What is the increase in low-emission zones doing to customer demand for eligible vehicles on a national scale?
A survey by Arval this summer found that 43% of businesses felt they will be affected by the introduction of clean air or ultra-low emissions zones, with 76% of companies expecting to change the make-up of their vehicle fleet to meet new standards. Zones in cities such as Birmingham, Bristol and Leeds have been delayed due to coronavirus, as have the schemes in Scotland, but they will be coming through and businesses are preparing for them.
But is that understanding of the impact and behavioural change finding its way through to the used market?
“It will be interesting to see the impact of consumer behaviour and whether air quality will drive purchasing decisions without either carrot or stick,” says James Davis, customer insight director at Cox Automotive, referring to clean-air zones temporarily dropping away from the headlines.
“When the London ULEZ launched, van dealers inside and outside the M25 were telling us that enquiries were largely focused on Euro6 diesel; cars less so because Euro4 petrol, the minimum standard, was mandated in 2006 and this opens up the age profile significantly.”
An issue for used buyers and sellers is that there was no easy demarcation of where Euro6 diesel models – the standard required for many clean-air proposals – were introduced by manufacturers.
“The majority of car and van manufacturers didn’t badge Euro6, with some introducing cosmetic and/or spec enhancements as part of a half-year model refresh,” continues Davis.
But pre- or post-Euro6, diesel will still remain popular in the used sector for now at least. “With an irreversible downward trend in diesel car registrations, the resulting reduction in supply will keep used values strong” says Davis. “In many cases diesel is still the best option for non-urban long-distance mileage, carrying a payload or towing a trailer.
“There will remain a market for Euro5 and Euro4 diesel and petrol respectively, and older, as some owners will not be able to afford a newer vehicle,” he concludes.
“That said, the local and national government need to be mindful of penalising the less well off in society with clean-air charging, so where many live inside the clean-air zones, there will be exemption periods.”
EURO6 AND LCVs
As a working tool, light commercial vehicles aren’t subject to the more emotive purchasing decisions of fleet or private cars.
“The proposed widening of low-emission zones across the UK has focused commercial vehicle buyers towards Euro6 LCV models,” says BCA’s COO UK remarketing, Stuart Pearson.
“Euro6 LCV examples are performing strongly in online auctions, reflecting the generally high levels of demand across the LCV sector in recent months, including for Euro5 and even earlier models.”
Although it’s not always easy to compare, because Euro6-compliant light commercials are by definition the newer models and are therefore likely to attract the highest prices at auction, Pearson said that “commercial vehicles under four and a half years old – where Euro6 vehicles sit – have seen the most significant year-on-year increases in value”.
But that doesn’t mean businesses remarketing their light commercials, or their cars for that matter, need to worry any more about shifting vehicles around the country to geographically favourable sites.
“While there are obvious and clearly defined business benefits for Euro6 commercial vehicles working in low-emission zones, the remarketing demand is nationwide, so the vehicle’s location at time of sale is less important than it used to be,” concludes Pearson.
BCA COO UK Remarketing Stuart Pearson on how buyers want quality, no matter where it is the past few months
1. Vehicle not location
Remarketing demand for vehicles suitable for Low-Emission Zones is strong nationwide as buyers focus on the vehicle, not its location. This trend has become more apparent since lockdown with all BCA sales online.
2. No need to transport for best value.
From the seller’s perspective, nationwide remarketing demand means there is no benefit in transporting Euro6, hybrid or electric vehicles to locations operating low-emission zones because there are no discernible regional differences in value.
3. But post-sale transport is important
While the vehicle’s precise location when sold is not a big issue, good logistics support to ensure vehicles are delivered in a timely manner is. BCA has also introduced Click and Collect so customers can plan their vehicle collections online efficiently.
4. Hybrids are the popular green option
Hybrids remain the dominant choice for buyers purchasing eco-friendly cars. Hybrids are more established with motorists, and plug-in hybrids continue to grow in popularity as they offer cheap electric-only power for short trips, yet longer journeys are free from range anxiety.
5. Don’t dismiss pre-euro6 LCVs
For the average self-employed tradesman or small business, a reliable and cost-effective transport solution to support their business is most important – if they are not entering low emission zones then a Euro5 or earlier model could meet their needs.