scruttonbland.co.uk
AND LOGISTICS TRANSPORT
Autumn Edition
Buying a commercial vehicle – Hire Purchase or leasing?
The economics of electric vehicles
Planning ahead – why cash is king
Contents
3 Welcome to the Autumn edition edition of our Transport and Logistics newsletter
8 Planning Ahead – Why Cash is King
10 Introducing Port One Logistics Park – Pioneering Sustainability Across Our Region
4 Hire Purchase or Leasing - What are the Best Options?
12 The Economics of Electric Vehicles
6 Bacton Transport – Sustainable Growth and Efficient Service
14 Meet the Team
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Welcome to our Autumn edition of our Transport and Logistics newsletter
Welcome to our Transport and Logistics newsletter, aimed at businesses and individuals working in this sector. Listening to our clients, two of the major issues they are currently dealing with are sustainability and profitability, and we have a number of articles to help explain some of the questions that we are asked on those topics.
P urchasing a commercial vehicle such as a truck is certainly a major financial undertaking, and one that needs careful commercial consideration. On page 4, Ben Cussons, Associate Partner, looks at the pros and cons of leasing versus hire purchase and flags up some of the more significant points for vehicle and finance managers to note. The question of whether to switch to electric- powered vehicles is worth asking. Whilst electric trucks are still priced out of reach of many transport firms, smaller vans and commercial vehicles are now being used by many businesses. On page 12, James Tucker, Business Advisory Partner examines the current state of UK motoring on the path to zero emissions. Staying with finance, on page 8 we have an article on cash flow forecasting and how important it can be in determining the success or otherwise of a business venture.
Finally, we love to showcase some of the leading businesses across our region and to celebrate the work they are doing to grow our economy. On page 6 we profile Bacton Transport who have been around for over 90 years and recently achieved significant growth by working with their clients to achieve workable and sustainable solutions, such as taking on both storage and assembly on site in their new facilities near Ipswich. Further west, Port One Logistics Park promises cutting-edge storage solutions coupled with environmentally conscious logistics designed to maximise cleaner operations within a sustainable working environment. See more about Port One on page 10.
Our Transport and Logistics team works with businesses and organisations to support their management teams in identifying issues and risks and delivering targeted, cost- effective solutions and advice. Please don’t hesitate to get in touch if you have a specific concern you’d like to discuss or would like to find out more about how we can help your organisation.
Steven Burgess Audit Partner
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Hire Purchase or Leasing – What are the Best Options?
The UK is now a net importer of goods and the port of Felixstowe is one of the main routes to bring these goods into the country. It is therefore no surprise that the economy in the East of England is heavily dominated by the transport and logistics sector, says Ben Cussons, Associate Partner.
T he most recent figures published to the end of May 2023 by the government*, show that goods imported in the twelve-month period had a value of £901 billion compared to £842.7 billion exported. That is a lot of ‘things’ that needed to be moved. The hauliers responsible for moving these goods around the country are operating in a very capital-intensive industry, with a significant investment and/or commitment to a fleet of vehicles required to keep the economy going. These vehicles hold a significant balance sheet presence in these companies accounts and an important decision for hauliers and transport businesses is whether to lease or hire purchase (HP) their vehicles.
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Shown as an asset of the company and strengthens the balance sheet
However … you should bear in mind there may be limits to what you can afford. In addition to putting a deposit down, which at the very minimum will be the entire VAT value of the acquisition, the cost of servicing the debt may be difficult to maintain when other costs and revenues in your business may be fluctuating. Repayments will be over a set period, potentially longer than on a lease, adding a lot more debt to your balance sheet. Remember that buying outright will mean the responsibility of maintaining and servicing the vehicle is down to you, and the risks of dealing with expensive repairs like new tyres will need to be factored in. Furthermore, you need to consider the impact of your current ratio which will be worsened by the addition of debt (an element of which will be a current liability). This is important for those businesses with borrowings that have financial covenants attached.
• Once paid for the asset is yours and there is no immediate commitment to replace the asset, any future earnings out of the vehicle are yours
Cons: •
Requires initial outlay of cash in way of the deposit and funding of the VAT upfront • Significant liabilities used to borrow the money to finance the purchase of the asset may compromise raising additional finance • You are responsible for the ongoing maintenance costs and as the asset’s future life shortens then these are likely to increase Buying a truck on finance means you spread the cost over a period of time and the truck will belong to you at the end of the repayment period. Added to this, you can claim VAT back up front plus up to 25% in Corporation Tax reduction from day one, depending on your tax rates and where tax profits fall within the financial year. The truck will appear on your balance sheet as an asset (together with any associated acquisition costs), and because the HP finance is linked to the asset, it may be easier to source funding. At the end of the payment plan you will own the truck, to either keep using or sell on second hand.
There’s no obvious answer to this question, and there are pros and cons for each route.
Purchase – either outright or on finance
Buying second-hand
Pros: •
If you’re thinking of buying second hand rather than new, remember to factor in the number of miles the vehicle will be making, how it will be used, the cost of repairs to an aging vehicle, versus how much life is left in the truck.
Immediate Corporation Tax saving in the year of purchase based on 25% of the total costs of the asset, irrespective of whether bought outright or on finance • 100% of the VAT can be reclaimed on the cost of the asset
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Accounting for operating leases Under current FRS102 rules a company doesn’t need to show leased vehicles as an asset in the accounts or recognise the liability for the future obligations. The rental payments are just expensed to the statement of profit and loss, but a disclosure also needs to be included for the remaining commitment of the lease. This can make you seem less profitable but with a stronger balance sheet from a finance point of view. However, change is expected to the current rules on leasing from January 2025 which will see the need for an asset and liability to be recognised, regardless of whether the company leases or buys. This change would see assets under operating leases capitalised on your balance sheet (the ‘right-of-use’ asset) with a corresponding lease liability within creditors. The asset is then depreciated over the shorter of the useful life of the asset and the lease term. There will still be a need to differentiate between assets brought and assets leased though as the accounting treatment behind them will differ. Careful advance planning should be made once guidance has been published as this could significantly change the balance sheet for lessees, including the current ratio which – as noted above – many lenders may have written into financial covenants. There is no obvious conclusion about whether leasing or purchasing is better as both have pros and cons. The decision should be made on the merits to your company and any future plans you may have. If you would like further advice on the best way to proceed for your company, please give a member of our Business Advisory team a call on 0330 058 6559 or email hello@scruttonbland.co.uk
Operating Leases
On the other hand, the most obvious point is that the vehicle will not belong to you, and you do not have the option to sell it, as you might with a vehicle bought on HP, if your business needs change, or if you need to liquify your assets. Leased assets and their associated liabilities are not (currently) included on the company’s balance sheet; instead, you must disclose operating lease commitments in the notes to the accounts.
Pros: •
There is a reduced initial outlay of cash Fixed monthly spend, often includes maintenance costs built in to the monthly amount for the period of the lease. • Nearly always a brand new vehicle leased • Currently doesn’t show as a liability on the company’s balance sheet • Cons: • No use of the asset once lease term expired • Need to enter into a new contract to replace the asset • VAT is claimed monthly on the lease rentals. 50% cap for cars • May incur additional charges if you exceed the agreed usage as set out in the initial contract Leasing is a popular option as there is currently a surplus supply of vehicles after the peak of the pandemic, and the leasing process will provide some certainty over outgoings as the repayments are fixed over a finite period. However other costs have risen, and leasing companies will be passing those on their clients, so don’t expect any irresistible deals. Many lease contracts will have a maintenance plan as part of the contract and there is a tax relief element as VAT can be claimed back as payments are made.
Accounting Treatment
Purchase – if on finance If you have taken out debt to finance the purchase of the asset, you will have a large asset and liability on the balance sheet. A deposit is likely to be required initially and then the asset will be brought over a set period, which is likely to be longer than a lease period would be. This would add a lot more debt to your balance sheet over time and represents a bigger commitment than leasing. A fixed asset needs to be recognised for the acquisition costs which will then be depreciated over a number of years, often over the term of the lease. A liability is also recognised for the obligation of the future instalments of the agreement. Consequently, buying makes the company appear more profitable but results in a weaker balance sheet.
* www.gov.uk/government/statistics/ uk-trade-in-numbers
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Bacton Transport – Sustainable Growth and Efficient Service
Bacton Transport, a prominent logistics and transportation company, has been part of the business landscape in East Anglia for over 90 years. We spoke to Andy Stevenson, Bacton Transport’s Finance Director about their recent growth and plans for the future, as well as how they have coped with the challenges of the past few years.
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V ery much a family firm, Bacton Transport was founded in 1932 and started life transporting milk from Suffolk farms to the local dairies. It is now owned and run by brothers Charles and Ed Downie, grandsons of the founder of the business, who have brought a number of complementary skills: Charles worked in logistics for some years before joining the family firm about a decade ago, whilst Ed has built up an indepth knowledge of the business, and is known for his rapport with their 100-odd drivers. The business has quietly grown to become a major player in freight and storage, collecting and delivering over three thousand tonnes of freight and six hundred individual consignments every day. As well as their main base in Woolpit, Suffolk they have a secondary depot near Nottingham which handles deliveries to Aldi supermarkets and have recently acquired a new storage warehouse facility at Haughley Park near Ipswich. This strategic move aims to meet the growing demand for storage and distribution services in the region, allowing the company to further enhance its operational capabilities and serve its customers more effectively. So, in an industry with razor-thin margins, how do they manage to create sustained growth? The answer, says Andy Stevenson, lies in the strength of their company culture, continually seeking excellence, and developing an inclusivity that tries to foster a sense of belonging across every part of the business. This determination to put the needs of the customer first is what drives the business ethos, or as Andy puts it: “We never say no”. Working with their customers in this way is in line with Bacton’s long-term strategy for business growth and means adopting an empathetic mindset to understand the clients’ needs, so they can deliver workable options to meet that requirement. A good example is the decision to take on storage and assembly work as an adjacent line of activity to their transport contracts. “Clients can bring in parts for goods which can be assembled in the storage unit before we deliver forward deliver them on,” says Andy. “We are also now really pleased to now be able to offer ETSF (External Temporary Storage Facility) storage of uncleared goods imported from outside the UK, allowing the client to defer making a full customs declaration and paying duties and taxes until the end of the goods’ agreed storage period.” Along with every other transport and logistics business, Bacton Transport has needed to respond and adapt to deal with the challenges of COVID-19 and its repercussions. “The pandemic was interesting,” comments Andy, wryly. “After the initial shockwaves, we could see that e-commerce enabled demand to bounce back, but, like everyone else we were soon faced with a shortage of drivers, and the supply of vehicles dried up. Although trucks are beginning to be available again, costs have gone up significantly, and we are paying 40% more that we were four years ago. Finally getting the trucks now that we ordered two years ago can quickly cause cash flow issues, so you need good financial management to keep that side of things stable. Working with Scrutton Bland has helped us enormously, for example their audit team has not only kept up compliant but has helped to reveal ways to improve our systems and controls.”
“Transport and haulage remains a big energy consuming sector, so any sustainability initiatives are a good thing all round,” continues Andy. “Bacton Transport are a member of the Suffolk Carbon Charter, which means we’re committed to working on sustainable solutions such as solar panels, water capture measures and LED lighting. Just recently we’ve been told that we have achieved Carbon Charter Gold from Suffolk County Council as we’ve made a 21% reduction in our carbon footprint since our last assessment two years ago. We’ve also reduced the top speed of our fleet by 3 miles per hour, which sounds like nothing but actually reduces our miles per gallon fuel consumption by 10%. Like everyone else we’re keeping an eye on electric vehicles, but they’re not quite commercially viable for us yet, although recently we have been working with Volvo to help them compare the costs of running diesel trucks compared to electric.” But it’s not just about the trucks. Bacton recognises the importance of training their drivers to a high standard and the firm has just achieved FORS (Fleet Operator Recognition Scheme) silver and gold accreditation. “We had to deliver 1100 hours of driver training, and 40 hours of manager training,” says Andy. “We spent over £50k on extra tuition, and we even had to get the drivers onto bicycles and cycle to the next village so they could experience what it is like to have a huge truck drive past them! We now no longer use agency drivers, as we want to provide the best professional service from our inhouse pool of employees.” Looking forward, Bacton’s recent expansion into Haughley Park will have a positive impact on the local economy by creating regular job opportunities within the community. “We need to employ a diverse range of employees, including warehouse staff, logistics professionals and administrative personnel, thereby driving economic growth and fostering employment in the region,” comments Andy. “Our goal is that as we continue to expand our operations, we remain a key player in the UK logistics industry, offering tailored and sustainable solutions and contributing to the growth and success of businesses in our region and beyond.” Scrutton Bland’s audit is much more than a process to certify accounts and ensure you’re compliant with the law. It becomes a powerful tool for optimising your organisation and a vital input for a robust business plan with built-in resilience. Contact us at hello@scruttonbland.co.uk or call us at 0330 058 6559.
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Planning Ahead – Why Cash is King
C ash is a key driver of any business and in a time of regular interest rates hikes, the ability to pay off debt is becoming increasingly difficult, meaning that future liquidity issues for some firms are almost a given. Just recently renowned logistics firm Tufnells Parcel Express entered into administration, and while partly bought out by Shift, over 2000 UK jobs were lost. This isn’t to say that if the corporate governance team at Tufnells had prepared a cash flow forecast then it would’ve stopped them from entering administration. But what can be said is that keeping on top of cash flow can certainly help to indicate if there is trouble on the horizon.
The term ‘cash is king’ was popularised in the late 1980s by Pehr Gyllenhammar, the then CEO of Swedish car group Volvo. While certainly the term may now have some critics during this current high inflationary environment, it is still an important concept to consider, particularly for businesses with high capital costs, such as transport and logistics. Sam Willis, Audit Associate, looks at how and why businesses need to plan ahead.
1. Managing Working Capital Working capital, is the money available within a business to be used for its day-to-day operations, and it is what keeps the metaphorical wheels of logistics companies turning. Cash flow forecasting aids logistics companies in managing their working capital effectively. By estimating future cash inflows and outflows, a company can adjust its expenditure, negotiate favourable credit terms, and ensure that it has enough liquidity to meet its operational needs. This proactive approach prevents the costly consequences of delays and can help mitigate unexpected expenses, both of which can disrupt operations and damage client relationships. 2. Planning for Seasonal Fluctuations Many logistics companies experience seasonal fluctuations in demand. Whether it’s due to increased demand around holiday periods, seasonal sector demand (such as agriculture) or industry-specific trends, these fluctuations can significantly impact resources such as staffing, storage, vehicle use and subsequent maintenance, which will then in turn affect their cash flow. Cash flow forecasting enables logistics companies to anticipate these shifts and allocate resources accordingly. By knowing when and where demand is likely to spike or dip, companies can adjust their staffing, transportation and storage facilities capacities, ensuring that they can meet customer demands without overcommitting resources during the quieter periods.
Understanding Cash Flow Forecasting
Firstly, a simple definition: Cash flow forecasting is the process of estimating the inflows and outflows of cash within a specific time frame, typically on a monthly or quarterly basis. It involves projecting the expected cash receipts and payments, considering various factors that could influence the financial operations of a company. This forward-looking analysis allows companies to anticipate potential cash shortages, plan for investments, make informed decisions, and implement strategies that ensure their financial stability. While there are many useful resources available across the internet that can guide the preparation of a successful cash flow forecast (or if you don’t have the time, an experienced accountant will be more than up for the task), the aim of this article is to signify the importance and value that they can place in determining the success or otherwise of a business venture.
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3. Navigating Capital Expenditure In the world of transport and logistics, staying ahead often means making strategic investments in technology, storage facilities, and fleet management. These investments can range from upgrading transportation vehicles, implementing new warehouse management systems or simply acquiring new additions to the fleet. Cash flow forecasting helps to provide the financial insights necessary to plan and execute these investments without putting an undue strain on the company’s cash balances. Companies can use the information available to evaluate whether or not they have the funds to cover the costs straight from the bank or if other financing options are required. 4. Making Informed Decisions Transport and logistics is a dynamic sector, meaning that decisions must be made promptly and accurately. Cash flow forecasting can facilitate this by providing decision-makers with accurate and timely financial insights. Whether it’s determining whether to expand into a new market, negotiating contracts with customers, or the use of external financing, having a clear picture of the financial implications of future strategy is invaluable. This process has become even more of a consideration after recent events following the pandemic, when cross border activity came to a halt, to the more recent cost of living crisis. Now more than ever is it crucial that contingency plans are in place. Through the use of cash flow forecasts, decision-makers can analyse and make informed decisions on varying scenarios and ‘what-if’ events to ensure plain sailing through the murky waters.
5. Getting Through the Day Whether your goals are to iron out the day-to-day glitches, expand your operations with new capital expenditure or merely just to survive another day, cash flow forecasts are an extremely useful tool to help with your decision making. Logistics and transport firms are no exception, since they need to maintain a well- functioning fleet, ensure there is sufficient cash to meet fluctuating diesel prices, as well as to meet the costs of staffing and dealing with periods of high demand. A cash flow forecast will help analyse your cash flow can help to ensure the smooth running of your company’s operations, which at the end of the day provides us with the satisfaction we all long for.
A finance professional can help you overcome your cash flow challenges by:
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carrying out an initial cash flow review to identify both ‘quick wins’ and opportunities for longer-term improvements benchmarking your working capital cycle to compare against your peers’ performance and identify potential opportunities to improve developing detailed action plans for your business, where the dependencies between cash, costs and customer service are optimised recommending appropriate technology solutions to ensure that your company is making the best use of the latest cloud-based accounting packages and apps supporting the implementation of sustainable procedures which focus on: optimising your processes throughout your working capital cycles
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compliance and monitoring
identification and improvement of commercial terms
Get in touch with Sam or one of his colleagues to discuss how they can help with your cash flow forecasting. Please phone 0330 058 6559 or email hello@scruttonbland.co.uk
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Introducing Port One Logistics Park: Pioneering Sustainability Across Our Region
Located strategically along of the A14 at junction 52, Port One Logistics Park is a major step forward in the development of logistic park facilities in the UK. Projected to cover an expansive 4.5 million square feet in a couple of years, it promises not only cutting- edge storage solutions but also optimises accessibility along the A14 and A12 corridors, connecting the east coast ports to the heartbeat of UK trade. We spoke to Murray Gibson at Port One who explained more about the development.
What makes the design of Port One different to other storage facilities? At the core of Port One’s allure lies its
Can you say something about the sustainability ethos you have developed at Port One? We’ve tried to set up Port One as a trailblazer in sustainability, setting a new standard for environmentally conscious logistics. Acres of solar panels sit on our roofing and the surrounding landscape, providing 100% of our energy needs by ultimately generating 5.2 megawatts of green energy when fully developed. Charging stations for electric vehicles and forklifts are already in place and more are planned, to ensure the design is moving toward cleaner operations. Our vision for Port One has had sustainability embedded at every stage of its design, planning and procurement. A business’s green credentials are not something that can be ignored, and we all need to make our move onto this sustainable path at a much faster pace. The beauty of Port One is that any new tenant will already be making giant leaps in sustainability simply by acquiring one of our warehouses as it comes as a pre-requisite.
Further investment has been made locally by planting 30,000 native trees as well as undertaking the regeneration and long-term management of nearby Great Blakenham Riverside Park to ensure it becomes a place where native flora and fauna can thrive. Rainwater is harvested to create rain gardens and wet woodland and 98% of their waste is recycled by a local company within a mile. What can’t be recycled from the site is used for waste to energy. Natural sustainability comes from the strategic location of Port One, meaning lorries will be travelling fewer miles between Port One, Felixstowe and Harwich. It is estimated that the reduction could be savings of 5 million miles every year. Port One sits at the centre of the Freeport East Zone and will be able to take advantage of their plans to establish a Green Hydrogen Hub and integrating diverse sources of sustainable energy to fuel vehicles and equipment.
commitment to sustainable modern solutions. The purpose-built units have been meticulously crafted, to marry space and height, dwarfing the traditional four-tier storage model and unlocking capacity. Catering precisely to the needs of our diverse clientele allows business operations to run more efficiently; from customisable mezzanine levels to fluid layouts, every aspect of these units has been designed to meet evolving business needs.
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How will its location benefit the distribution network in the east of England? Port One Logistics Park’s strategic location is not just key for avoiding the disruptions of bridge closures off the port, it ensures a seamless flow of goods once the trucks arrive at the Logistics Park, bypassing hurdles that often stymie distribution. This is reflected in the park’s design as a hub for e-commerce, as we have recognised the dynamic shift in consumer habits, with three-quarters of the site operating as a conduit for B2C commerce. Port One Logistics Park forms an integral cog in our region’s trade ecosystem, bringing together retailers, freight-forwarders, warehousing stalwarts, and transport, all relying on Port One to catalyse their operations.
Can you say something about the challenges you overcame? Like any other large-scale project there have been challenges to overcome, not least in dealing with the geography of the site. The ground was very uneven, in some places having thirty metre drops, which was a significant problem, given the millimetre-perfect structural requirements of the project. The solution came through moving over 500,000 m3 of soil and using eight different types of retaining structure to complete the nine buildings. There were also climatic issues, as the building work took place over a very hot summer, which meant that construction workers had to start work at 4am so they could complete their working day before the temperatures became too hot to continue. Are there plans to expand? There are currently two new warehouses under construction, adding nearly half a million square feet to Port One’s estate and by the end of 2023 three more warehouses will join the park. Port One also has additional plans for secure, gated lorry parking facilities with top- tier amenities, demonstrating a commitment not only to goods and vehicles but to the lorry drivers, ensuring their comfort and safety.
How has the project impacted the local economy? Port One Logistics Park reverberates with opportunity and its impact on the local community is palpable. This is echoed in the opening of a recruitment office on site, underlining the park’s commitment to local employment and growth. As rental costs escalate, Port One Logistics Park offers secure 24/7 access, clean and sustainable solutions, and increased capacity, coupled with the promise of 21st-century amenities at exceptional rates. As it matures into a key part of the UK distribution infrastructure, Port One has emerged as a testament to the perseverance and pursuit of excellence within the logistics sector in our region. It’s a transformative project which promises a greener and more prosperous tomorrow for all who embrace its offering.
For more information on this, visit www.port-one.co.uk
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The Economics of Electric Vehicles - Where Are We on the Road to Zero Emission Motoring?
The number of electric vehicles (EVs) on Britain’s roads is increasing. With the sale of new internal combustion engine vehicles due to be outlawed in the UK in 2035, that rate of change will need to increase significantly before then. But what are the issues in reaching zero emission motoring by 2035? James Tucker, Business Advisory Partner looks at some of the current obstacles.
Legislation There are a range of carrot and stick policy measures in existence to encourage the transition towards EVs. The UK government has also thrown itself 100% behind electric battery-powered vehicles, whilst the EU has rather more pragmatically backed more than one horse, leaving space for hydrogen and e-fuels (made of captured CO2 and hydrogen extracted from water using renewable energy). Time will tell whether this disparity represents inspired leadership in tackling climate change, as the government would no doubt portray. An alternative view may be that it is an example of post-Brexit bureaucracy that risks putting the UK at a competitive advantage.
Hearts and minds We all know that banning anything in isolation is rarely the answer, and in reality, people need to be convinced that they want to buy an electric vehicle, not that they have got to because they have no alternative. One of the biggest obstacles to that change of mindset (given that most of us want to make environmentally responsible decisions) is the now well-worn term of ‘range anxiety’. Anxiety about anything is often misplaced and not supported by facts and science so let’s look at some of real issues. Ken McMeikan, CEO of Moto service station operators put his view forward on national radio recently when he said that the power and/ or infrastructure simply does not exist to run the national fleet of EVs. Without significant strategic change, he said, it won’t happen any time soon.
Moto predict that they will require 25% of the power output of a nuclear power station to service rapid charging points at their service stations by 2030. In June 2023 alone they used 3M kilowatts of power for that purpose, enough to power 12-14,000 homes. But where will all this power come from and how will it get to where it is needed? Moto’s concerns appear to be backed up by Nick Winser, the government’s first Electricity Networks Commissioner who has put forward a raft of measures aimed at clearing the grid backlog. Currently new renewable energy projects face a wait of 10-15 years to connect to the UK power network because the grid simply cannot keep pace. The recommendations are designed to halve this to no more than 7 years – a key date as described above. The UK grid connection delay is the longest in Europe and a major obstacle to achieving our net zero targets.
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The cost The cost of driving from A to B is clearly a massive factor in people’s decision-making process. With the huge increase in the cost of electricity over the last couple of years, the distinction between filling up with traditional fuel and recharging an electric vehicle is not as stark as it once was, but it is relatively easy to work out the numbers. But what about the hidden costs? For many years now, domestic electricity has carried VAT at 5% whilst commercial supplies are charged at 20%. Even without profit margins, that makes it much more expensive to recharge your EV from public charging point than from at home. For businesses with fleets of larger vehicles which can’t be charged from domestic power points, this becomes a significant cost concern. Then there is depreciation. According to Autovista, the average retained value for a used electric car after 3 years and 36,000 miles is 47.6% of its cost. That compares very unfavourably to petrol engine cars at 67.1%
and even the out-of-favour diesels not far behind. For a car costing £40,000 new that is an additional cost of £7,800 or 20% over a 3 year period. Is electric really the only way forward? BMW doesn’t think so – they have just launched the iX5 Hydrogen which they say acts as an ‘additional option’ for locally emission-free mobility in the future. BMW have worked with Toyota, a notable absentee from the fully electric market until recently, to source the hydrogen cells. Perhaps this represents an alternative for the future, although if the electricity infrastructure in this country is a problem, you will need a fair amount of good fortune finding a hydrogen cell filling station– there are currently 15. Hydrogen however is widely seen as a vital component to the commercial vehicle market’s future transition to net zero although hydrogen cell-powered HGVs and heavy plant is really not feasible at the moment.
Perhaps it is no surprise then that the UK government signed an £11.3M deal with Toyota late in 2022 to assist with the development of hydrogen-powered pickup trucks with a range of big players investing huge sums in the development of this technology. Hydrogen-powered trucks also have a greater fuel-efficiency and range than battery-electric vehicles, making them beneficial for long- haul transportation. Unsurprisingly, the cost of hydrogen trucks is still prohibitively high for most transport and haulage firms, but as economies of scale and technologies for solid- state fuel cells and storage systems advance, the costs are expected to decrease. Scrutton Bland have a comprehensive range of business advisory services for transport and logistics firms. Whether you need advice on VAT regulations, moving your accounting processes to digital, or improving your financial management, we can help. Get in touch with James or one of the Business Advisory team at hello@scruttonbland.co.uk or phone 0330 058 6559.
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Meet the Team We have a long-standing association with the transport and logistics sector, and our specialists have a thorough understanding of the opportunities and challenges it currently faces.
We seek to build long term and trusted relationships with our clients, and to fully understand their businesses in order to provide bespoke and targeted advice.
Get in touch with a member of the team to see how they can help you.
Steven Burgess Audit Partner steven.burgess @scruttonbland.co.uk 01473 945870
Chris George Tax Advisory Partner chris.george @scruttonbland.co.uk 01473 945836
Donna Cullum Audit Manager donna.cullum @scruttonbland.co.uk 01473 945855
Ben Cussons Associate Partner ben.cussons @scruttonbland.co.uk 01379 773532
James Tucker Business Advisory Partner james.tucker @scruttonbland.co.uk 01473 945761
Joy Shaw Senior Tax Adviser joy.shaw @scruttonbland.co.uk 01473 945837
Luke Morris Corporate Finance Partner luke.morris @scruttonbland.co.uk 01473 945731
Daniel May VAT Manager daniel.may @scruttonbland.co.uk 01473 945823
Sam Willis Audit Associate sam.willis@ scruttonbland.co.uk 01473 945736
0330 058 6559 scruttonbland.co.uk
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Scrutton Bland Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Our FCA registered number is 828934. 0787/09/2023/MKTG
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