Used trucks may be the future in Euro 6 aftermath

MAN Truck & Bus CEO Des Evans expects the emphasis in next year’s UK market to switch to used trucks, in spite of it having spent €1.6 billion on Euro 6 development.

“Current demand for Euro 6 product is almost zero,” he declared.

Addressing journalists on the eve of the Commercial Vehicle Show, Des Evans said: “There is real ignorance in the market on the realities of the Euro 5-Euro 6 transition. Euro 6 will make second-hand trucks look very interesting.”

Turning to the current state of the British truck market, Evans queried whether it would reach the 40,000 mark in 2013, pointing out that first quarter registrations had failed to touch 9,000.

“35 years ago, the UK truck market took 75,000 new vehicles a year, and this long-term decline means that we can no longer rely on profit from new products,” he said.

Evans maintained that he was happy with MAN’s share of the new truck market, and was particularly proud that MAN had nearly 16 per cent of the important three-axle tractor sector.

He aimed to keep the emphasis on Euro 5 for new tractor units for the rest of the year: the bulk of the first Euro 6 vehicles that MAN sells in the UK are expected to be rigids, as bodybuilder capacity meant that chassis delivered after the September deadline for derogated chassis could probably not be bodied in time for registration before the end of the year.

“April/May is decision time for those wanting Euro 5,” he warned.

The swansong of Euro 5 would be in the hands of the MAN TGX XXL EfficientLine tractor: a vehicle configured for maximum payload and minimum fuel consumption, with its speed limiter set to 86 km/h, a 480 hp D26 SCR engine and Tip-Matic gearbox.

MAN is transparent about the challenges it will face selling Euro 6 trucks. UK sales director Sandy Millar said there would be a weight penalty of 200kg on TGX and TGS models and 150kg on TGM and TGL. Prices would increase by around £5,000 on TGM and TGL, and £10,000 on TGX and TGS. Power ratings would remain unchanged.

While fuel consumption would not change from Euro 5 and AdBlue consumption would fall by 50 per cent on those trucks that already had SCR, those lower-powered trucks that did not currently use SCR would all require AdBlue at Euro 6.

Particulate filters would require service at 250,000 km intervals on TGL and TGM, and 500,000 km on TGS and TGX.

Evans acknowledged that, in the face of these facts, Euro 6 did not present a particularly attractive option for operators, and he saw growing demand for late used trucks and a tendency to run existing trucks on as shaping the market for some years to come.

Joking about his ‘used truck manufacturing facility’ in Swindon, he said that the 2,000-strong MAN Truck Rental fleet would release a substantial number of one-, two- and three-year-old trucks to meet demand from operators for whom a new truck was not suitable.  

“We can offer a £299 a week deal with R&M on a ‘brand-new’ two-year-old truck,” he said.

For the future, he saw Euro 6 trucks staying with their original owners for far longer than their predecessors, and said that MAN would do everything it could to make this possible – acknowledging that there was money to be made from parts and service when there was no profit in new trucks themselves.

“Our Euro 6 heavy trucks will easily last for six years or 1.5 million km so we should finance them and give fixed operating costs over a million km,” he announced.

“We will refurbish trucks and recycle units in the future to keep them going,” he said pointing out that there were some 52,000 MAN vehicles currently active in the UK market.

Other UK industry bosses have taken a slightly more circumspect view of the Euro 5-6 transition.

Ray Ashworth, UK managing director of DAF Trucks, said that the registration figures for the first quarter of the year did not reflect an order upswing that had begun last December, but had yet not translated into registrations.

“It will rise again once people realise that Euro 5’s days really are numbered,” he told Transport Operator on the eve of the CV Show, estimating that some 41,000 new trucks would be registered this year, of which he wanted 31 per cent, in comparison to the 28 per cent share achieved in 2012.

He expected big rental fleets to buy ahead of September’s derogation deadline, then register Euro 5 vehicles next year, but warned that this avenue would not be open to smaller operators.

“For them, we will continue to build Euro 5 trucks until the end of the year,” he promised, pointing out that DAF’s unique in-factory bodying operation at Paccar’s UK assembly plant in Leyland meant that they were able to do this, but that they would not build vehicles for stock.

Moving to Euro 6, he said a price premium of £10,000 – £12,000 was to be expected on heavy trucks, and that DAF would be prepared to sacrifice market share to retain profit.

“We have to recover the investment,” he said admitting that 2014 and 2015 were likely to be slow years for sales.

On the final day of the show, DAF’s marketing director Tony Pain told Transport Operator that while they had taken some orders for Euro 6 trucks, there had been a sizeable influx of sales of Euro 5 vehicles.

“People were able to see the new products were there, and the penny finally dropped that this really was going to happen,” he said.

Michael Kamper, the managing director of Mercedes-Benz’s UK commercial vehicle operation, said that the market had not recovered from the recession.

“2013 is a difficult year to gauge and predict,” he admitted. “Upcoming changes with Euro 6 will turn into quite a challenge for our customers, although we have proven Euro 6 economy and reliability already.

Kamper, who has returned to the UK after 10 years at Merc’s German headquarters, said he expected the UK market to top out at 42,000 units this year.

“The last ‘normal’ year in the UK truck market was 2004,” he said, pointing out that the subsequent decade had been one of boom and bust. “The average normal year is somewhere between 41,000 and 45,000.”

He was concerned about the fate of smaller companies, who already struggled to fund Euro 5 vehicles, ever being able to afford Euro 6.

“There’s a danger that the increasing costs incurred by not replacing vehicles coupled with the increased cost of Euro 6 may find that making fleet replacements is very difficult. 10 to 15 per cent of our target audience may find itself in this position.

“The mainstream banks are not interested in funding vehicle acquisition. We currently provide finance for 45 per cent of our new vehicles, and this year we are aiming for 50 per cent.

“Ultimately, it’s the only way of doing it, and we will follow the same path for used vehicles as well.”