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Monday, August 8, 2011

London Low Emission Zone (LEZ) - Special Report

Commercial vehicle dealers are used to legislation changes distorting the market for new and used trucks - there has been each 'Euro' standard, digital tachos, weight and driver licensing limits and the fist London LEZ stage. The second stage of the LEZ promises to be just as interesting for commercial vehicle operators and dealers, especially as the van market is impacted for the first time. London is launching the next stage of the low emission zone The Rules London's LEZ covers a wider area than the congestion charge - it broadly covers the area inside the M25 - not just central London. Operators turning off the M25 are warned by sign that they are about to enter the zone and must turn around to avoid paying the 'charge'.

From 3rd January 2012, operators who enter the LEZ and whose vehicles do not comply with the new PM emissions standard will be liable for penalty charges of up to £1,000 per infringement.

Trucks

The new rules mean that a truck over 3.5 tonnes has to reach Euro 4 standard for particulate matter to be allowed into the zone without a charge. In practice, this means that any truck registered before the first of October 2006 will not comply. That's a lot of trucks - we are told and many as 70,000 vehicles will not comply.

Truck dealers are used to the impact of the LEZ on the used truck market - the zone, originally introduced back in 2008 stipulated that trucks had to be brought up to at least Euro 3 standard for particulate matter. This meant that older trucks were moved away from the capital, either for local operations elsewhere in the country or exported abroad.

This has led to a depressing of the prices of older stock and an increase in demand for later, qualifying vehicles. Browse the classified pages of Trucklocator Weekly magazine and you will see the "LEZ compliant" banners across the qualifying vehicles.

In truth, the used truck market has already been distorted for some months - the banners on the used vehicles all declare "2012 LEZ compliance". None has been selling trucks for operations into London for over twelve months - If you have then your customers will have every right to be on the phone shouting.

Vans

As it is the first time that vans have been included in the LEZ, the restrictions are less draconian than for trucks. Basically any van before a '51' plate will no longer be allowed into the zone without charge, unless it has been modified and registered as such.

This will obviously stimulate the market for 'newer' used vans - meeting the Euro 3 standard and above, whilst the older vans will be heading up the M1 for the last time.

Most new van makers are offering some kind of incentive for operators of these older vans to trade up to a new one 'scrappage V2'. Since Scrappage V1 was a bit of a washout for vans, it is unlikely that these cashback incentives will drive hoards of van drivers to new van showrooms in their teenage vans, turning instead to the used market.

Stock Shortage

The situation is aggravated by the relative paucity of late used commercial vehicle stock. Good quality Euro 4 or 5 trucks are becoming as rare as hens' teeth, as not many were registered as new since the economy nosedived in 2008.

The van stock situation has fared better, despite a similar registration crisis - this is thanks to a number of large fleets and leasing companies shutting up shop and putting their vans on the market. This is unlikely to continue and will lead to a spike in prices towards the end of the year and a large drop off into the second quarter of 2012 - most operators should be sorted by then.

The Solution - Fit a Filter Is trading up to a newer vehicle the only option for operators? The simple answer is no. There are half a dozen or so companies who all have a solution to the problem. In layman's terms, you can upgrade a vehicle that is as low as a Euro 0 to meet the standards by taking away the existing 'acoustic' silencer and replace it with a Diesel Particulate (DPF) filter. It is here where the layman has to turn into an expert, as there are varying technologies, with some better suited to specific duty cycles of the vehicles.

The Costs

Before going into the technical details and looking at the options available from the manufacturers, you want to know if there is a business case for these systems. Again there is a reasonably simple answer It costs not much more to fit a filter to a six year old truck than a twelve year old van. With the exception of he odd ice cream van and other specialist vehicles, most filter makers are focusing on trucks, as the cost of conversion will be greater than the prices of most vans. Customers should expect to pay about £2,000 to £2,500 for a light commercial with prices starting at £3,500 to £4,000 for a truck, increasing to upwards of £5,000 for more complex systems. The higher rated the truck engine, the more filters required and therefore the more expensive the systems.

The costs do not stop at installation stage - choose the wrong system and the truck will end up in the workshops more often with the filters out for cleaning - a process that for some systems involves sending them away for baking overnight in a large oven.

Filter Technology - the Types Available

The problem isn't taking the particulates out of the exhaust gases; it is getting rid of the particulates from the filters - the process called regeneration. The filters therefore need to be able to clean themselves, or regenerate otherwise they will soon block up and need to be removed and cleaned.

For the filters to clean themselves, the systems need heat. Lots of it.

If a truck is worked hard up and down the motorway there will be sufficient heat generated in the exhaust system to use a relatively straightforward 'passive' filter system. If the truck spends its life in slow moving urban environments, then it may need a more complex and expensive 'active' system.

Active Vs. Passive Filters

Active system by Huss which uses diesel to increase the heat in the exhaust To burn off the carbon particulates, the temperatures required would be in excess of 600 degrees if a catalyst were not used. To lower the temperature, the systems use a catalyst. This usually takes the form of a precious metal that is contained within the filter itself (a 'dry' system) or has the catalyst injected into the fuel before entering the engine as a liquid (a 'wet' system).

Questions to ask of supplier

Is filter straight swap for acoustic silencer?

Whilst all systems will need some type of monitoring devices, the installation is a lot easier if the DPF will use the same mountings as the original acoustic silencer. This avoids the need to have specialist fabrication skills and equipment on site. Most 'dry' passive systems will fit in this way.

How are filters cleaned?

Do the filters have to be sent away?

If so you will need to check where the nearest facility is to you to make sure that you are not shipping your customers' filters all over the country.

How frequently do the filters need cleaning?

What number of vehicles in use are the figures based on?

Key here is also the cost of cleaning the filters Some companies offer a filter exchange service

From which exhaust temperature is the system recommended?

The filter suppliers will help here and can even put a recording system in place to test the maximum temperatures achieved in a 'duty cycle'. If in doubt, it may be best to specify a lower temperature system than may be necessary to avoid downtime later in the vehicle's life.

Can we install system on site?

There is still a business opportunity to become an installer/servicer of these filters. Many dealers have already taken the opportunity to increase turnover - the systems cost upwards of £400 to fit. Many of the simpler systems are straightforward nut and bolt jobs with some auto electrical work, whereas the more complex 'active' systems need some fabrication experience.

The active systems use additional heat sources to burn off the soot and ash in the filters, since the engine itself is never worked hard enough to generate the heat required even with a catalyst. This means that they are more expensive to buy, as they need additional control equipment. One supplier describes their system as a 'mini-flame-thrower' strapped to the underside of the truck. Would you have one of those if you really didn't need it?

There are plenty of passive systems on the market and they all do the job of cleaning up the exhaust and meeting the standards, so the manufacturers have to compete in other areas. Obviously initial cost of purchase is one factor, but most systems are within 10 to 15% of each other. It seems the area where benefits exist are in keeping the trucks out of the workshops for maintenance of the filters and the differences in the support systems for getting the filters cleaned - some companies work on an 'exchange units' basis, whilst others will give you an overnight service - helpful if you have a local facility, not very helpful if you are shipping filters to the other side of the county. Others claim that a simple wash with a pressure washer or ten minutes with the Dyson will return the filter to life.

'Passive' Systems Continuously Regenerating Trap (CRT)

These traps are usually ceramic filters with a catalyst section in front which reduced the temperature required from 600 degrees to as low as 260 degrees in some cases, as long as it happens for at least 40% of the time. They are totally self-contained and can usually fit in the place of the existing acoustic silencer.

Catalysed Continuously Regenerating Trap (cCRT)

To bring the effective temperature range lower, the filters themselves can be coated with the catalyst, therefore improving performance which means that the exhaust temperature need not be so high for the system to passively regenerate.

Fuel Borne Catalyst (FBC)

Instead of using a catalyst in the filter itself, there are 'wet' systems that inject quantities of a catalyst into the fuel system, prior to it entering the engine. FBC is injected into the fuel via a dosing system and a supply of liquid catalyst stored on board the vehicle. Initially, FBC aids the combustion process within the cylinder, reducing the total burden of soot produced and ensuring that only catalysed soot enters the filter. Soot pre-catalysed with the FBC system will then combust at significantly lower temperature than would otherwise be possible. FBC DPF systems have been successfully employed on duty cycles where more than 80% of the operating cycle time is spent at lower than 250°C exhaust temperature. The system simply needs a long blast up the motorway every now and then to clear out the accumulated catalysed soot, as the soot is already catalysed. This means that FBC systems can usually operate on lower average temperatures than a CRT system.

'Active' Systems

Where the temperature of a vehicle's duty cycle does not reach high enough levels for any of the cheaper, passive systems to work then the filters have to be 'helped along' to generate heat. The systems are usually used in conjunction with the FBC systems which store the soot ready to be burnt off - although there are exceptions - the system used by Huss needs no extra additive, just diesel, which is injected into the filter to ignite and raise the temperature.

Become an Installer

There are plenty of benefits in becoming an installer or distributor for a DPF system. Not least because there could be some interesting revenue streams for the second half of this year in installing systems, but there is a chance to earn money supplying the additive for fuel-borne systems, arranging for the filters to be cleaned or offering a filter exchange service. There is also some credibility in having a specialist on-site solution for emissions issues.

Convert Euro 3 Trucks for Used Stock?

A number of used truck dealers have wised up and are starting to convert late, quality Euro 3 trucks for stock, as used Euro 4 truck availability worsens. Just be careful which system you opt for. Chances are if you are based some distance away from London, a straightforward passive installation will suffice, as the vehicle has to get to London in the first place. If, on the other hand, you retail to companies inside London, their vehicles may never leave the confines of the M25 and converted Euro 3 vehicles with a simple CRT conversion will not be up to the job.

Further down the Line

When dealing in used trucks that have been converted it will be important for the selling dealer to know which system has been installed to make sure that it is suitable for the customer's duty cycle. 'LEZ Approved' is not the end of the story. If the truck was originally converted with regular motorway journeys in mind using a cheap and cheerful system, selling this truck to an operator who never leaves central London will be a recipe for disaster!


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