Although the new legislation is going to be good for the environment, it won’t be so good for your whole of life vehicle costs. As the Euro 6 vehicles are more expensive to purchase (than the current Euro 5) and more expensive to run (less MPG than Euro 5), have you got the right systems in place to manage and record the changes within your fleet?
We at TRACE are here to help. If you haven’t got a fleet, garage or workshop maintenance or management system, we can show you the real value of choosing us. If you’re already a customer, we can add a field within your software to note whether a vehicle is Euro 5 or 6 compliant which means that when you next report on the fleet, you can reconcile your Euro 5 – 6’s. It’s an easy little change/addition and not an extra cost – just ring our support desk. They can help add the new field.In the mean time, we’ve found this fantastic blog post from national vehicle hire company, Burnt Tree http://www.burnt-tree.co.uk We think it sums up EURO 6 really succinctly.
EURO 6/VI EMISSIONS STANDARDS ARE COMING — BUT CAN YOU KEEP YOUR FLEET COSTS DOWN?
Euro 6/VI emissions standards are just round the corner, coming into force during 2014-15 for the various different vehicle classes. So if you want to avoid eye-watering extra costs being tacked on to the price of running your fleet, now is the time to act.
This blog post will show you how. But first, let’s take a look at ‘Euro 6/VI’ and find out how its introduction is likely to affect your commercial fleet costs.
In a nutshell, Euro 6 is a set of European Union standards that will regulate the limits of exhaust emissions allowed by new vehicles up to 3.5 tonnes and Euro VI vehicles over 3.5 tonnes sold across the EU. They follow on from the already-stringent Euro 5/V standards that came into force in 2009 and 2010.
Euro 6 will further tighten up the acceptable amounts of nitrogen oxides, total hydrocarbon, non-methane hydrocarbons and particulate matter that vehicles of different classes can emit. Euro VI, comes into force on 31 December 2013 and demands significant reductions in the hydrocarbon, nitrous oxide and particulate emissions made by all heavy duty diesel engines (typically fitted to trucks and buses) registered after that date.
Up until now, vehicle manufacturers have responded to tighter standards by making impressive reductions in regulated emissions — to the extent that the air expelled by some diesel engines is cleaner than the air they take in!
However, to meet the demands of Euro 6/VI, manufacturers are having to make significant investment in new technology. That comes at a price — at the upper end of the scale, it’s estimated that the unit cost of trucks will increase by up to a staggering £10,000.
While it’s a good thing for the environment that new vehicles will make lower emissions, what does Euro 6/VI mean for you and your commercial fleet?
EURO 6/VI — DRIVING UP THE COST OF FLEET OWNERSHIP
If you own the vehicles in your fleet, the first change you’ll experience is a marked increase in the cost of lorries, trucks, vans and cars. In fact, you may well be experiencing this now — we’ll explain why in a moment.
Euro 6/VI will drive up vehicle prices for three reasons. First, the manufacturers will recoup the cost of investing in advanced emissions-reduction technology by increasing the cost of their vehicles. The larger your fleet, the larger the overall price hike you’ll need to contend with.
Secondly, the imminent introduction of Euro VI is driving up the prices of older, Euro V compliant vehicles (particularly heavy trucks), as fleet owners look to make savings by ordering Euro V trucks ahead of the directive’s implementation to avoid truck chassis cost increases and possible reliability issues with the new technology. Many types of late second-hand Euro 5 compliant vehicles are already in great demand, meaning second hand truck prices are increasing.
However, although the second hand resale price of popular categories of Euro V compliant vehicles has increased it is at a lower percentage than the large price hike on the Euro VI compliant additions to your fleet.
HOW TO REDUCE THE PRICE IMPACT OF EURO 6/VI
The key to reducing the price impact of Euro 6/VI is to achieve economies of scale. However, with price increases potentially reaching as high as £10,000 per unit, few private commercial fleets are large enough to give companies the bargaining power they need to bring costs back down to an acceptable level.
In contrast, as the owner of some 15,000 commercial vehicles, we intend to use the scale of the Burnt Tree fleet to deliver price benefits to our customers — and make commercial vehicle hire an even more attractive solution for current fleet owners.
These are the main ways in which we’ll help our customers weather the financial impact of Euro 6/VI:
- Using our position as one of the UK’s largest fleet owners to obtain major and significant unit price discounts for Euro 6/VI compliant vehicles — allowing us to keep commercial vehicle hire costs as low as possible
- Identify cost savings and efficiencies at every stage of our supply chain
- Use our expertise to drive positive change in the industry
- Create straightforward, no-nonsense products that meet your everyday commercial needs.
- Use our relationship and buying power to ensure we get the best after sales support and backup from the manufacturers for all of our customers should the new technology cause reliability issues
Euro 6/VI will be better for the environment, but could becomebad news for your margins — especially if you own your fleet, rather than hire it.