Fleet News

Disposals: Alternative fuels: the jury is still out

ALTERNATIVE fuel vehicles are now appearing around the used marketplace and with the congestion charging proposals for London it is clearly a possible turning point for this sector, says Dave Hill, senior editor of CAP Red Book.

While LPG and CNG residuals have excited a lot of comment, there are a few factors which are conveniently overlooked. Firstly, the few vans we have seen have achieved almost diesel money.

These have been in the main car-derived vans and the majority of those are Vauxhall Astra and Combo, probably the market leaders in this sector. But we have seen too few late low mileage examples to enable us to form a clear picture of where values should settle.

In the 3.5t panel van market – normally the biggest part of our marketplace for diesel vans – we have yet to see anything that can give us a realistic picture of how prices will fare. We await those which are coming off soon, with some mileage on them, and these will form a reasonable benchmark on how mileage will affect price.

Of course, the most critical factor affecting prices is demand. Alternative fuel vehicles stand to benefit or suffer, depending on how legislation pans out. Anybody who has to go into London, or indeed any other city that decides to launch congestion charging, may well consider gas as the way forward, thus stimulating demand.

But then if the Government decides to cash in on such a boom by increasing duty on green fuel then the danger is that everybody will start to dispose of these vehicles and go back to good old familiar diesel. Under such a worst-case scenario, we would then see a glut of green vehicles in the marketplace that nobody wants. What the market needs is for the Chancellor to announce his intentions in the next Budget to clarify the picture.

And ideally, he needs to give an undertaking not to increase gas duty for a significant time. However, the next general election could be as early as 2005 – only three years away. That would give operators less than the five years needed to run these vehicles and get full value for money from them. The other potential problem is that some businesses are likely to pull out of the affected zone in the capital. If they then find that they don't need as many vehicles as they initially thought, rapid disposals could follow.

The cost of delivering goods into 'green' cities is bound to increase as running costs soar, pushing up the overall cost of living. While retail dealers in the vicinity of the restricted zone could make some profit from selling green vans, the potential downside is that the retail man would be unlikely to be able to afford the vehicles so profit margins would suffer – and probably across the whole fuel range.

So the alternative fuel market remains on a knife edge. Charging the commercial vehicle user isn't an answer to the problems on our roads without a clear message on green fuel duties. An assurance that duty would be frozen for the life of this parliament would go some way to convince people to make the change from diesel.

We have the filling points at most fuel stations now, so the first major stumbling block has been overcome. Now is the time to overcome the next one. That is, the one that really matters to the van operator – cost.

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