Purchasing a new van

Whatever sort of van you want, and however you want to buy it, there are some questions you need to ask – starting with specifications such as payload, wheelbase, turning circle, engine power, load volume, payload and towing capacity. Find out what the experts look for when they buy a van, and how they get the best deals time and time again.

You also need to look at whole-life cost, warranty, residual values, maintenance schedules and the level of support you can expect if something goes wrong. Large fleets take a good deal of care in specifying their vehicles – so we asked a few of them how they choose, specify and purchase new vans.

ATS EUROMASTER

For Tim Richards, group vehicle and equipment manager at tyre supplier ATS Euromaster, the most critical issues are getting the specification exactly right, and making sure that the vehicle is reliable: “The vehicles that we use are quite specialised – we take a standard vehicle and it costs a lot to convert them. We fit compressors, a ply lining and a lot of safety equipment, and we involve the whole company in specifying the fit-out”

“Front-wheel drive doesn’t suit us. We tend to operate near maximum load – we drop off new tyres but we pick up old tyres at the same time – and we had a lot of issues with the front being overweight. We’ve had failures of the front subframe and the steering rack on front-wheel-drive vans.”

Some of the vehicles are fitted with both a tyre fitting machine and a wheel balancer, making the payload more important than ever: “For these dual-purpose vehicles Iveco makes the right size of van,” says Richards. “The size of the vehicle is important. They are all 3.5-tonners – once you’re over 3.5 tonnes you’re into O-licences, 6-weekly inspections and the cost goes up a lot.”

ATS Euromaster’s vehicles are leased through Arval on an open-book, pay-as-you-go basis. Given the high fit-out costs, the vehicles are leased over five years. “The return clauses are rather tight – vans have a harder life than cars.”

The whole-life cost is important, says Richards, but “you need to make sure the vehicle is as reliable as possible – that’s down to the vehicle and the driver. If anything goes wrong it means downtime – and you can’t just go and hire a tyre-fitting vehicle! It’s all about win-win for the operator and the customer.”

 

WEST MIDLANDS POLICE

Gary Mallett is Fleet Specification Manager for West Midlands Police Fleet Services. Most of the vehicles he operates are bought outright, with a number of them on lease contracts. “We deal direct with the manufacturer for purchase, but work with local dealers for support.”

As far as the specification is concerned, says Mallett, “It’s important that the vehicle is fit for the purpose and has all relevant safety options available – ESP, airbags, etc.” The process includes making a shortlist of the contenders, conducting test drives, and consulting with drivers. But that’s not all, says Mallett: “Finally we have to ensure we have the correct manufacturer and dealer support, which would include technician training, warranty support and dealer locations.”

“While both the initial purchase price and the residual value are important, we always have to take into consideration the support packages and how the vehicle will cope with our everyday use. Whole-life costs are important to us. We try and negotiate our vehicle life with the warranty.”

And clearly, with the sort of 24-hour operation that a police force demands, specialist support is vital: “We run our own workshops but rely on recovery contracts that operate outside of our working hours and are flexible to our own security needs.”

 

ENTERPRISE PLC

Tony Chadwick, Fleet Manager at utility support firm Enterprise plc, goes through a different process from some other fleet van buyers. He often has less choice in what vehicles he buys: “We supply to demand,” he says, “the contracts know what they need. It’s all driven by the contracts.” When Chadwick does get the choice, he has a process for buying new vehicles: “I would go out and look at three or four vehicles in that category – we’d get the purchase price, then work through the whole-life cost.”

Enterprise doesn’t have one fixed way of purchasing – “We buy, we rent, we contract hire,” says Chadwick – but whatever the contract, he points out that you can get the dealer to do a lot of the legwork for you when it comes to getting information about a vehicle. “We’ll ask the dealer for fuel consumption, carbon emissions, spares prices...” After all, they want to help you choose their product.

SKANSKA

Paul Bellamy, fleet manager at construction firm Skanska, has one clear priority in specifying a new vehicle: “Serviceability – that is, keeping the vehicle on the road at all times. The last thing you want is a minor breakdown leading to a vehicle being out of use. “Specifying the right vehicle is paramount, as is being able to get backup.” Most of Skanska’s light commercials need special fitments such as towbars and beacons. “Clearly, we have to understand what it is the vehicle has to do.”

“In this industry,” says Bellamy, “we think safety is pretty important”. He insists that his vehicles have additional regular safety checks, above and beyond the manufacturers’ guidelines, and points out that construction vehicles have a hard life, much of it spent off-road. Skanska tends to obtain its vehicles on contract hire or leasing deals. “Maintenance is all specified as part of the deal,” he adds, “and it also includes the additional safety checks. We think that’s in [the leasing firms’] interests as well!”

Top Tips for buying new vans

The van operators we spoke to all have different priorities in buying a vehicle, but a number of common themes shone through.

And these are valid for any van buyer:

• Be realistic about how the vehicle will be used – and get the users (drivers and technicians, for instance) involved in the buying process.
• Know how long you will be operating your vehicles for.
• Get the specifications right – both for your intended use and to optimise residual values.
• Use the resources of the manufacturer and dealer to get the information you want.
• Plan for your maintenance and support needs before you make the purchase – and make these part of the negotiation process.

 

Cost of ownership

 

How to calculate van running costs, and minimise the outgoings in your van operation.

Knowing the cost of owning and running a van is essential for an operator to be able to work efficiently, yet few operators have a true idea of what their actual costs are.

One common way of establishing the costs of a vehicle operation is through cost tables, which deal with each of the classes of standing and running costs and usually contain realistic specimen costs. One of the best-known examples is the Motor Transport cost tables, updated annually by that publication, but tables are also produced by trade associations such as the Road Haulage Association.

Cost tables are a good starting point, but they can be overtaken by rapid changes in cost – particularly fuel prices – and they may make some assumptions which are simplistic or which do not apply to every operator: for example, the Motor Transport cost tables assume a profit margin of 5%. A spreadsheet is useful to make ‘what-if’ comparisons of cost.

Standing Costs

These are the costs which have to be borne before the vehicle can start operation – they remain essentially fixed whether the vehicle is moving or not.

The standard cost tables show that for all but the highest-mileage van operators, standing costs outweigh running costs. However, establishment costs (see below) and depreciation are greatly susceptible to changes in accounting practice, and may even be ignored in some cases.

The Driver

For heavy goods vehicles fuel is the major cost, but it soon becomes clear that for almost all van operators, the driver is by far the largest single element of cost – and anything that can reduce the driver’s unproductive time could save money. An expensive item of manual handling equipment might look much less expensive if it allows the driver to make two more drops in a day. The cost of the driver is usually easy to establish, but it is important not to neglect extras such as NI payments.

Established Costs

This is a catch-all term to cover overheads such as property rent and rates, power and other utilities and administration costs. It is probably the element which varies the most between companies, and it may not be appropriate to include it in all calculations.

Vehicle Insurance

The cost of vehicle insurance and any additional business liability cover. Insurance premiums vary widely from fleet to fleet, and it may be worth establishing measures to cut them: approved driver training (such as the government’s SAFED scheme) or a driver incentive scheme for incident-free driving.

Licenses

The cost of vehicle excise duty for the vehicle in question. Clearly this is not negotiable, but it may be useful to calculate whether a vehicle in a lower VED band would save significant cost.

Depreciation and Residual Values

This may be calculated in many ways, and may include an element of finance cost; the Motor Transport cost tables include a simple straight-line calculation over a fixed time period. Whichever method is used to calculate depreciation, it represents a large proportion of the overall cost – indeed, for a low-mileage vehicle it may be a larger annual cost than fuel.

But there are measures which can improve vehicle residual values: broadly, the wider the market for a vehicle, the better its residuals – so an unmarked white medium-wheelbase panel van with a mid-range diesel engine will command proportionally better residuals than a high-spec, signwritten van fitted with specialist equipment.

This does not just apply to vehicles which have been bought outright: for vehicles on leasing schemes or contract hire, a lower residual value means higher monthly rental payments.

Running Costs

These are the costs which vary directly according to the usage of the vehicle, and are dominated by fuel: typically, this represents three-quarters or more of the running cost, dwarfing the figures for tyres, lubricants and maintenance – and with the cost of fuel increasing faster than the rate of inflation, this trend will only continue.

Nevertheless, it is important not to neglect the other elements of running costs, and these can often be made predictable through cost management schemes.

Fuel Usage and Fuel Management

With the high cost of fuel, there is no excuse not to manage its use carefully. Operators should make use of fuel cards – these offer detailed management reporting of fuel purchase – along with systems to monitor vehicle use: a simple daily check and record of the mileage is a good way to detect unusual patterns of fuel use.

The choice of van itself has an effect on fuel consumption, of course. There is now an official website giving fuel consumption and CO2 emissions figures for most vans (see link below) – but remember that this information is comparative only: for a more realistic figure check out a Commercial Motor or roadtransport.com road test.

The largest variable in fuel consumption, however, is the driver; additional driver training can show substantial gains in fuel economy, while some fleets offer bonuses or prizes for the most economical drivers on the fleet. However, this can be difficult to judge unless all drivers cover near-identical routes and times.

Increasingly vans are available with automatic or automated gearboxes: these make life easier for the driver, and may improve fuel economy in stop-start urban driving, so the additional cost may be worthwhile.

Tyres and Lubricants

More fleets are adopting tyre or lubricant management contracts, which outsource the supply and maintenance of these items (usually to the tyre or oil manufacturers). This keeps costs predictable, and can help prevent premature failures – tyre maintenance contracts typically include regular inflation checks (themselves useful to maintain fuel economy) and visual inspections of the tyres for damage.

Maintenance

Similarly, many operators are turning to repair & maintenance contracts, usually provided by the manufacturer and often part of a contract hire package. Again, this keeps an element of the cost completely visible and predictable. 

Links

Dealer & Aftermarket Support

How to assess a manufacturer’s dealer network and ensure that you have sufficient support for your operation.

Introduction

For private car buyers the level of dealer support is important, but it is usually a secondary consideration.

For commercial vehicle operators, however, dealer backup is vital, and some buyers base their purchase decisions as much on the dealer as on the product itself.

The key measure of a dealer network’s effectiveness is uptime – how much useful operation operators can expect out of their vehicles. This is where specialist maintenance, out-of-hours servicing and fast emergency response all become significant.

The Dealer Network

The headline figure given by most manufacturers for their dealer network is the number of service points on offer. However, it is important to compare like with like: are the service points truly capable of dealing with commercial vehicles, or are they simply car-based workshops? Something as mundane as the size of each workshop service bay can be significant – a conventional service bay of standard height and width cannot cope with the size of a Luton-bodied van, for example.

Some of the car-based van manufacturers have opened specialist ‘Van Centres’, with longer opening hours than their typical car dealerships.

It is also important to distinguish between dealer groups and service points. For example, Iveco’s dealer network consists of just eighteen dealer groups, but these amount to around 100 locations, with a further 30 sites forming an ‘authorised repairer network’. These independent workshops are nominated by the dealer network, and have technicians trained to the same level as main dealer technicians.

Specialist Van Dealers

Car dealerships have improved their service levels in recent years, but they have yet to catch up with the best commercial vehicle dealers. Van and truck dealers are set up to keep vehicles in operation and generating income.

Some dealers can help to minimise downtime by offering routine out-of-hours servicing, as well as a pick-up and drop-off service for commercial vehicles. Andrew Cooper, Sales & Marketing manager for Customer Service at Iveco, points out that the firm’s dealers have to meet stringent standards for service levels. For example, they have to be open for service for at least 95 hours a week, to include the core hours of 8am-8pm from Monday to Friday and 8am-1pm on Saturday. In practice, many dealers are open 24 hours a day for six days of the week: for example, North-East Truck and Van offers 24-hour servicing from three sites.

Third-Party Maintenance - The Issues

While it is no longer obligatory to have a vehicle maintained at an official manufacturer’s representative (independent repairers now have better access to technical information under the European Commission’s block exemption rules) there are good reasons to remain with the original dealer. Andrew Cooper cites, “The training and expertise our dealers can offer. You have the confidence that you get the same standard of service wherever you get it serviced.”

Cooper points out that Iveco dealers can offer a two-year fitted aftersales warranty on any repair or maintenance item installed by an Iveco technician. Factory-supported dealers also get the latest diagnostic tools, and are able to reprogram systems as necessary: “Only the dealer network is authorised to reprogram vehicles,” adds Cooper.

Maintenance contracts

Repair and maintenance (R&M) contracts are primarily a way to take control of operating costs, although Andrew Cooper says, “There’s definitely the potential for saving money”. The resale value of a vehicle may also be improved if it has a proven service record.

An R&M contract is typically based around a ‘home’ workshop – one nominated as convenient for your operation – but it may be negotiated to include repairs at remote workshops within the dealer network where necessary.

The contract can include repairs due to wear and tear as well as planned maintenance, and it may just cover the basic chassis of the vehicle, or include the bodywork and any auxiliary equipment.

The contract may also cover tyre management, as well as MoT tests and the periodic roadworthiness inspections required by VOSA for O-licence holders.

All these elements of maintenance and repair may be included in a contract hire package, which can make it easy to budget for almost every cost relating to a vehicle’s operation.

Specialist commercial vehicle assistance

Breakdown assistance is a major aspect of the support that a good dealer network can give. Commercial vehicle operators need specialist assistance – not simply a service to get the driver home, but rapid repair in order to get the load to its destination on time. It is vital that the dealer and manufacturer work together to give the best possible assistance.

Clearly, the success of a good assistance network depends on the number of dealers involved and their hours of opening, but it also relies on an efficient communications system. Several manufacturers (such as Iveco Assistance Non-Stop) have call centres based on mainland Europe; while this may at first seem undesirable, in practice this is not an issue. In fact, it ensures that service standards are consistent throughout the Continent (vital for international operators), it can help in ordering vital spares and it allows the manufacturer to collate performance statistics over a wider area.

The manufacturer should set standards – and should be able to give actual performance figures – for terms such as maximum estimated time of arrival (ETA), ETA versus actual time of arrival, time taken between arrival and successful repair and so on.

How to assess a manufacturer’s dealer network and ensure that you have sufficient support for your operation.

The retail van buyer demands the best of both these worlds; they want the B2C ‘polish’ that the private car buyer enjoys - the comfortable and smart reception areas comprising of refreshment and audio visual stimulation, they want service at short notice and yet courtesy vehicles for pre-booked appointments, they want to engage with staff who are not just technically clinical and not just meters and greeters. But they also demand the same respect that the B2B heavy commercial world receives in the unspoken acknowledgement that time is money and the clock is ticking.

The key measure of a dealer network’s effectiveness is uptime – how much useful operation operators can expect out of their vehicles. This is where specialist maintenance, out-of-hours servicing and fast emergency response all become significant.

It is a challenging juxtaposition that in reality requires the approach of a full range commercial vehicle manufacturer in order to meet these exacting needs. A manufacturer who lives and breathes the heavy commercial scene yet has substantial investment in van design and engineering, where these two worlds collide and each sale enforces that.

 

Environment & alternative fuels

With pressure on operators to reduce pollution and cut their carbon output, what are the pros and cons of the alternatives to diesel power?

With concern over air quality and man-made global warming, there is increasing pressure from legislators and customers for vehicle operators to account for their emissions, and to reduce them wherever possible. The main areas of concern are nitrous oxides (NOx), hydrocarbon emissions (HC) and particulate matter (PM) – these can worsen air quality and have an effect on public health – as well as carbon dioxide (CO2), which is the main greenhouse gas associated with global warming.

Some cities are adopting ‘low emission zones’ (LEZs) which generally require vehicles with the latest emissions standards, while many firms are undertaking environmental audits, which usually focus on the net carbon production of the firm’s operations – its ‘carbon footprint’: fuel type and fuel usage are a large part of these audits.

“Two or three times a month I’m talking to large customers who are seriously looking at what they can do,” says Martin Flach, Product Director at Iveco UK. More small companies are also undertaking green audits, particularly those in public sector work or facing eco-conscious consumers.

But these audits are about more than fuel: recycling is another issue, and while there are no current standards for commercial vehicle recyclability, it is worth noting that over 90% of an Iveco EcoDaily is recyclable.

Alternative Fuels

The vast majority of commercial vehicles are powered by either compression-ignition (CI) diesel engines or spark-ignition (SI) petrol engines. Diesels are generally much more fuel-efficient than SI engines – so they emit less CO2 – but they tend to generate more NOx and PM.

Engine technology has improved dramatically, so that NOx, HC and PM emissions are all a small fraction of what they were twenty years ago: the diesel EcoDaily can now meet the EEV standards which were originally devised for gas-powered vehicles. Driver aids such as stop/start systems and automated gearboxes can give significant fuel savings, while driver training is also a cost-effective way of saving fuel and thus reducing emissions.

But despite the increasing efficiency of diesel engines organisations are looking for power sources which improve air quality and reduce ‘carbon footprint’. However, all the alternatives are compromised in terms of range, performance or expense.

LPG

LPG (Liquefied Petroleum Gas) runs in lightly-modified SI petrol engines and generates low particulate emissions, but has no carbon benefit. “The only reason somebody would want to use it is because it is cheap,” says Martin Flach of Iveco. It has attracted lower duty rates than petrol or diesel , but this advantage is steadily being reduced, and LPG is unlikely to be cheaper than other fossil fuels in the long term.

CNG

Natural gas (methane, CH4) is a clean-burning fuel which – for cars and vans – is used in SI engines and is suited to urban operations where air quality is paramount. It can be stored as CNG (compressed natural gas) or LNG (liquefied natural gas). CNG is stored in high-pressure steel or composite tanks. Even so, the ‘energy density’ of CNG is still lower than that of diesel fuel, so the tanks are bulky and range is compromised. There is a limited network of CNG filling stations in the UK, but the fuel is best suited to depot-based operations with a gas compressing plant (supplied with mains gas) on site. Some manufacturers offer CNG vehicles converted by a third party; Iveco offers a range of full factory-built CNG vans and trucks.

LNG

LNG is stored in insulated tanks at -160°C; again, the tanks are bulkier than diesel tanks, and operationally LNG vehicles are exactly the same as CNG vehicles. LNG filling tanks are easily installed at a depot, but there is again a limited network of LNG filling stations. None of the large manufacturers sells off-the-shelf LNG vehicles, but Iveco will convert CNG vehicles upon request.

Biofuels

Biofuels have been produced from plants or other biological matter, and they can be used without a net contribution to CO2 levels, making them ideal for minimising carbon footprint. They are also often usable as direct replacements for fossil fuels with no hardware modification. However, there is some concern over the sustainability of biofuel crops which take the place of food crops.

biodiesel

Biodiesel can come from plant crops or used cooking oils, and can be used as a diesel substitute or blended with mineral diesel to produce bio-blends B10, B30 etc. It represents an easy way to reduce a vehicle’s net carbon emissions. Before using biodiesel it is advisable to consult the manufacturer because acceptable levels vary greatly.

biogas

Biogas is natural gas (methane/CH4) produced in a ‘digester’ plant from vegetable waste, food waste and landfill rubbish. It is a direct substitute for CNG or LNG, and is sold at a small number of sites. Environmentally biogas is a good option; as Martin Flach says, “In the short term, it’s one of the best opportunities to get a [good environmental] result at the lowest cost.”

bioethanol

Bioethanol is an alcohol fuel which can be used as a full or partial substitute for petrol – pure bioethanol has higher energy content than petrol.

Hybrid and Electric vehicles

Electric Vehicles

Battery-powered electric commercial vehicles are well established: milk floats demonstrate quiet, reliable operation without local pollution – as well as short range, high weight and high purchase cost.

Modern electric vehicles are better, and are available at almost every size: Iveco, for example, makes 3.5t and 5t GVW models. But they still have a major limitation: batteries are heavy and expensive, and to get significant range or performance the payload has to be reduced. “You need an incentive to buy one,” says Martin Flach of Iveco. “An electric vehicle has a high upfront cost and it’s difficult to demonstrate a payback – you’ve got to have a very low daily mileage to make them work. Electric vehicles are best suited for city applications.”

While tailpipe emissions are non-existent, the electricity needed to charge the batteries has to come from somewhere – whether fossil fuel, nuclear or a renewable source.

Hybrids

Hybrid vehicles, typically with a diesel or petrol engine and a supplementary electric motor, can reduce tailpipe emissions dramatically – at low speeds, they often run on battery power alone – as well as saving fuel in stop-start operation. Range is not a problem, but as with electric vehicles the payback time is likely to be long.

Fuel Cells

Fuel cells are an alternative to battery power: they use a chemical fuel to generate electricity. The fuel is usually hydrogen (H2), which combines with oxygen to produce water.

However, producing and storing hydrogen is problematic, so attention has moved to liquid-fuelled cells, typically using ethanol. This is an attractive solution, with no range limitation and potentially a small carbon footprint, but the vehicles will remain as prototypes for years to come.

 

Finance Options

While some firms insist on paying up front for their new vehicles and owning them outright, most operators are aware that this is not the only way: choosing the appropriate finance option can improve cashflow and tax planning.

Financing the purchase of a new vehicle can appear complex and risky – but by asking a few relevant questions, the choice of a finance package becomes much easier.

The first issue is whether the operator wishes to own the vehicle outright; if so, the choice of finance packages is straightforward. If ownership is less important, then the issues come down to cashflow, flexibility – an operator may wish to operate the vehicle only for the length of a customer contract – and whether the vehicle should appear as an asset on the balance sheet. With any financing option, it is important to investigate the choice of finance providers: the main options are banks, specialist leasing and contract hire firms and the manufacturers’ own finance arms.

Manufacturers do not just finance their own products: they will look at the complete package, including bodywork and equipment and even competitors’ vehicles. For example, Agnes Kaminska, Marketing Manager at Iveco Capital, says, “We can cover very complex and specific combinations of chassis, bodywork and equipment – tail-lifts, cranes, that sort of thing – which makes us a very specialist player in the market.”

Whichever option an operator goes for, it is vital that they take financial advice on the tax position, and that they examine any agreement carefully to check interest rates and additional fees.

Specialist information on rental and leasing can be obtained from the British Vehicle Rental and Leasing Association, which is the trade body for companies which rent and lease cars and commercial vehicles: the BVRLA’s members have around 144,000 light commercial vehicles out on contract hire.

Outright Ownership

Few operations have the cash reserves to buy large assets such as vehicles outright without some form of financing – and those that do might be better off keeping their cash in reserve for shorter-term commercial opportunities.

Hire Purchase

Hire purchase (HP) is the ‘traditional’ way to finance a vehicle purchase: the vehicle itself is effectively collateral for the loan, which is paid off entirely within a fixed time. The vehicle remains the property of the lender, and if payments are missed, it can be repossessed. At the end of the loan term, the borrower pays a fee (which may be less than a monthly payment) and takes full ownership.

Agnes Kaminska says, “The retail market is very skewed towards hire purchase. There are many traditional operators who like to own a vehicle themselves.”

The obvious benefit to the operator is in terms of cashflow, and with initial agreement lenders may be able to offer variable payment terms.

During the HP period, the borrower is the ‘Registered Keeper’ of the vehicle – it is an asset on their balance sheet – and can claim the appropriate capital allowances. There is another tax benefit, in that interest on the repayments is allowed to be set against profits. However, VAT is payable on the initial purchase, which is reflected in the payments.

Lease Purchase

This is similar to hire purchase, except that the regular payments do not cover the full purchase price. Instead, a larger final payment (sometimes known as a ‘balloon payment’) is required to take ownership of the vehicle.

Leasing Options

Leasing can be an attractive choice if the customer does not need to own the vehicle outright; the vehicle is effectively bought on the operator’s behalf, and the operator pays a regular rental fee over a fixed term. This rental is lower than a typical hire purchase payment and is tax-deductible, although it does attract VAT.

The choice of leasing “is very often driven by accountants,” says Agnes Kaminska. “It can be very attractive not to have an asset showing on the balance sheet.” In this case an operating lease or contract hire is the way to go. Contract hire can eliminate worries over residual values or maintenance: “The new generation prefers to go down the leasing option – and especially contract hire,” adds Kaminska.

The BVRLA says that a typical van lease contract is over a four-year term at 18,500 miles per year. Whichever scheme is chosen, the final condition of the vehicle can be critical to ensure that no penalties are charged. The BVRLA’s ‘LCV Fair Wear & Tear Standard’ (published at £10) establishes standard conditions for the return of vehicles, while organisations such as the Freight Transport Association (FTA) offer independent end-of-lease inspections.

Finance lease

With a finance lease, the operator pays regular rental fees on the vehicle for a fixed period; there is no high initial outlay, but the vehicle remains on the operator’s balance sheet. At the end of the lease period, the rental agreement may be renewed (at a lower rate) or the operator may dispose of the vehicle, keeping a substantial portion of the sale price.

Operating Lease

With an operating lease, the operator pays regular rental fees, which are lower than with a finance lease because the residual value is taken into account, and the vehicle remains ‘off balance sheet’.

At the end of the finance period, the rental agreement may be renewed or the vehicle may be returned. There is no depreciation risk, but strict terms of mileage and usage are applied – excess mileage and damage penalties may be payable – and the operator recovers no value from the vehicle at the end of the term.

Contract Hire

Contract hire works like an operating lease, in that the asset is off the operator’s books, rental fees are fixed and allowable against tax and the vehicle is returned at the end of the contract. But contract hire rental payments can incorporate repair and maintenance contracts (on the chassis, bodywork and equipment), road fund licence fees, tyre management, breakdown cover and almost every other aspect of fleet management.

Essentially, contract hire makes it easy to predict and budget for almost all the costs of operating a vehicle, and is proving increasingly popular.

Links

Legislation

 

This guide will help show you the legislation that specifically affects van operators.

Operating a single small van is relatively straightforward – much like running a car. But as firms acquire more vehicles and those vehicles move up the weight range, the legislation involved becomes more complex and onerous. It also starts to involve organisations such as VOSA and the Traffic Commissioners with whom many operators will have had no contact.

Driver Licensing

In normal operation, any van which is up to 3.5 tonnes GVW can be driven by anybody who holds a valid UK car driving licence (that is, a category B licence); in addition, those who passed their car test before 1st January 1997 may drive vehicles up to 7.5 tonnes GVW.

Drivers who passed their car test after this date can drive a vehicle of up to 7.5t GVW (‘maximum authorised mass’ in DVLA jargon) only if they pass the Category C1 test. In practice, most drivers take the Category C test, allowing them to drive rigid vehicles up to any weight – fewer than 2,000 drivers took the category C1 test in 2008-9, while 21,000 took the Category C test.

Operator Licensing

Almost any organisation which operates vans at above 3.5t GVW is required to obtain an Operator’s Licence (known as the ‘O-licence’) which is issued by the Traffic Commissioner for that regional Traffic Area. The Traffic Commissioners are an independent body which administers O-licences; they can refuse to issue an O-licence, or remove one from an operator. They work with VOSA, which is responsible for testing and enforcement services.

Types of O-Licence

There are three basic categories of O-licence: Restricted, Standard National and Standard International. A Restricted licence allows an operator to carry their own goods within the UK; a Standard National licence is required to carry other peoples’ goods for hire or reward, in the UK only; international operation for hire or reward requires a Standard International licence.

Applying for an O-Licence

To apply for an O-licence, an operator needs to complete form GV79, available from VOSA, and submit it to the local Traffic Area office. The operator needs to prove that they comply with a number of requirements, such as:

  • that the firm has an Operating Centre suitable for the vehicles on the licence, in terms of size, accessibility and location;
  • that the firm’s partners and directors are fit to hold a licence;
  • that the firm has appropriate maintenance facilities, or a suitable maintenance arrangement and the financial resources to keep it going;
  • that the firm has suitable arrangements to ensure that it will comply with the drivers’ hours rules.

There are further requirements to obtain a Standard licence, including the need to attain standards of competence, usually met by obtaining a Certificate of Professional Competence (CPC). The issue of an O-licence is certainly not automatic: for example, local residents may object to the establishment of an operating centre. And the O-licence only covers an operator for a certain number of vehicles: if the operator wants a margin for expansion they can apply initially for a larger number of vehicles.

Vehicle Inspection and Maintenance

The maintenance requirement for the O-licence is usually determined by reference to VOSA’s ‘Guide to Maintaining Roadworthiness’; this document sets out standards for different types of operations, all based on the combination of daily checks (to be undertaken by the driver) and regular safety inspections, at a minimum interval which is determined by the Traffic Commissioner.

Drivers' Hours, Tachographs and the Working Time Directive

Drivers' Hours

Almost all drivers must comply with the drivers’ hours rules, a combination of UK and EU legislation. Essentially they mean that nobody can drive for more than four and a half hours without taking a compulsory break of 45 minutes – and that break must not include any type of work.

The drivers’ hours rules also limit daily driving time to nine hours in total (extendable to 10 hours no more than twice a week) and weekly driving time to 56 hours (or 90 hours per fortnight). Drivers also need a daily rest period of at least 11 hours, and a weekly rest period of 45 hours. Some of these requirements can be altered occasionally, as long as there are compensating rest periods soon after.

Tachographs

Enforcing the drivers’ hours limits is difficult with smaller vehicles, as there is no obligation to record driving time. However, vehicles at above 3.5 tonnes GVW are now required to be fitted with a tachograph to record driving patterns (new vehicles are fitted with a digital tachograph) and these records need to be maintained.

Working Time Directive

Drivers must also comply with the limits of the Working Time Directive (WTD): for most workers this means no more than 48 hours’ work per week – but this is an average figure, which can be exceeded on occasion.

Speed Limits and Speed Limiters

Only the very smallest car-derived vans (under 2 tonnes GVW) can be driven at the same speeds as cars on single carriageways (60mph) and dual carriageways (70mph). Larger vans, effectively including any panel van, up to 7.5t GVW, can only be driven at 50mph on single carriageways and 60mph on dual carriageways; however, they may travel at 70mph where permitted on motorways.

Vehicles over 7.5t GVW are restricted to 40mph on single carriageways, 50mph on dual carriageways and 60mph on motorways. New vehicles over 3.5t GVW must be fitted with a speed limiter, restricting their maximum powered speed to 90km/h (56mph).

Manual Handling and Lifting Equipment

The Manual Handling Operations Regulations require employers to undertake risk assessments wherever employees might lift or move heavy items. In practice, this often means that vans should be fitted with a tail-lift or crane to aid loading. Any lifting device needs to be fitted competently and to comply with the Lifting Operations and Lifting Equipment Regulations 1998 (LOLER). These require that it undergoes regular ‘thorough examination’, usually meaning a schedule of inspection by a trained technician.

Links

Specifications

How to understand a van’s spec sheet and decide which specifications are relevant for your operation.

Commercial vehicles are sold in a bewildering variety of specifications with an enormous number of options. You must identify which characteristics are most significant for your operating requirements, and establish the best combination in terms of load capacity, route suitability and cost.

The main categories of specifications are weights, dimensions and driveline (engine and transmission) as well as body specification, safety and driver comfort. All of these can have a substantial effect on the purchase price of the vehicle and on its subsequent depreciation, as well as its running costs.

Vehicle Weights

Most commercial vehicle weights are measured in kilograms or tonnes; the most important weight figures are payload, kerb weight, GVW, GCW and axle ratings.

The starting point for most operators is payload: the weight of the load (including all packaging materials) you need to carry. Van specification sheets always show payload prominently, calculated by subtracting the unladen weight (or kerb weight) of the van from its Gross Vehicle Weight (GVW). However, any quoted kerb weight usually ignores any additional equipment or fittings, and often assumes a less-than-full tank of fuel; it may include an allowance of 75kg for a driver. But if you add options, or use a two-man crew, the usable payload will go down; for a small van, the change in payload can be substantial.

Gross Vehicle Weight (GVW, sometimes called Gross Vehicle Mass/GVM or Maximum Authorised Mass/MAM) is the maximum permitted operating weight of a vehicle, including all loads, passengers etc, but not including any trailer. This is a legal as well as a technical maximum, and has important implications: above 3.5 tonnes GVW, you require an Operator’s licence, a tachograph must be fitted and a special driver’s licence may be needed to drive the vehicle.

Note, however, that 2 tonnes GVW is the threshold above which van speed limits are lower than those for cars.

Gross Combination Weight (GCW, sometimes called Gross Train Weight/GTW) is the maximum permitted operating weight of any vehicle including a trailer. However, there may also be a limit on the maximum permitted weight of a trailer (lower for an unbraked trailer than for a braked trailer).

Axle ratings are significant if you intend to operate the vehicle fully laden. Each axle’s plated rating (in kg) is the maximum load the wheels on that axle can transmit to the road, as measured on a weighbridge. The sum of the axle ratings is usually greater than the GVW, by an amount known as the axle tolerance: for example, if a 3.5t GVW van has axle ratings of 1,750kg (front) and 2,100kg (rear) it has an axle tolerance of 350kg (1,750 + 2,100 - 3,500 = 350); this gives some scope for the load to be positioned at different points along the length of the vehicle.

Dimensions and Body Specification

The overall dimensions of a vehicle are significant, of course, if you have a limited area in which to park or load it; however, the most frequently quoted dimension for vans is wheelbase – the distance from the centre of the front wheel to the centre of the rear wheel, which gives a very rough indication of the amount of loadspace available.

While a long wheelbase may give more loadspace, it will increase the weight of the chassis (reducing payload) and compromise the vehicle’s turning circle. Also, front-wheel-drive (FWD) vans tend to have a longer wheelbase than rear-wheel-drive (RWD) vans. Jon Stokes of Iveco points out, in relation to the RWD EcoDaily, “Because the chassis frame has an overhang on either side of the rear axle, the weight distribution changes less as you add more load. As the centre of gravity stays close to the same place the handling doesn’t change.”

Van operators carrying light goods are often limited not by payload but by loadspace volume; and the larger the body, the greater the unladen weight. For panel vans, volume should be quoted in cubic metres (m3 or cu m) to the VDA standard – this disregards much of the ‘dead space’ in an irregular-shaped loadspace. Check that the internal height of the loadspace, the height of the loadspace floor from the ground and the distance between the rear wheelarches is sufficient.

The size of door apertures and their opening angles are just as important. Also determine whether you need extra loading doors or just a single rear opening – each door adds to the unladen weight.

Drivetrain: Engine and Transmission

The first criterion to determine is the fuel type used by the engine – for almost all vans this will be diesel. Next is the emissions level – these can be Euro-4 pr Euro-5 in the used van market or will be Euro-6 when buying new.

The size of a van’s engine (in litres) is not as important as its power and torque ratings. Engine power ratings matter at high speeds – vehicles such as Luton vans (with their extra frontal area) and tippers (which often tow trailers) may need a high horsepower rating – but the torque characteristics of an engine are usually more noticeable. As Jon Stokes says, “Peak torque is less important than torque spread” – an engine with a band of high torque across a wide range of engine speeds will generally be more flexible and easier to drive than one with a single high peak of maximum torque: look for a specification that reads, for instance, “Maximum torque 250Nm from 1,200-2,000rpm” rather than “280Nm at 1,800rpm”.

Increasingly vans are available with automatic or automated transmissions: these make life easier for the driver, and may improve fuel economy in stop-start urban driving, so the additional cost may be worthwhile. There is now an official website giving fuel consumption and CO2 emissions figures for most vans (see link below) – but remember that this information is comparative only.

Servicing intervals are significant, not only because of the cost of servicing but also because of the loss of revenue from having a vehicle unavailable. Some modern vehicles have service intervals as long as 40,000km.

Safety Equipment and Driver Aids

Safety equipment such as driver airbags and anti-lock braking systems (ABS) are increasingly standard fitments, and so vans without these features could become less desirable. Some vans go further, with Dynamic Roll Control or Electronic Stability Program (ESP) – all designed to prevent a driving mistake from turning into an accident.

Driver aids are becoming more common too: from Bluetooth hands-free phone connections to reversing cameras, they are seen as essential for some applications. The most obviously useful aid for long-distance driving is cruise control, which can also improve fuel economy.

 

Unit Conversions

Weights Dimensions
1 Tonne 1,000kg = 2,205lb = 0.9842 tons 1m 39.37 inches
1 ton (imperial) 2,240lb = 1,016kg 1 inch 25.4mm
Note that all UK and European legislation is defined in terms of kilograms and tonnes.
Power Torque
1hp 0.746kW = 1.014hp 1Nm 0.738lb-ft
1kW 1.341hp = 1.360PS 1lb-ft 1.356Nm
1PS 0.736kW = 0.986hp