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Low-income Londoners face shortage of ULEZ-compliant used cars

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Londoners are facing a shortage of second-hand vehicles that are compliant with the capital’s Ultra-low Emissions Zone (ULEZ) just months before a major expansion of the zone, a study has found.

According to AutoTrader, only 5,150 affordable ULEZ-compliant cars below £5,000 are on sale in London despite 200,000 vehicles set to be impacted by the expansion.

The average cost of used diesel cars that follow ULEZ rules was calculated at £19,991, while petrol cars cost £15,000. Typically, only petrol vehicles registered after 2005 and diesels registered after 2015 comply with the rules.

Mayor of London Sadiq Khan introduced a £110m scrappage scheme last month to help those on lower incomes, disabled people, charities, sole traders and small business to replace or retrofit their old, polluting vehicles.

But Erin Baker, Auto Trader’s editorial director, said the scheme was a “drop in the ocean” for lower-income households.

As well as modern petrol and diesel cars, electric vehicles will also be exempt from the ULEZ charge, which costs £12.50 for each day they are in the zone. Auto Trader’s data showed that the cheapest EV available in the London area is £5,400.

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 scale of the financial challenge faced by lower-income households needing to change vehicles ahead of ULEZ expansion on 29 August is underlined by the vast price gap between compliant and non-compliant cars, Auto Trader said.

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”. According to Financial Conduct Authority research, nearly a third of UK adults have £1,000 or less in savings.

“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,” Baker said.

“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.”

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