Pressure on employers to review green fleet options

As pressure mounts on employers to crack down on environmentally-unfriendly vehicles, there are a number of models and alternative fuel sources on the market they should consider, says Nicola Sullivan

As the government cracks down on gas-guzzling cars, employers are faced with boosting the green credentials of their fleet. The pressure on employers to review their fleet policies and practices increased following Chancellor Alistair Darling’s announcement in his first budget report that high-polluting business cars will now be subject to emission-based capital allowances. Cars releasing more than 160g of CO2 per km will attract just a 10% writing down allowance, compared with expenditure on cars of 160g per km or below that will gain a 20% allowance. Cars with CO2 emissions lower than 110g per km will continue to receive a full first-year allowance.

In addition, company car taxes will rise for all vehicles except the most environmentally-friendly models, which emit 135g or less of CO2 per km, in 2010-2011. Employers will also have to find room in their fleet budgets for an increase in fuel duty to two pence a litre, which will come into force in October.

But employers hoping to dodge all of these penalties by kitting out their fleets with more environmentally-friendly models may find it difficult to find a low-emitting car, which is suitable for business use. Alastair Kendrick, partner of Bourne Business Consulting, says: “Many of the cars that fall below 120g [of CO2 emissions per km] would not be suitable for business travel and providing such vehicles to employees could find the employer exposed to potential risk under the duty-of-care rules.”

But not everyone in the industry agrees. Stewart Whyte, managing director at Fleet Audits, believes there is a “monumental choice” but says that employers need to understand the nature of what is available.

Models that emit less than 135g of CO2 per km typically tend to be smaller cars, however, there are a number of mid-sized environmentally-friendly vehicles on the market, including the Peugeot 308 and some Audi A3 hatchbacks, such as the TDI 105 model. The Toyota Prius is often touted as one of the more popular and fashionable larger green cars on the market. Emitting 104g CO2 per km, its hybrid technology combines an electric motor and a petrol engine to increase fuel efficiency. The Volkswagen Passat Bluemotion, which releases 137g of CO2 per km, also utilises fuel-efficient technology.

More radical models on the market run on alternative fuel sources, including liquefied petroleum gas (LPG). These models include the Silver Vauxhall Zafira Club 1,600, Jeep Grand Cherokee 4.0 Sport and Vauxhall Vectra 1.8 litre. But the availability of bi-fuel models, twin-tanked cars that run on petrol and LPG products, is limited in the UK and these are expensive to buy or lease and can be costly to maintain.

Electric cars with zero carbon emissions may be a popular choice with eco warriors but they are not always suitable for business use as the battery life of these cars usually lasts for just 100 miles and they not designed to be used on motorways. Richard Schooling, chief operating officer at Alphabet, says: “You’ve got electric cars and G-Wiz cars but they may not be practical for [a] sales rep that has to travel from London to Manchester.”

Other electric cars on the market include the Mega City, available from the Nice Car Company, and the Elettrica that runs on lithium batteries, which have a longer lifespan than lead batteries.

But employers that believe they can do their bit for the environment simply by swapping cars for greener models may find it is not that easy, says Whyte. “Nobody can [go] into an office and say, ‘let’s [make] the fleet green, we’ll buy Toyota Prius’ without knowing what’s going on,” he says.

Instead, employers should look at the bigger picture, says Dean Woodward, contract services manager at DaimlerChrysler Fleet Management. Employers whose workforce needs to travel long distances may find diesel cars are the most economical solution. Sales of diesel cars hit 40.2% of total UK sales in 2007, compared with 26.5% ten years before, according to the New Car CO2 report: driving down emissions published by the Society of Motor Manufacturers in March. Popular models of diesel cars include the Ford Focus, VW Passat, Peugeot 407 and VW Golf.

But Woodward believes some employers may be put off by the higher cost of diesel fuel. “[Diesel] prices have shot up so much and the difference between petrol and diesel has been minimised due to advancements in petrol technology,” he says.

If you read nothing else read this…

  • Vehicles with lower CO2 emissions per km will soon attract lower company car taxes and capital allowances.
  • Smaller cars are typically the lowest-emitting models, but environmentally-friendly mid-sized models include the Peugeot 308 and some Audi A3 hatchbacks.
  • Diesel cars, such as the Ford Focus, VW Golf and Peugeot 407, may be a good choice for staff who have to travel long distances.
  • Cars that operate using hybrid technology, such as the Toyota Prius, increase fuel efficiency by combining an electric motor and petrol engine.