London households face shortage of cheap car options to avoid ULEZ bills
Only 5,150 affordable ULEZ-compliant cars below £5,000 on sale in London despite 200,000 impacted vehicles
Lower-income households looking to beat the August extension of London’s ultra-low emissions zone (ULEZ) face a dearth of cheaper options to stay on the road despite the launch of mayor Sadiq Khan’s £110m scrappage scheme, Auto Trader research shows.
Transport for London estimates more than 200,000 drivers of non-compliant vehicles2 will be impacted by the extension of the ULEZ to London’s outer boroughs on August 29, forcing them to buy a car or van which follows the rules or pay £12.50 to drive in the zone.
But according to data from online marketplace Auto Trader – which includes 900,000 daily prices from across the whole retail market - the average cost of a used diesel car complying with ULEZ regulations is now £19,991 – with the equivalent petrol engine costing £15,000. The average cost of a used electric vehicle is even higher at £36,102.
At the more affordable end of the market, Auto Trader’s data reveals just 5,150 on sale for £5,000 or less across London in January which comply with the new rules. The cheapest EV available in the London area is £5,400. Typically, only petrol vehicles registered after 20053 and diesels registered after 2015 comply with the rules.
Prices of used cars remain at record levels thanks to the supply chain disruption caused by the Covid-19 pandemic, which cut the number of new cars produced in the UK last year to the lowest since 1956.
The high average costs threaten to put ULEZ-compliant vehicles far out of reach of the scrappage scheme, which offers lower-income households claiming at least one benefit a grant of just £2,000 towards a new car in return for scrapping their old vehicle.
The scale of the financial challenge faced by lower-income households needing to change vehicles ahead of August 29 is underlined by the vast price “gap” between compliant and non-compliant cars.
The average cost of a diesel engine car following the ULEZ rules is £11,996 more expensive than the price of a non-compliant model at £7,995. For petrol models, the ULEZ “premium” is £11,025 more than the £3,975 cost of a non-compliant vehicle.
A report by consultant Jacobs into the impact of the ULEZ extension in May 2022 warned of a “disproportionate” impact on low-income households “due to their lesser capacity to switch to a compliant vehicle and/or to change mode”4. According to Financial Conduct Authority research, nearly a third of UK adults have £1,000 or less in savings.5
Erin Baker, editorial director at Auto Trader, said: “When the average price of a used car is £18,000, a £2,000 scrappage scheme is a drop in the ocean for low-income drivers in outer London who want to avoid ULEZ payments.
“Drivers looking for cheaper ways to beat the tax are also struggling. With the impact of the Covid pandemic likely to keep used car prices high for some time, the lack of affordable options for those on tighter budgets is a real worry in a cost-of-living crisis. Many of those who can’t use public transport will be put in an impossible position.”
Notes to Editors
1All averages refer to median prices
2https://tfl.gov.uk/info-for/media/press-releases/2022/may/tfl-seeks-views-on-expanding-world-leading-ulez-london-wide
3Petrol cars that meet the ULEZ standards are generally those first registered with the DVLA after 2005, although cars that meet the standards have been available since 2001.
4https://ehq-production-europe.s3.eu-west-1.amazonaws.com/2e0438f24520ece474690bb99a94108e4a555b1e/original/1652882837/c7731c1b9dd3c304567a31d5b4816351_London-wide_ULEZ_Integrated_Impact_Assessment_%28ULEZ_Scheme_IIA%29_%282%29.pdf
5https://www.fca.org.uk/data/financial-lives-2022-early-survey-insights-vulnerability-financial-resilience
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