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Company cars – the inevitable move away from diesel

If your business operates a fleet of company cars, or you run a fleet management business or vehicle rental business, then you need to start planning for the inevitable move away from using diesel powered vehicles.

refuel-2157211_1920Why was diesel so popular?

Most company cars on commercial fleets are powered by diesel engines tells Paul Long, Managing Director of Rent Direct, an independent car and van hire business. Historically diesel vehicles were cheaper to run, as they had a much higher mpg rate and due to the subsidies on Road Fund Licenses handed out by the UK government in 2001.

We were all encouraged to buy diesel powered vehicles rather than petrol ones. Petrol engines emit more carbon dioxide and governments were trying to reduce, “greenhouse gasses” that are thought to contribute to global warming.

Why has diesel fallen out of favour?

Since 2012 attitudes towards diesel have been changing, as research shows that diesel engines are contributing to harmful air pollution, which is a particular problem in congested areas, such as our towns and cities. Diesel engines emit nitrogen oxide and particulate matter into the air we breathe. The particulate matter contains hundreds of tiny particulates, which easily enter our lungs. These particulates are made of many chemical elements, harmful enough for the World Health Organisation to declare that diesel exhaust is a carcinogenic and can cause lung cancer.

Diesel exhaust is now thought to be responsible for the premature deaths of over seventy thousand people across Europe annually. Today, around 50% of all new cars purchased in the UK are diesel cars, so the scale of the problem is huge and change is likely to be slow.

What does this mean for business owners?

Historically businesses purchased or leased pools of diesel cars for their sales teams and as company cars for employees. Fleet management companies too have amassed fleets of diesel vehicles, along with the car and van hire businesses. However, this will need to change and fleet managers and business owners need to start thinking about how they transition to using cars that use cleaner technology.

Do businesses have to make the change?

Despite the recent increases in Road Fund License costs, there is currently no law forcing people to change from diesel to greener technologies, however, moves are being made in cities all over the world to restrict and even ban diesel cars from busy cities.

Last year, the result of a YouGov poll, which asked Londoners if they would support a ban on diesel cars in London city centre resulted in 52% voting in favour of a ban.

The death of the diesel car is more likely to come about by manufacturers improving the efficiency and/or lowering the initial costs of purchasing greener vehicles rather than regulation driving the change. The UK government is well aware that it was Government that encouraged people to buy diesel rather than petrol, so is cautious of forcing change.

How does this effect your business today?

If your employees drive company or fleet cars that have diesel engines and they drive in any large city, they are likely in the near future to find measures in place to restrict diesel cars entering the city. For example, London is proposing extra toll charges in the form of an extra £10 toxicity charge and is looking at creating lower emission zones.  The capital’s bus fleet is to be replaced by cleaner alternatives and London cabbies are being encouraged to switch to electric cabs.

In the short term, employees may incur small charges for entering cities, but longer term more stringent measures will have to be put in place, as the International Council for Clean Transportation studies report that world levels of nitrogen oxides are on average seven times higher than levels that are thought to be safe to human health.

The car manufacturers are already indicating change

Car manufacturers have spent time and money developing the three alternatives to diesel cars namely; electric, hybrid and new and improved petrol engines. Each still have their issues but everything is being done to overcome these. In May this year, car manufacturer Volvo announced that it will not be developing any new diesel cars, beyond the current range, instead it will switch to developing and supplying hybrid and all electric cars instead.

Once the major car manufacturers stop producing diesel cars then this will signal the end.

So how can business owners transition to cleaner company cars

This depends on whether the business owns the vehicles or leases from a fleet management company. If a fleet management company is used, then they should be managing their car fleets with cleaner technology already driving change. If a business actually owns the cars, then it will be a case of choosing the right time to make the change.

As we have seen in the past, when the Government wants to remove certain cars from the UK roads, scrappage schemes have been used as a cash incentive to take cars off the road. This is an option that may well be needed, however any such scheme is a long way off and will probably be aimed at changing older vehicles rather than new ones.

With all this in mind, detailed planning and consideration is required for what step to take next as making the wrong choice could result in another costly change down the road.

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