Consulting » FLEET DECISIONS – Keep on trucking: just step on the gas.

FLEET DECISIONS - Keep on trucking: just step on the gas.

The C5 may have made alternative fuels look unattractive (and downright dangerous, too). But now government grants and new technology are creating real competition for petrol and diesel.

Once, the job of a fleet manager, operating under the weather eye of the financial director, was not too difficult. Diesel was the cheapest fuel, and, it was believed, the most environmentally friendly. However, diesel vehicles were more expensive to buy and commercial vehicles apart, drivers preferred petrol. But enter lead-free petrol, witness the undermining of the eco-friendly properties of diesel, and combine this with a rise in diesel prices, and things become more complicated. Now, more changes are afoot. In the first government Transport White Paper for 20 years, the emphasis on taxation has been moved away from ownership and towards use. Duty on traditional fuels will rise by 6% each year for the next three years – over and above inflation. The cost of liquid petroleum gas (LPG), however, will remain the same. This was confirmed in the recent Budget. To support this, government grants are available from the Energy Savings Trust, which fund up to 75% of the cost of conversion on production vehicles, and up to 50% on those converted by the buyer. The current alternative fuel choices are compressed natural gas (CNG), compressed liquid gas (CLG), liquid petroleum gas (LPG), and electricity. Their outstanding advantage, as far as operators are concerned, is the price at the pump, with natural gas retailing at 40p per litre, LPG at 35p per litre and diesel and lead-free petrol at around 68p. But the main drawback for CNG and CLG is that research in Europe is still in its infancy. Mercedes, Volvo and Ford are looking at commercial vehicles with natural gas engines, but according to the Natural Gas Vehicle Association, gas engines are 20% less efficient than diesel in congested traffic and 10% less so on a highway, although some of the most modern engines have reduced these differentials. The association’s chief executive, Fred Parker, says: “It is recognised throughout Europe that natural gas is best for the internal combustion engine, but because cars are designed to optimise on petrol, there are no natural gas powered vehicles in the UK.” But David Burnicle director of technology for Tickford Engineering points out: “Although components are more expensive, there is a greater long-term supply of natural gas,” he says. “CNG will become the fuel for big fleets, and LPG for private operators.” However, there are already more than 1.5 million LPG vehicles in continental Europe, and UK manufacturers and leasing companies are looking at it seriously. At the moment, LPG vehicles run on dual-fuel engines, with an automatic switch to petrol in the event of running out of LPG. Although you no longer have to make every journey via the M1 to find a filling station selling LPG, there are still only around 100 sites. A £10m investment announced by Shell will develop a network of 200 sites, selling the fuel as MotorGas. And Jet also proposes to “expand aggressively” this year. Vauxhall is the only manufacturer currently producing LPG cars; it makes LPG Astras, Vectras and Omegas, plus Astravan and Combo LPG DualFuel vans. Ford plans to launch the Transit, Mondeo and later the Focus as bi-fuel LPG vehicles. It has also produced a bi-fuel Transit that runs on CNG. For those buying a petrol engined car and then converting, the LP Gas Association has an approved installer scheme to minimise the risk of cowboys cashing in. Unfortunately, converting cars affects the manufacturer’s warranty on a new car. Tim Rankin, development director at fleet finance and management company Dial is also aware of the problem: “We are recommending only Vauxhall LPGs to clients because of the manufacturer’s warranty. We are going into the arena slowly but if we do not gain the experience, others will,” he says. “Several customers are interested in LPGs, particularly for delivery vehicles.” The London Borough of Southwark aims to convert its fleet of 316 vehicles to alternative fuels by 2000. The fleet ranges from small vans such as Fiat Fiorinos to refuse freighters. The borough leases petrol-driven Vauxhall Combis from Automotive Leasing and sends them to Hendy Power for conversion. Vauxhall was not supplying dual-fuel vehicles at the time of the order. Southwark’s fleet services director Ian Smith says it was a corporate decision to switch the fleet to LPG. “We have two refuelling sites and our drivers fill up in the same way they did with diesel,” he says. “The health and safety regulations are no more complicated than for diesel. The only difference is that the tank has to have barriers around it. “We paid £1,495 per Vauxhall conversion, and £1,595 for each Ford Transit. Each driver has to key in the vehicle’s fleet number and mileage, plus his own code before a pump will dispense fuel. From that information a computer works out the fuel consumption. We are doing the work over five years. Vehicles are taken on a five-year lease and would be ready for renewal by then anyway. Once we can see the fuel savings, emissions, economics, and whether LPG or diesel is cheaper to run, we can make a decision. “The key is to gauge at what point LPGs become viable for us. The ball-park figure for breaking even is generally around 10,000 miles, but because we are working within the borough, we are only doing short trips. And the point at which they break even may compare well with diesel vehicles. But petrol vehicles are less expensive than diesels, which will affect the mathematics.” Millbrook, which undertakes conversions for Vauxhall, experimented with £10 worth of fuel in a two-litre Omega: the petrol covered 94 miles; diesel covered 114 miles and LPG covered 129 miles. LPG vehicles are 20% less fuel efficient than petrol engines, but LPG is cheaper than traditional fuels, and the calculation for the break-even point also takes into account a grant for 50% of conversion costs from the Energy Saving Trust. Servicing LPGs is no more expensive than petrol engines, other than the extra 10 minutes or so required to look at the additional equipment. “Our rental rates are as for petrol-engined Vauxhalls,” says Southwark’s Smith. “The only proviso is that if the LPG equipment means the vehicles would be worth less at auction, Automotive Leasing reserves the right to remove the kit, return it to us, and charge us for the removal.” The borough also has eight electric vehicles: four Peugeot 106s are used by the public protection team, who run noise patrols, check pubs are selling beer at the correct strength, etc; and four Citroen Berlingo vans, which are dispatch vehicles. To help defray the cost of the conversions, the council became a partner of Zeus, a consortium of eight European cities, which enables members to gain bulk buy rates. “The electric vans lend themselves well to their tasks because there is a fixed route,” says Ian Smith. “The range of an electric van or car is around 60 miles before a recharge, and they are supplied with a lead and a 3-pin plug. You can recharge them anywhere.” Is there a risk of fusing the entire neighbourhood? “I’ll let you know,” says Smith. But there is one problem: “Pedestrians don’t hear them and tend to get run over,” he says. Southwark also looked at CNG and LNG. “The tanks used to house CNG are bulky and we would have lost considerable payload,” says Smith. “Our vans are used by building services and they need all available space, so we decided against that,” he says. Tanks for LPG are either a cylinder the size of a fire extinguisher, or a doughnut shape to fit in a spare-wheel well. “LNG takes up similar space to LPG but it is dispensed at very low temperatures, -80 degC, so the health and safety issues were complicated,” he says. “It is also a new fuel and deliveries are difficult; LPG is established technology, it has been around for years.” ELECTRICITY VERSUS LPG Electric vehicles are difficult to justify because of cost, limited range and limited speed. The diesel engined 3-door Peugeot 106 costs £6,676 + VAT. An electric 106 costs £11,645 + VAT, but with environmental grants this could be reduced by as much as £5,000. This brings the initial cost of the vehicle in line with a diesel-engined car, but does not account for the battery rental of £85 per month. According to BVRLA figures, recharging the battery for six hours on the domestic off-peak tariff costs just 40p, which, at a consumption of 20kW per 100km over 45 miles, works out at less than 1p per mile. The financial arguments for fleets switching to LPG vehicles are unassailable, particularly with the creation of government grants. But there are two drawbacks. Residual values are no higher than for traditional fuel vehicles, leaving the cost of conversion unrecouped, and there is a scarcity of fuelling stations. Also, despite Whitehall’s apparent commitment to alternative fuels, there are still large reserves of crude oil, which the government will not want transformed into a petroleum lake overnight. ?:

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