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June 18, 2003

COMMENT: UK fleet: road charges could depress market

New initiatives designed to reduce the strain on Britain's road network are currently being discussed by the UK government. The additional costs of road charges will hurt business fleet users most.

By bcusack

New initiatives designed to reduce the strain on Britain’s road network are currently being discussed by the UK government. The additional costs of road charges will hurt business fleet users most.

Having stayed buoyant after recent UK car tax changes, this additional burden could prove too much for the UK fleet market.

The proposed road charge scheme would replace traditional road tax and it is being dubbed as a fairer alternative to paying for road improvements out of taxpayers’ money.

In the future, satellite tracking technology could be used to pinpoint vehicle locations and drivers could be charged for every mile of road they use on their travels. However the first vestiges of the initiative are less high tech and set to begin with the opening of the M6 toll road, a 27-mile stretch of carriageway.

After a lower introductory rate, use will eventually be billed at £3 for cars and £6 for vans. This price, though comparable with other similar European schemes, is likely to hit fleet operators and commercial users the hardest.

With over 75,000 people expected to use the road each day as an alternative to the perpetually congested M6, the scheme is bound to be a significant money-spinner for the government and a considerable burden for operators of commercial and company vehicles.

These new charges follow on from recent UK car tax changes that have increased the costs of high-mileage, high-emission vehicles. This led to a change of usage of fleet vehicles in the UK with smaller, more economical vehicles becoming ever more popular. Despite the costs of repositioning, the UK fleet market is still perceived to be healthy.

Many in the UK government and elsewhere view road charges as being essential to the reduction of congestion on UK roads. With the transport infrastructure becoming increasingly strained, such dramatic measures would appear to be the inevitable backlash.

The introduction of these tolls means that fleet vehicle users, who often cover very high mileages, will be placed at a distinct disadvantage. The increased costs of tolls will have a significant impact on the bottom line costs of fleet operators. This may well depress the UK market for fleet vehicles and services if businesses decide that fleet running costs have become too high.

SOURCE: DATAMONITOR COMMENTWIRE (c) 2003 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.

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