Good news for

Customers are being hit by
extra costs related to Euro 5, but the change seems unlikely to
affect residual values. Antonio Fabrizio reports.


LOGOFor some time now, European commercial vehicle
manufacturers have been producing vehicles with lower and lower
exhaust emissions to comply with gradually stricter EU emission

The latest stage of this
development is the Euro 5 engine (referred to as Euro V in relation
to trucks), which will be followed by the Euro 6 model later. But
what have the effects been so far on costs and residual values?

For Elliot Lennick, CEO of MAN
Financial Services in the UK, North and Eastern Europe, complying
with this legislation has meant a cost increase for truck
manufacturers, which has partly been passed onto customers.

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“The costs are quite high and every
time there is a passage from one standard to another, prices
increase. You have a higher capital value, and that gives the
vehicle a higher price to buy, lease or finance,” he said.


The cost of

Historically, in the case of
trucks, this has meant an increase of some €2,000 to €3,000 per

Toby Poston, head of communications
at the British Vehicle Rental and Leasing Association (BVRLA),
agrees that with Euro 5 trucks, cost has been the main issue for
the association’s members and their customers.

“These vehicles are 15% to 20% more
expensive than Euro 4 vehicles, and with such a focus on costs, not
every customer is willing to pay that at present,” he said.

“Much of the difference in cost is
due to the exchange rate and the costs of new technology. Meeting
Euro 6 targets is likely to mean even more price increases from

In the case of van manufacturers, a
lot of them are already Euro 5-compliant – including Mercedes and
Volkswagen, which made the transition soon after the new laws were

Today, most of the company’s larger
ranges are Euro 5 compliant, as are Fiat with its Doblo Cargo, and
Renault with its Master range.

The deadline for producing all vans
to Euro 5 standards is early 2011, although EU legislators usually
allow some flexibility.

Tony Grove, LCV manager at Arval,
said: “It is always a bit challenging, and different levels of Euro
compliance have targeted different types of emissions. But
manufacturers are using this as a trigger for bringing in new
engine ranges altogether – which from a customer and a leasing
point of view, means that there is usually a benefit in fuel

With less fuel consumption and tax
incentives, final costs for vans in fact are not necessarily going
to be higher, Grove said.

“In those cases where Euro 4 and
Euro 5 are offered side by side [for example, Renault and
Vauxhall], there has been an increase of about £125 [€139] between
the two, which, given that you get a vehicle excise duty benefit of
£80 a year on Euro 5, means that there is no real impact,” he


No effect on residual

Also, both Lennick and Grove agree
that the new standards will not affect residual values.

As an example, Grove said that when
Mercedes moved to Euro 5, Arval did not change its RV position,
“because when the Euro 4 vans come off lease and go through the
auctions, they’ll be simply judged on their merits of being
slightly less economic than a Euro van that follows”.

Alex Wright, CV sales director at
Manheim Auctions, added: “In the wholesale used van market, EU
emissions standards do not impact on values, which are driven
purely by demand and seasonal trends.

“In many respects, HGVs have also not been affected that much
because more than 80% of vehicles going through auction are usually
seven to eight years old.”


Car fumes