London is set for yet another emissions-based cost, with the latest charging zone set to kick in from 8 April 2019.
The newest scheme will arguably have the most impact since the original congestion charge started in February 2003, because the Ultra-Low Emission Zone (ULEZ) is set to target cars and vans that produce emissions that have a direct impact on the air that we breathe. Petrol cars that don’t meet Euro4 emissions standards, and diesels that don’t match the relatively recent Euro6 standards, will both be subjected to an additional £12.50 on top of the existing £11.50 congestion charge. The ULEZ will also replace a new T-charge, which will come into force from 23 October, and will charge pre-Euro 4 vehicles an extra £10 to use the congestion zone.
Initially the ULEZ charge will apply to the same geographical area as the C-Charge, but this is set to expand to cover everywhere within the North and South circular roads.
Perhaps the biggest kicker to owners of these older vehicles is the fact that there is no escape by getting up early or heading home late – this charge will apply 24 hours a day, 365 days a year.
The only solution for those who operate in or near London is to upgrade, therefore, and the timing of the decision means that there are many fleets that could be caught out with old stock on their books that will not be financially viable for regular trips into the city. The major leasing companies are all reporting a reaction from the industry already.
“There is no escape – the charge applies 24 hours a day, 365 days a year”
“We have been approached by a number of fleet customers about this issue and their main concern is to ‘future proof’ their fleet against how the ULEZ will affect them in London and, potentially, other cities,” said Simon Cook, LCV leader at Arval UK. He has been recommending that companies look to defleet anything that isn’t Euro6-compliant.
“At 3.5 tonnes, there is little alternative to diesel. For medium-sized vans, there are a few EVs but there are issues with range and payload which make it very difficult to justify adopting them.”
The charge has seen a knock on impact on the types of vehicles that fleets are asking about, too. Steve Crawshaw, Leaseplan’s commercial vehicle fleet consultant, says: “One area we have noticed is a rise in the interest in petrol vans. That has been very noticeable in the past three or four months, but there is nothing out there.”
He points out that manufacturers might have petrol options in their ranges in other countries, but they aren’t offering them here. That could change if there is sufficient demand from customers.
Perhaps the most notable element to the ULEZ is that it is the first city-based charge that seems set to spread outside of London. As Alphabet’s head of LCV and public sector, Dean Hedger, says: “There are low-emission zones planned from Newcastle to Southampton – with all points in between including Nottingham, Birmingham and Bristol – so any fleet with an eye on the future is focused on Euro6 diesels or Euro5 and above for petrol.
“With so much uncertainty, an apparent ‘bargain’ Euro5 diesel could end up costing fleets a lot in the long run.”
There is no simple, universal solution as things stand, with many in the industry advocating relocating vehicles around the country, ensuring that any Euro5 vans are based away from cities by the time the charge comes in. James Davis, director of commercial vehicles at Manheim, said that there might also be an increase in short-term solutions to cover any gaps.
“The ULEZ will result in many operators re-routing their fleets, moving older vehicles out of London to other parts of the country. This is despite the fact that the market for used Euro6 trucks could be in full swing in two years, with plenty of such trucks in the marketplace,” he said. “One of the consequences of the zone is that operators may end up taking extra Euro6 vehicles on daily rental, spot rental or flexi-rent packages to carry out jobs in London.”
Wherever the ULEZ spreads, fleet selection for vans is about to get a lot more complicated.