy them, they depreciate and cost you money to maintain. If you’re still running Euro 5 or older vans, I think there’s a real risk that their used value will collapse over the next few years. I suspect that no one will want to buy vans that are effectively banned from many major towns and cities.
In my view, unless transport is a core part of your business, van operators are better advised to consider long-term flexible rental deals such as those from Europcar and Northgate.
If you’re looking for daily van rental quotes for your business, you can compare prices with our independent van hire price comparison engine.