THE • increasing use_ of private cars, dual-purpose vehicles or• small
Page 68
If you've noticed an error in this article please click here to report it so we can fix it.
vans by travellers or salesmen for both business and private purposes often raises legal queries, to which reference has been made in this series on June 20 and July 25. These have concerned the respective speed limits and whether carriers' licences would be required in the event of samples or small. goods being conveyed. Coupled with the issue of a carrier's licence there would, of course, also be the necessity to keep drivers' records and observe the legal requirements as to the maximum permitted hours of driving.
In the article on June 20, I suggested that companies eonsidering the establishment or expansion of a fleet of vehicles For the use of their staff might well derive great benefit if it could be determined at the outset whether or not goods of some weight or large size were to be carried. This was because, whilst admitting the greater ease with which goods can be carried in a dual-purpose vehicle or a van, severe legal restrictions are then encountered compared with
the freedom of a private Planning
car.• •
I will now take this comparison between the three types a stage further by considering the cost aspect. Even in this sphere, however, legal differences have their effect. This is because, whilst purchase tax is rated at 60 per cent. on the total cost of a car or dual-purpose vehicle, it is not only reduced to 30 per cent. in the case of a van but is alSo limited to the price of the chassis. This factor naturally has its repercussions On comparative items of operating cost: It might also be claimed • to have an indireet'effect'on the respective used sales value, which of course, is bound to exercise sortie influence on the cost of the vehicle's
depreciation.. • '
I assume that a vehicle of about 1,000 c.c. or 5-cwt. payload will be used in all three cases. Dealing first with the private car, the average cost price of four well-known makes is around £600. Licensed as a private car, the annual duty payable will be £12 10s.; or approximately 5s. per week, whilst I will assume that rent and .rates cost 6s. 6d. Recent increases in insurance premiums for private cars have been .particularly heavy and a comprehensive policy with a 50 per cent increase to allow for use by.commercial travellers can amount to £40 a year, or 16s. per week. Interest at 3 per cent, will cost '7s. 2d. per week, making a total for these four items of standing costs of £1 14s. 8d. Assuming a yearly mileage of 15,000. or 300 per week. the operating Cost per mile would be 1.39d.
With fuel costing 4s. 6d. per gal. and a consumption rate of 35 m.p.g., fuel cost per mile will amount to 1.54d., whilst lubricants are reckoned at 0.20d. per mile. A set of tyres will cost approximately £30; giving a tyre cost per mile of 0.48d. based on an estimated life of 15,000.
Two-yearly Replacement In line with the increasing tendency for frequent replacement of staff cars, maintenance costs should be limited to servicing and minor repairs, and are estimated at 0.690. per mile. Whilst frequent replacement should provide maximum availability and the minimum of maintenance, it must naturally have its repercussions on depreciation.
On the basis of replacement every two years, I will assume that the car is disposed of after that period at 80 per cent. of the initial cost eriec, or £480. Divided by the 30,000 miles covered in the two years the deprecjation cost per mile would be 0.91d., giving a total running costof 3.820. per mile. Added to 'the standing cost of 1.390., this gives a total operating cost per mile of 5.210., assuming a weekly mileage of 300.
The average cost for this size of vehicle when fitted with a dual-purpose body would be approximately £675. The first three items of standing costs would again be: Licences, 5s.; rent and-rates, 6s. 60.; end insurance, 16s. Interest, however, would be increased to 8s., corresponding to the higher initial c30
price, making the total weekly standing cost £1 15s. 6d., or 1.43d. per mile.
It is not expected that there will be any appreciable difference in performance and the first four items of running costs will again be reckoned as: Fuel, 1.54d.; lubricants, 0.20d.; tyres, 9.48d.; and maintenance, 0.69d. per mile.
Depreciation, however, will require special attention. In addition to the higher first cost, the comparative used value may be lower than in the case of a private car and I will assume that after two years it would be sold for 75 per cent. of the initial price. In that event a sum of £169 depreciated over 30,000 miles gives a cost per mile of 1.35d. Total running costs are thus 4.26d. per mile, making the operating cost per mile 5.690.
Although the 5-cwt. van must be taxed as a goods vehicle, the annual amount (£12 10s.) remains, the same, as this par
category. It is assumed. that rent and rates remain at 6s. 6d., whilst the cost of insurance will be reduced to 6s. 3d. per week. This is on the assumption that the vehicle would be operated under a C licence.
As the average cost price would be around £435, interest would also be reduced to 5s. Id. per week, making the total weekly standing cost £1 2s. 100., or 0.91d. per mile.
Whilst there may be additional expense in the maintenance of the van body in the later stages of its life, it will be assumed that this will not occur during the twoyear period. _The first four items of running.costs would be reckoned as: Fuel, 1.54d.; lubricants, 0.200.; 'tyres, 0.48d., and maintenance, 0.69d.
per mile. •
Although the initial cost is lower, the drop .in resale value would probably be greater than in the case of the car•or dualpurpose vehicle. If a.van is sold for two-thirds of its, original value at the end of the two-year period, approximately' £145 will have to be charged for depreciation, resulting in a cost per mile of 1.160. for the 30;000 miles'it is assumed will have been covered in that period. This gives the total running cost of 4.07d. per mile. The total operating cost "of 4.980. per mile compares with the corresponding figure of 5.21d. for the car and 5.69d. for the utility.
The Other .Side
Set against these variations in operating costs are the comparative freedom or, alternatively, restriction of legal regulations relating to the three types. Maximum freedom is provided by the private car, the only restriction being the physical limitation by inability to carry other than comparatively small goods.
Although both the dual-purpose vehicle and the van have a greater capacity in this direction, if the goods carried are for use in connection with a trade or business, the vehicle must operate under a carrier's licence, with the resulting restriction as to keeping of records and abiding by regulations as to maximum permitted hours. Speed limits, however, depend upon the construction rather than the use of the vehicle, so that the van is restricted to 30 m.p.h. at all times.
Formerly the permissible speed limit of vans varied according to whether they were loaded or .empty, In December, 1955, the Goods Vehicles (Variation Of Speed Limit) Regulations, 1955, restricted vans, along with other goods vehicles, to 30 m.p.h., whilst dual-purpose vehicles and four-wheel-driven vehicles were specially exempted from speed restrictions.
It is significant. to compare the incidence of purchase tax on these three types. For the four examples of private car chosen this averaged £200, whilst for the utility the amount was £220, not because of any increase in the rate of purchase tax but solely because of the higher initial cost. The average tax payable on a van when built on the same chassis is, however, only £50. This difference of some £150 affects not only the interest charges but also to a lesser extent the cost of depreciation.-S.B.