The Best Car Finance Blog In The World

I’ve included the following report because it illustrates a point that I’ve been making for some time now that diesels are now cleaner than petrol cars and as we are years away from all cars being electric should they still be demonised and disregarded by drivers?

 

The fact is that whilst sales of petrol vehicles now massively exceeds the sale of diesels, if you are environmentally aware but not in a position to drive an electric vehicle should you immediately opt for petrol? Petrol emits more CO2 than diesel so if we’re not careful we will see the opening up of holes in the ozone layer – remember those? So read the report, aimed at the fleet industry, and draw your own conclusions.

 

Once the fuel of choice for the company car driver, diesel’s dominance among fleets has been on the wane for some time.

 

Its reputation tarnished and the attraction of tax-busting hybrid and battery electric vehicles (BEVs) difficult to ignore, numbers have continued to dwindle.

 

Industry leaders say they cannot see a way back for the embattled fuel and this is despite diesel beginning its fightback last year, when the first cars complying with the latest emissions standard began joining UK fleets.

 

Cars qualifying for the so-called RDE2 standard do not attract the 4% diesel company car tax surcharge, while fleets benefit from not having to pay the higher first-year rate of VED.

 

Shaun Sadlier, head of consultancy at Arval UK, says the savings from choosing a RDE2 diesel company car can run into “thousands of pounds” over a typical three-to-four-year lease contract.

 

“Fleets operating RDE2 cars also benefit from lower Class 1A NICs and first-year VED costs in comparison with a non-compliant model,” he said.

 

Mercedes-Benz, Jaguar Land Rover (JLR) and BMW were among the first to offer RDE2 cars. Rob Morris, national fleet operations manager, at Mercedes-Benz, says that its RDE2-compliant engines were a “popular choice” with customers.

 

All Mercedes-Benz cars produced from this month (June) will meet the stricter standard.

 

Vauxhall has become the first volume manufacturer to offer the emissions standard across its range.

 

James Taylor, general sales director at Vauxhall, told Fleet News: “That means all new Vauxhalls avoid the 4% diesel surcharge on benefit-in-kind (BIK), offering savings to our customers of up to £22 and £43 per month for 20% and 40% taxpayers, compared with the same (non-compliant) models.”

 

STRICTER LIMITS

 

The on-the-road Real Driving Emissions (RDE) test was introduced alongside the new emissions testing regime, the Worldwide harmonised Light vehicle Test Procedure (WLTP), in two stages.

 

RDE1 was introduced in September 2017 for new car type approvals and applied to all new car registrations from September, last year. Vehicles compliant with this standard are designated Euro 6d-Temp. The stricter RDE2 standard came into force from January for new type approvals and will be applicable to all new cars, which will be labelled Euro 6d, from January 2021.

 

Cars certified to RDE1 (Euro 6d-Temp) must emit less than 2.1 times the Euro 6 NOx limit of 80mg/km for diesel and 60mg/km for petrol engines. This conformity factor tightens to 1.43 times for RDE2-compliant (Euro 6d) vehicles.

 

In 2023, it’s expected conformity factors will be removed, aligning laboratory and on-road emissions limits.

 

Alongside Vauxhall, other Groupe PSA brands have become RDE2-compliant, including all Citroën and DS diesel models, plus the majority of Peugeots now also meet the stricter emissions standard.

 

RDE2 models include all 1.5-litre and 2.0-litre BlueHDI-powered Citroëns and DSs, with manual and EAT8 automatic transmissions.

 

BlueHDi versions of the Peugeot 3008 and 508 have also qualified, along with the new 208 and 2008.

 

Martin Gurney, who is responsible for fleet and used vehicle sales for Peugeot, Citroën and DS in the UK, says Groupe PSA has been “working hard” to ensure its vehicles are compliant ahead of schedule.

 

He added: “These early announcements should reassure customers that we are committed to engineering clean and efficient powertrains for all drivers. The fact that most of our diesel models already meet the forthcoming RDE2 standards speaks volumes about the development that goes into our engines.”

 

BMW continues to add RDE2 models, while Hyundai says it will add further RDE2 engines to its line-up to join the i10, later this year.

 

Other manufacturers, such as Audi, Škoda, Renault and Kia, which do not currently have any RDE2 cars, say launches in the second half of the year will see compliant models come through.

 

But will a wider choice of cars, which avoid the 4% surcharge, be enough to halt the demise of diesel?

 

DIESEL’S DECLINE

 

The leasing industry is reporting growing interest from savvy fleets, but all admit the focus is shifting to zero emission motoring.

 

Figures from the Fleet News FN50 show that the proportion of diesel cars on the FN50 fleet – the UK’s top 50 leasing companies by risk fleet size – fell from almost two-thirds (63.4%) to almost half (50.5%) in 2019.

 

In terms of vehicles they had ordered, the flight from diesel was still more pronounced. Almost half of the cars ordered last year were petrol (47.6%), while only two-fifths (38.8%) were diesel.

 

Jon Lawes, managing director of Hitachi Capital Vehicle Solutions, has seen a growing fleet interest in RDE2 diesel cars.

 

However, he says this is when there is a direct comparable alternative available for the model they want.

 

He explained: “WLTP has been responsible for the wholesale rise of CO2, irrespective of RDE categorisation, and, therefore, we’ve seen a continued negative shift in perception of diesel vehicles.”

 

WLTP CO2 values for company cars registered after April 6, which are typically higher than those derived from the old emissions testing regime for comparable vehicles, are now used for tax purposes.

 

Their use has coincided with a new company car tax regime to try to take account of the hike in emissions, which also includes a new zero percentage rate for battery electric vehicles (BEVs).

 

PLUG-IN INCENTIVES

 

Lawes says he expects a “continuing overall decline” in diesel market share as more fleets opt for plug-in hybrid or BEV alternatives.

 

However, he did offer a glimmer of hope for diesel powertrains. “We expect RDE2 models will cause this decline to plateau as this will provide a favourable cost-effective option for some sectors and drivers.”

 

David Bushnell, principal consult-ant at Alphabet (GB), said: “For those high mileage drivers, where diesel is still probably the number one choice for fleets, the selection of an RDE2 vehicle will clearly make sense in terms of personal taxation and national insurance costs.

 

“It’s also an existing technology that many drivers are comfortable using. But, even here, we’re seeing mild hybrid technology coming in to reduce drivetrains’ CO2 output.”

 

However, he says the “clear additional tax benefits” for choosing plug-in hybrid and battery electric vehicles, revealed in the Budget, will prove hard to ignore.

 

Chris Chandler, principal consultant at Lex Autolease, has seen a similar trend. He said: “The cost savings and environmental benefits of a plug-in hybrid or full electric alternative are more attractive at the moment.

 

“The main question we’re being asked by fleets on a daily basis is how they can start – or accelerate – their transition along the ‘Road to Zero’.

 

“The availability of RDE2 vehicles and how to optimise diesel fleets seems to be far lower down fleet managers’ agendas.”

 

GROWING INTEREST

 

Chandler’s comments appear to be backed up by the results of a recent Energy Saving Trust survey.

 

It revealed that one-in-three UK fleet managers expect half of their company car fleet to be electric by 2025, and seven-in-10 fleet managers are preparing to buy an electric car within two years.

 

Matthew Walters, head of consultancy and customer data services at LeasePlan UK, said: “From our conversations with fleet managers, it’s evident WLTP is still the main consideration when it comes to compliance-related tax savings and how this impacts the vehicle selection process.”

 

He expects sales of internal combustion vehicles (ICEs) to fall as electric vehicles become more available and increasingly affordable.

 

Lex Autolease has seen a significant increase in demand for plug-in hybrid and full electric vehicles over the past 12 months, especially since the 0% BIK tax announcement.

 

Chandler says a “good awareness” of wholelife costs in the market is driving the shift towards low and zero-emission driving.

 

He said: “Rather than pay 25-30% tax on a RDE2-compliant diesel vehicle, company car drivers seem to be more focused on taking advantage of the tax benefits of plug-in hybrid and pure electric cars.”

 

As a result, the UK’s largest vehicle leasing company, Lex Autolease, says it doesn’t anticipate increased availability and understanding of RDE2-compliant models will significantly slow the decline of diesel.

 

Chandler added: “RDE2-compliant models will simply account for a growing proportion of the existing diesel market.”  By Graham Hill thanks to Fleet News.

Sanitisation costs for cars and vans bei g delivered and returning from garages are beginning to appear.

 

Dealers and garages are currently “working out” who pays the cost of sanitisation on cars and vans that are delivered to their new owners or undergo service, maintenance and repair (SMR).

 

There appears to be general agreement among all parties that vehicles will need sanitising thoroughly before they are handed over or handed back after service and maintenance to the customer or employee with a company car.

 

But who is to pay for cleaning products, PPE equipment and the time taken? These costs can’t simply be absorbed by the dealers and garages.

 

Tim Meadows, vice president and commercial director at Epyx, said: “This is a development that we are just starting to see through our 1link Service Network SMR platform, which is used by fleets totalling four million vehicles, as lockdown starts to ease.

 

“Sanitisation is becoming recognised as an essential part of almost any visit by a vehicle to a workshop. The car or van is potentially touched by many people as part of almost any SMR process, and the potential spread of infection needs to be minimised.

 

“However, that sanitisation has a cost and is starting to appear as a formal charge on some job sheets. The question is, who pays?”

 

Meadows says that garages “understandably” see it as an additional cost that they shouldn’t have to bear. “Their customers, equally understandably, feel the same,” he said.

 

The issue is especially acute where, on lower Service Maintenance and Repair bills, it could be interpreted as a disproportionate amount, added Meadows.

 

“If you are having £1,000 of work done, then a potential £10 item doesn’t stick out but, if your car is in the workshop for a MOT test or even just having a small repair, it becomes more noticeable.”

 

Leasing companies that already work on very small margins are working with dealers and manufacturers to arrive at a compromise to avoid increased delivery costs

 

Meadows continued: “Some of the fleets that use 1link Service Network have hundreds of thousands of maintenance jobs every year and adding £10 to each suddenly becomes a very large sum of money.

 

“Equally, this is a significant cost for garages to absorb. However efficient they become at sanitisation, this is something that takes time and money.”

 

Meadows believes that one thing that the industry had seen during the coronavirus crisis is a “very strong spirit of co-operation”.

 

“Everyone recognises that they are facing the same issues and they need to resolve them together,” he said. “We are sure that sensible solutions will be found to this problem.”

 

I agree, it’s not the end of the world, an extra £10 for most jobs is not over the top, it’s more the concern on the part of the customer that the sanitisation has been carried out. So many changes to our lives, not just in the short term but forever. By Graham Hill thanks also to Fleet News

Autovista Group has published a new whitepaper outlining how a report outlining the remaining battery life of an electric vehicle (EV) could improve its residual value.

 

Created in partnership with battery analytics specialist TWAICE and TÜV Rheinland, the document states that driving profile has a major impact on how long a battery lasts and in the absence of documentation of how a driver has treated the battery, residual value formation remains below its full potential.

 

“Used car programmes and extended warranties are already powerful signals that help address the information asymmetry between buyer and seller. But the BEV represents a new challenge for the market,” said Christof Engelskirchen, chief economist at Autovista Group.

 

“We know that how the battery is treated over the 8-10 years of its lifetime has a major impact on range and therefore suitability for daily use, but car manufacturers provide no systematic transparency on battery treatment and quality.”

 

Munich-based TWAICE has the technology in place to evaluate the true remaining quality of a battery based on how it was treated. It creates a digital twin of a battery and can simulate the impact of operating conditions, driving style, and charging behaviour.

 

Jonas Keil, battery engineer at TWAICE, said: “Many people underestimate the impact of battery treatment. At the three-year point with 28,000 miles on the clock, a battery that has been poorly treated will perform worse on promised range by about 5% – and this gap will only increase as battery quality, once lost, cannot be recovered.”

 

Autovista Group has simulated that improved and verifiable battery quality, provided in the form of a Battery Health Report, delivers up to £400 higher remarketing results for a three-year-old used C-segment BEV in Germany.

 

Dr. Matthias Schubert, executive vice president mobility at TÜV Rheinland, added: “Numerous long-term tests have shown that the aging pattern of EV batteries can vary widely amongst individual cases, depending on the user profile. An assessment of the remaining capacity and expected performance lifetime is a decisive precursor to establishing residual value.”

 

The full potential of a Battery Health Report can only be realised if information on battery treatment becomes available as a standard data item on every used BEV transaction, similar to information on age, mileage and equipment.  By Graham Hill thanks to Fleet News.

Business travellers and commuters continue to steer clear of public transport, preferring to drive rather than travel by bus or train, new data from Transport Focus shows.

 

Having tracked transport usage over the past four weeks, the independent UK watchdog says survey results show public transport has remained consistently low.

 

Before the outbreak, 43% nationally used public transport at least a few times a month, while 80% used the car.

 

But just 2% of respondents said they had used a bus in the past week, which has remained unchanged since Transport Focus began its weekly survey.

 

In terms of trains and the London Underground, usage has again remained unchanged over the period, with only 1% of respondents saying they had travelled on either.

 

More than a third (36%) of respondents said they were avoiding public transport on Government advice, unchanged from the previous week.

 

Two out of five respondents (39%) said they would not use public transport for any reason until they felt completely safe.

 

However, almost one in eight said they would begin using public transport again when shops were open again or when their employer asked them to return to work.

 

During the first few weeks of the pandemic, there was much debate about the use of face masks.

 

Last month, the Government updated its advice and for the first time recommended their use in when in an enclosed space where social distancing is not possible.

 

Examples given include short periods indoors in crowded areas, such as when using public transport or visiting some shops.

 

Six out of ten respondents (62%) said think that wearing a face mask while using public transport should be a requirement in the most recent study. That was similar to the previous week’s result (63%) but has increased from the 51% seen in week one of the survey.

 

Until social distancing can be guaranteed on public transport, however, 71% said they would continue to avoid its use.

 

A consistent six out of 10 (60%) said they will more likely to drive in the future.

 

Driving retained its top spot, with 53% reporting usage of their car, unchanged from the previous week and a 5% increase on the 48% from a fortnight ago.

 

Drivers, however, are continuing to report an increase in the volume of traffic they are encountering, with 38% of respondents saying roads are ‘moderately’ busier in the past week – up from 33% in the previous week.

 

Traffic on the motorway, they say, is very light but local roads are much busier than they were a couple of weeks ago.

 

As lockdown restrictions are gradually lifted more businesses are re-opening and staff are returning to work. However, the proportion of people who say they expect to work from home more often in the future has increased since the survey was first conducted.

 

In week one, 40% said they expected to be spending more time working from home, compared to more than half (52%) of respondents now.

 

A Fleet News poll currently shows that two-thirds of respondents (66%) expect working from home to be their ‘new normal’ in the future. By Graham Hill thanks to Fleet News

The number of vehicles requiring recovery due to pothole damage has increased rapidly according to the RAC.

 

It rescued almost 3,500 motorists with pothole damaged cars in the first quarter of 2020, an increase of 64% on Q4 2019.

 

The number of cars damaged by potholes requiring recovery, between January and March, is 4.5% higher than in the same period last year, despite the Coronavirus lockdown reducing the number of vehicles on the road in the last nine days of the March.

 

Breakdowns resulting from damaged shock absorbers, broken springs and distorted wheels – that are most likely to be attributable to poor road surfaces – made up 1.6% of all the RAC’s call-outs for its individual members.

 

This was considerably up on Q4 2019 when the figure stood at 0.9% and marginally up on the same period a year ago – 1.5%.

 

The RAC’s Pothole Index suggests the overall standard of the roads has improved a little as the Index currently stands at 1.6, down from 2.3 in the same period last year and slightly down on Q4 2019 (1.7).

 

This does mean however that drivers are still 1.6 times more likely to break down as a result of pothole-related damage than they were back in 2006 when the RAC first started collecting data.

 

RAC head of roads policy Nicholas Lyes said: “The jump in pothole-related breakdowns from the last three months of the year to the first quarter of the next year is always the largest as winter weather has the greatest effect of all in wearing down our roads.

 

“Many parts of the country suffered very wet weather conditions throughout February. It’s still likely that the storms and floods were major factors in why the number of pothole-related breakdowns was higher than the same period last year.

 

“In his Budget in March, the Chancellor committed to funding our local roads and it is clear that the economic recovery as the UK emerges from the COVID-19 pandemic will need to be built on solid infrastructure – which of course needs to include good quality roads.

 

“Moreover, it will also be interesting to see if lower traffic volumes during the UK’s lockdown will help prevent further deterioration of roads as fewer wheels going over weaknesses in the asphalt should contribute to less surface wear.”  By Graham Hill Thanks To Fleet News

Electric cars are driven for 26% more miles in their first three years on the road than petrol models, research from the RAC Foundation has found.

 

The analysis, which pre-dates the steep fall in road traffic seen since the start of the coronavirus pandemic, is based on the MOT data for 516,936 vehicles.

 

It found battery electric cars cover an average of 9,435 miles per year over their first three years, compared to a petrol car’s 7,490.

 

Diesel cars are driven the most, and cover an average of 12,496 miles in each of their first three years.

 

Steve Gooding, director of the RAC Foundation, said: “Unsurprisingly people with diesels have been doing most mileage, probably seeking better long-distance fuel economy, but this study is also evidence that battery-electric powered cars are not just trophy vehicles signalling their owners’ green credentials but prior to the lockdown were racking up the miles as everyday transport.

 

“Tens of millions of people still drive petrol and diesel-powered cars, but this data suggests that owners of electric cars have found them to be a practical proposition, running up the sort of big annual mileages that many of us need to do, challenging preconceptions about their range and the ease of re-charging.

 

“The next big question is what will happen when the Covid-19 lockdown ends?

 

“Some say our travel behaviour might change quite dramatically as we’ve mastered on-line meetings in place of the office routine, but any ongoing desire for social-distancing might yet draw us back to our own cars for the trips we make once the travel restrictions are lifted.”

 

The research found a Mitsubishi Outlander plug-in hybrid – the most common PHEV on the road – averages 12,500 miles a year.

 

RAC Foundation reports the battery electric Tesla Model S covered an average annual mileage of 12,392, the Nissan Leaf 8,241 and the Renault Zoe 5,736.

 

The analysis also found there was a big difference between petrol and diesel versions of the same model. By Graham Hill thanks to Fleet News

The price of US oil has recently turned negative for the first in history as the coronavirus pandemic has caused global demand to collapse – but this is not yet being reflected fully at the fuel pumps.

 

Earlier last month, oil producing countries agreed to collectively slash global output by an unprecedented 10 million barrels a day, or about 10%. However, demand has dropped by 30 million barrels a day or more.

 

The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as minus $37.63 a barrel as oil producers are paying buyers to take it over fears that storage capacity could run out in May.

 

The impact on Brent Crude – the benchmark used by Europe and the rest of the world, has been less as there is still capacity in which to store it: it has fallen 8.9% to less than $26 a barrel.

 

According to the Fleet News Regional Fuel Prices tool, average petrol prices in the UK have fallen 11p a litre in the past month, but the wholesale cost of fuel has dropped by much more than that.

 

Currently, the average price of a litre of diesel is 111.64p, with unleaded at 106.91ppl. One month ago, they were 122.01ppl and 118.69ppl respectively.

 

Once tax and fuel duty have been factored in, the RAC calculates that under normal circumstances petrol prices should be about £1 a litre.

 

RAC fuel spokesman Simon Williams said: “The oversupply of oil continues to suppress the barrel price and it’s clear now that plans by some of the world’s largest oil-producing nations to limit production haven’t yet been enough to lift the price – there’s currently too little demand for oil in the first place.

 

“It’s right that retailers charge a fair price for fuel that reflects the price of the raw product, and in theory petrol prices could fall below £1 per litre if the lower wholesale costs were reflected at the pumps – but at the same time people are driving very few miles so they’re selling vastly lower quantities of petrol and diesel at the moment.

 

“This means many will be at pains to trim their prices any further.

 

“We also continue to be concerned about smaller forecourts that provide a vital service in areas where the supermarkets don’t have a foothold as many are already finding conditions tough with sales having fallen off a cliff since lockdown.

 

“It would be bad news all round if these forecourts shut up shop for good.”

 

Luke Bosdet, fuel price spokesman for the AA, added: “It is likely that once Covid-19 is defeated there will be calls for a review of UK pump prices during the current oil and commodity fuel price crash, as there were in the years after the 2008 to 2012 price spikes.”

 

At the end of March supermarket giants Morrisons and Asda reduced their fuel prices by 12p per litre for petrol and 8ppl for diesel as the coronavirus Covid-19 crisis continues.

 

The cuts follow a plunge in oil prices caused by a trade war between Russia and Saudi Arabia, which saw Saudi Arabia – which produces about 10% of the world’s oil – decide to slash prices and ramp up its production.  By Graham Hil thanks to Fleet News

The views of Charley Grimston, co-founder of Altelium and CEO of CNC Asset Ltd

 

There have been plenty of good news stories coming from the automotive sector since the covid-19 outbreak, including car manufacturers switching their production lines to make ventilators. But, of course, there are concerns about the industry’s economic stability, at the beginning of April 2020 car sales were down 44 per cent.

 

However, there are three powerful reasons why the electric vehicle market will be supercharged by this dreadful virus and lockdown when it’s over.

 

Clean refuelling

 

Firstly, drivers will want electric vehicles because diesel and petrol forecourts will be perceived as unclean.  You have to hold the pump the previous person has used, touch the screen or enter the shop to pay. With electricity you can fuel up at your own home for consumers, or at a centralised depot for fleet owners.

 

We may all want to get back to normal but some things you can’t unknow, and one of those things is how infection is transmitted.

 

Preserving environmental gains

 

Secondly, people will want to do things differently and better. Those who can afford to buy cars will want to play a part in making the world a better, greener place. Already we are seeing how nature is recovery as a result of the lockdown:  “This is the first time I have seen such a dramatic drop-off over such a wide area for a specific event,” said Fei Liu, an air quality researcher at NASA’s Goddard Space Flight Centre describing levels of nitrogen dioxide over China.

 

The nationwide shutdown has led to a big drop in air pollution across the UK’s major cities.  For nitrogen dioxide pollution, new data shows that this has almost halved in London, Birmingham, Bristol and Cardiff.  Transport contributes 23 per cent of global carbon emissions and driving is by far the largest element of that, contributing 72 per cent of transport carbon emissions.

 

When the engines of the economy start again, we’ll want to try and preserve these gains. A report just published by the Journal of Nature has proved that electric vehicles produce less carbon dioxide than petrol cars across the vast majority of the globe.  There were lingering doubts in some quarters about the environmental credentials of electric cars, centred around the battery. This report lays those concerns to rest. So, when people start buying again, they will buy with the environment in mind – and that means electric.

 

Buy once, buy well

 

And thirdly those investing in new cars, especially fleet owners, will want to buy well. This global lockdown and coronavirus is like nothing we have ever experienced, but what many of us have experienced is recession. At times of recession, or worse, warranties become far more important to both the car owners and manufacturers.

 

To fleet owners, a long warranty is a sign of quality and reassurance. To the manufacturer it provides a way to demonstrate your belief in your product quality. A warranty allows a product to be sold on quality and therefore protects profit margins. Profitably is also protected further downstream, where a warranty allows the manufacturer to offer range of customer service and support, underwritten by their insurance.

 

How do we know this is the case?  We have been providing damage and breakdown extended warranty and renewable energy insurance for plant and machinery for over thirty years.  We have seen ourselves and our customers through huge fluctuations in the market, and what has provided consistent protection throughout this time is the warranty.

 

Developing warranties for EV batteries

 

Until now it has been difficult to develop warranties on electric vehicles, specifically the battery, because the technology is so new. Traditional lead acid batteries come with a raft of data and industrial standards, developed and refined over many years, which inform investment or warranty decisions.

 

There was a lack of data around electric batteries which held back investment decisions about the single most important component part – the electric battery. There’s too much risk involved to offer a good, long warranty if you don’t know what affects the product’s performance and longevity.

 

Now this final issue has been addressed. Intelligent data can now be gathered in real time from electric batteries and then enhanced with AI learning to describe the current, past and likely future performance of the battery at an individual cell level. Systems like Altelium are at the forefront of this. They unlock market potential because armed with this data the battery can be given second life uses.

 

Intelligent planning

 

Here again the warranty is the catalyst of change. A comprehensive warranty at individual cell level can include service and breakdown cover for the cell in it its second life situation as part of a static energy storage system. This extends the revenue stream for the manufacturer or the owner of the storage facility.

 

It also extends significantly any carbon footprint calculations for the car itself because the battery cells will be in operation for so many years.   Unlike Bernard London who suggested that recession could be ended through ‘planned obsolescence’ in 1930s, now the approach must be the total opposite. We must recognise intelligent planning and electric vehicles are the exemplar of how to energise the automotive market.  By Graham Hill thanks to Fleet News

The price of US oil has turned negative for the first in history as the coronavirus pandemic has caused global demand to collapse – but this is not yet being reflected fully at the fuel pumps.

 

Earlier this month, oil producing countries agreed to collectively slash global output by an unprecedented 10 million barrels a day, or about 10%. However, demand has dropped by 30 million barrels a day or more.

 

The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as minus $37.63 a barrel as oil producers are paying buyers to take it over fears that storage capacity could run out in May.

 

The impact on Brent Crude – the benchmark used by Europe and the rest of the world, has been less as there is still capacity in which to store it: it has fallen 8.9% to less than $26 a barrel.

 

According to the Fleet News Regional Fuel Prices tool, average petrol prices in the UK have fallen 11p a litre in the past month, but the wholesale cost of fuel has dropped by much more than that.

 

Currently, the average price of a litre of diesel is 111.64p, with unleaded at 106.91ppl. One month ago, they were 122.01ppl and 118.69ppl respectively.

 

Once tax and fuel duty have been factored in, the RAC calculates that under normal circumstances petrol prices should be about £1 a litre.

 

RAC fuel spokesman Simon Williams said: “The oversupply of oil continues to suppress the barrel price and it’s clear now that plans by some of the world’s largest oil-producing nations to limit production haven’t yet been enough to lift the price – there’s currently too little demand for oil in the first place.

 

“It’s right that retailers charge a fair price for fuel that reflects the price of the raw product, and in theory petrol prices could fall below £1 per litre if the lower wholesale costs were reflected at the pumps – but at the same time people are driving very few miles so they’re selling vastly lower quantities of petrol and diesel at the moment.

 

“This means many will be at pains to trim their prices any further.

 

“We also continue to be concerned about smaller forecourts that provide a vital service in areas where the supermarkets don’t have a foothold as many are already finding conditions tough with sales having fallen off a cliff since lockdown.

 

“It would be bad news all round if these forecourts shut up shop for good.”

 

Luke Bosdet, fuel price spokesman for the AA, added: “It is likely that once Covid-19 is defeated there will be calls for a review of UK pump prices during the current oil and commodity fuel price crash, as there were in the years after the 2008 to 2012 price spikes.”

At the end of March supermarket giants Morrisons and Asda reduced their fuel prices by 12p per litre for petrol and 8ppl for diesel as the coronavirus Covid-19 crisis continues.

 

The cuts follow a plunge in oil prices caused by a trade war between Russia and Saudi Arabia, which saw Saudi Arabia – which produces about 10% of the world’s oil – decide to slash prices and ramp up its production.  By Graham Hill thanks to Fleet News

The introduction of clean air zones (CAZs) is to be delayed until the Government overcomes the COVID-19 pandemic.

 

Rebecca Pow, a junior minister at the Department for Food, Environment and Rural Affairs (Defra), says the move will provide “certainty” to the commercial fleet industry.

 

In a letter to David Wells, the chief executive of the Freight Transport Association (FTA), Pow acknowledged it was a “difficult time” for the industry.

 

She said: “The freight industry is an important part of our response (to the COVID-19 outbreak) and we will keep working with you to ensure you can continue your vital role.”

 

The Government has a legal obligation to deliver compliance with air quality limits in the shortest possible time, which Pow says the Government still intends to deliver.

 

However, she told Wells that in order to provide certainty to those affected by clean air zones, Defra will work with local authorities to delay their introduction introducing until after the COVID-19 outbreak response.

 

“We will keep the timetable under review but we expect the introduction of clean air zones to be no earlier than January 2021,” she said.

 

“We are in a new and evolving situation which needs a co-ordinated approach to minimise wider societal impacts.”

 

A Government spokesperson told Fleet News that it understands the pressures local authorities face due to the coronavirus outbreak.

 

She added: “We have agreed with Leeds, Birmingham and Bath to delay the introduction of clean air zones in their areas until after January 2021 to help them focus on their response to coronavirus.”

 

The FTA has been urging Government to delay the introduction of CAZs to allow businesses to focus their efforts on keeping goods moving throughout the COVID-19 outbreak

 

“While FTA and its members support fully the Government’s ambition to improve air quality across the UK, to achieve compliance with the scheme businesses would have to undertake significant work and planning,” said Natalie Chapman, FTA’s head of urban policy.

 

“With the industry focusing all its attention on ensuring the public, supermarkets and other retailers continue to receive the essential items they need during the pandemic, logistics businesses simply do not have the resources to dedicate to preparing for the imminent introduction of CAZs.

 

“In addition, supplies of technology, equipment and trucks are being disrupted by the pandemic, making it harder for businesses to upgrade their fleets to meet the emission standards required of the schemes.”

 

Once the immediacy of the coronavirus crisis comes to an end, FTA says it will continue to work with Defra and cities including Birmingham and Leeds, whose zones were due to come into force this year, to ensure the detail of the schemes take into account the needs of businesses whilst delivering improvements to air quality.

 

Both Birmingham and Leeds councils had written to Defra in recent days to ask for a delay to the introduction of CAZs in their respective cities.

 

Leeds City Council’s CAZ was due to go live on September 28, when it had planned to charge buses, coaches, heavy goods vehicles, taxis and private hire vehicles, which failed to meet minimum emissions standards will be charged for driving within the zone’s boundary.

 

In a joint statement issued by the chief executive of Leeds City Council, Tom Riordan, and the council’s leader, Councillor Judith Blake, they said they had asked the Government for permission to delay the zone “until further notice”.

 

Birmingham City Council had requested to delay the launch of the zone until at least the end of the calendar year.

 

The British Vehicle Rental and Leasing Association (BVRLA) welcomed the decision to put schemes on hold.

 

BVRLA chief executive Gerry Keaney said: “This is a very sensible decision in the current circumstances. It gives some temporary respite for businesses and individuals trying to come to terms with the current health crisis and gives the government’s Joint Air Quality Unit (JAQU) extra time to make sure that key systems such as the centralised payment portal are fit-for-purpose and more fleet friendly.

 

“To date, the range of air quality measures being proposed are wide and varied across UK towns and cities. The landscape is very confusing. Hopefully, this delay will provide additional time to reflect and deliver a more effective and coordinated way forward.” By Graham Hill thanks to Fleet News