REMARKETING: Will Clean Air Zones leave older van values gasping for breath?

Date: Wednesday, November 28, 2018 | Author: Tim Cattlin

Tightening emission legislation is likely to give the new van market a boost. But where does this place the market for older vans? Tim Cattlin looks at the implications.

From April an Ultra Low Emission Zone (ULEZ) will be in place in central London, meaning diesel cars, vans and minibuses that do not meet Euro6 emission standards will be unable to enter unless a daily charge of £12.50 is paid.

Forget to do this (or stray into the area accidentally) and you’ll be hit with a penalty of £160.

Leeds, Birmingham, Southampton, Derby and Nottingham are also all at various stages of planning their own clean air zones.

Interestingly, Transport for London’s (TfL) website suggests you may wish to “upgrade to a second-hand vehicle that meets ULEZ standards” or that “leasing a vehicle may be a more affordable way to get a vehicle that meets the emissions standards”. This raises the question as to the effect this legislation may have on the residual values of pre-Euro6 vans, the assumption being that the market will vanish in inner-city areas and reduce further afield where operators still need to work in these urban centres.

“The publicity surrounding the ULEZs is now stepping up and over the next 12 months it is anticipated that vehicles that achieve the correct Euro standard will be in more demand than vehicles that do not,” says Steve Botfield, commercial vehicles senior editor at vehicle valuers Cap HPI. “The caveat to this will be down to the area the purchaser anticipates he will be entering. Those that are not affected by any ULEZ will benefit from the lower-valued pre-Euro6 models”.

James Davis, director of CVs at Manheim Auctions, sees demand for later used vans being maintained, but offers a word of warning to those with much older vehicles: “With five million businesses in the UK, the majority being micro-businesses with a turnover of less than £1m, and between 600k and 700k new start-ups every year (and 200k-300k winding up) the demand for used CVs is clear to see.

The demand for new is driven by business confidence, legislation and operating and funding models. These new vans are tomorrow’s used vans, and it’s clear those operators will increasingly look to update their vans. I predict a superheated used market in the next two years as a result. I’d warn owners and operators of older vans to realign their expectations of the exceptional financial returns they’ve enjoyed in the last decade. I can see demand for these will soften as the ULEZs expand in the early ’20s”.

Andy Picton, chief CV editor at used vehicle valuation experts Glass’s, suggests the picture may not be as gloomy as some predict: “Initially, there will be little impact on smaller businesses, as those operating older vans and who infrequently travel into a CAZ [clean air zone]/ULEZ, will pass the charge onto the customer. Many are holding back from major fleet purchases – with some switching to short-term/flexi-rental until the confusion over Brexit clears.

That said, vans that are no longer able to be used in London can still be easily sold into another part of the country without suffering a penalty, so RVs are unlikely to be affected in the short to medium term.

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