Anyone working in the motor fleet sector knows that the last couple of years have been pretty tumultuous. Between the optional remuneration arrangement (OpRA) tax changes, local authorities from Bristol to Leeds planning to ban polluting vehicles with Clean Air Zones (CAZ), the introduction of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) causing list chaos and the government's fine words but little action on electric vehicle infrastructure, it's been a period of pain and change.
One issue that has hung over the industry more than any other though is the future of what has, up until now, been the lifeblood of fleet vehicles; diesel. Since the VW scandal broke in September 2015 when it was discovered that the car giant had been 'defeating' emissions tests in order to boast of cleaner vehicles, diesels have rarely been out of the news. In a complete reversal of fortune, they have gone from being hailed as being cleaner and more environmentally friendly to being blamed for our deteriorating air quality and for massively boosting the nitrogen oxide levels that are associated with over 70,000 premature deaths in Europe each year. The result has been tumbling sales – the Society of Motor Manufacturers and Traders (SMMT) reported in June that sales fell for the 14th consecutive month – manufacturers scrambling to get hybrid and electric vehicles ready for the market and, perhaps most surprisingly of all, diesel losing its crown as the most popular fleet fuel to petrol with just 40% now fuelled by it. The question on a lot of people's mind is 'Are diesels dead?', and in this latest blog from Quick Fleet Insurance we'll look at this question in detail and consider what such a prognosis could mean for an already embattled fleet sector.
Ask industry professionals whether diesels do or do not have a future and you're likely to get an array of answers depending on their perspective/vested interests. The CEO of French oil giant Total recently said that diesels would be with us for a 'significant period of time'. It's easy to argue that Total, a major producer of diesel, need it to have a long future and that with so many diesel vehicles on our roads any transition to an alternative will be long, slow process owing to cost. Even a costly scrappage scheme would take years to remove them from our roads.
Owing to this potential lag and the lack of viability of electric vehicles, many companies are still investing heavily in the fuel. Bosch, the world's largest manufacturer of car parts, announced in April that it had created a technology that would reduce NOx emissions so that they were '10 times lower than limits set for 2020. Bosch's CEO, Volkmar Denner, added that, 'There's a future for diesel' and that, 'Soon emissions will no longer be an issue'.
Manufacturers are backing the fuel too. Mercedes, Hyundai, Kia, BMW and Jeep all have new models out this year and all have committed to investing in making them the cleanest they have ever produced. Emissions Analytics has revealed that the latest Euro 6d-Temp diesel models emit, on average, 71% less particulates that petrol equivalents.
For all the announcements by big companies, one thing is undoubtedly true: we're buying fewer diesel-powered vehicles. The decline in sales is alarming and highlights public sentiment that diesels are inherently dirty, bad for the planet and bad for human health. Half-year sales of diesels in the UK plunged by over 30% compared to the same period last year, and while the second-hand market remains strong, fewer vehicles coming on to our roads can only hasten their decline.
The VW scandal rocked people's faith in the fuel and gifted environmental activists and the government a chance to take action. In environmental terms the fuel has become the whipping boy, the root of all evil and a major cause of the decline in our air quality. The response from civic leaders in major cities such as Bristol, Nottingham, Oxford, Leeds and London has been to announce the creation of CAZs which would effectively either ban them of make entry so expensive that only the most determined would choose to do so. CAZ have been described as a 'nightmare' by ACFO, and while cities such as Leeds are taking business's concerns onboard and have reduced planned charges, they aren't going to help hard-pressed fleet owners.
Central government's response has been widely criticised. While they have taken the opportunity to raise vehicle excise duty (VED) on diesels, they have yet to provide motorists with clear guidance as to whether they should or should not buy them. While they have announced a ban on new diesel and petrol vehicles by 2040, they have yet to make the massive infrastructure investments in terms of electricity generation and charging points to usher in the ultra-low emission vehicle (ULEV) future they seem to want.
A lot of people are both excited and hopeful for a ULEV future. Electric fleet vehicles could prove a game-changer. With costs per mile of around 2-4p (as opposed to 10-12p for a diesel), improved reliability and lower tax regimes, there's obviously a lot to like. All the major manufacturers are investing massively in electric car technology and new models are being launched on almost weekly basis. Even those who would have traditionally have been threatened by the concept of alternative fuel sources such as the big oil companies are getting in on the act. BP recently bought Chargemaster's and its 6,500 charging points, while pledging $500m to develop its low carbon business and put fast charge points on its 1,200 forecourts.
The answer to that is almost certainly yes, but with the significant caveat of how far into the future you look. Consultants AllixPartners have predicted that by 2030 diesel will account for just 5% of the global market. Such a cliff-edge decline certainly sounds fatal and with governments around the world announcing bans, it's hard to see that it has a long-term future.
What is equally certain, however, is that they will be with us for some time to come. While manufacturers such as Volvo have pledged to go ULEV from 2019, most will keep producing new diesels and older models will ply our streets for some time yet. Electric technology – particularly in relation to batteries – needs to come a long way if cars are to go the distance that fleets need them to, and when it comes to trucks and special types fleets there's a world of work to be done. For the time being at least, diesels are here to stay..
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