The introduction of the Euro 6 engine emissions standards will have a significant impact on the way commercial vehicles are acquired in the coming years. That is the view of Andrew Morley, Sales Director of Prohire Plc, one of the UK’s fastest growing commercial vehicle hire and fleet management specialists.
Euro 6 became mandatory for all new truck registrations from 31st December 2013. The standard is the latest stage in the legislative drive to reduce harmful vehicle emissions that started in 1993 with the introduction of Euro 1 and since that time emissions have been reduced by up to 97%.
Of course, in developing products that meet the emissions standards demanded by Euro 6, engine manufacturers have incurred hefty R&D costs.
As is the way of the world, the vehicle manufacturers have had little option but to review their own pricing structures to recoup their investment costs.
As a result, commercial vehicle prices – from the lower end of commercial vehicles to top-end tractor units – have increased by up to 16 per cent since the turn of the year.
To beat the increases, many fleet operators were tempted to bring forward new vehicle orders prior to the end of 2013. Others, meanwhile, have delayed fleet replacements altogether.”
Critics of Euro 6 contend that the benefits to the environment that it will bring are minimal while the increase in vehicle costs that are the result of its introduction will be damaging to the stability of the road transport sector at a time when the economic recovery is showing signs of gathering pace.
There is also a belief that, thanks to Euro 6, vehicle payloads will be compromised and additional fuel costs incurred.
At Prohire it is our view that lower gross vehicle weight vehicles that operate in urban areas will gain little from the introduction of Euro 6: their operating costs will increase and any environmental benefits will be negligible. Meanwhile, for some tractor units, there is an argument that suggests that the increase in up-front capital costs can be off-set by fuel savings over time.
What is undeniable however is that across the board, fleet operators can minimize their exposure to the upsurge in commercial vehicle capital costs that Euro 6 has precipitated by moving away from purchasing vehicles outright and embracing some form of long term hire agreement when the time comes to add new vehicles to their fleets.
There are several reasons why, with the advent of Euro 6, long term hire makes sound commercial sense that; these being that the increased capital cost isn’t born by the operator in one hit and as the funding is ‘off balance sheet’ then this frees the operator up to use their working capital in other areas of the business.
Whatever the benefits, or lack of benefits, Euro 6 is now a reality.
Contract Hire and Fleet Management companies such as Prohire, will be able to guide you through the acquisition methods open to you to ensure that you make the right choice for your business.