Brown presents golden opportunity for fleets to save while going green

Vehicle fleet managers have a golden opportunity to make significant cost savings and demonstrate their green credentials, according to EurotaxGlass’s, following Gordon Brown’s announcement of changes to rates of Vehicle Excise Duty (VED).

The rise in VED for vehicles in band G (those emitting more than 225g of carbon dioxide per kilometre) to £300, then to £400 in 2008, affects one in seven of all new vehicles on sale, and these models are typically bought by fleets rather than private buyers. VED for band B vehicles (those emitting between 101g and 120g of carbon dioxide per kilometre) will reduce to £35.

Commenting on the opportunity for fleets to realise new cost efficiencies, Adrian Rushmore, Managing Editor at EurotaxGlass’s, says, “Some fleet managers will be able to lower costs on VED by reducing the number of band G vehicles on their fleets and opting for lower-rated alternative models. They could also benefit in terms of depreciation by avoiding the highest-rated vehicles. For example, large-engined executive saloons will normally lose their value more quickly than their
smaller-engined equivalents.

“This effect is likely to be compounded by public awareness of the jump in band G VED. When vehicles are disposed of after three years, the majority of used car buyers will be private individuals, who are more cost-conscious and therefore more aware of the significant difference in VED costs.

“The expectation is that the VED rate for top band vehicles will continue to rise beyond 2008, so private buyers will be increasingly hesitant about buying the heaviest polluters.”

He continues, “By adopting a policy of only running vehicles which fall below band G, fleet managers could make significant savings on operating costs, while also demonstrating a responsible attitude to ecological concerns by limiting the environmental impact of their fleets.”

The Budget statement also reported that the duty on biofuels would continue to be discounted by 20 pence per litre up to 2010, while the biogas incentive, worth 40 pence per litre is to be extended until 2012.

“Some fleets controllers have previously experimented with new fuel technology, such as liquefied petroleum gas [LPG], but such alternatives have often proved to be unsuccessful largely due to a lack of sustained Government support,” continues Rushmore.

“The lack of progress with the LPG initiative has had a negative effect on the residual values of modified cars, so fleets will need convincing that biofuels will be more successful than LPG. Even though there are a limited number of bio-fuelled models currently available – mostly from Saab and Ford – at least the larger filling stations now supply biofuel, which is a positive indicator for the future. But fleet managers are likely to remain sceptical about investing in bio-fuelled models while memories of LPG’s failure persist.”