Different Types of Commercial Vehicle

It’s no secret that vehicles are imperative to the functioning of many businesses around the globe; they serve many purposes, with commercial vehicles often leading the way for keeping a business on the move. It’s therefore no surprise that in 2022, worldwide commercial vehicle production grew to around 23.7 million units, continuing the slow recovery from the three million unit drop recorded in 2020. But, what exactly is a commercial vehicle, in the UK?

Commercial vehicle production in the United Kingdom from 2017 to the first ten months of 2023 [Source: Statista]

Defining A Commercial Vehicle

A Commercial Vehicle, or CV for short, is a vehicle used for either business or commercial purposes, assisting with the movement of goods or people and completing tasks relating to the industry in which they are used. Commercial Vehicles are attractive to business owners and employees alike, as they save time and money in many different ways, as well as bringing a host of other benefits. We see Commercial Vehicles used every day, covering many spheres of employment, such as the following;

• Heavy Goods Vehicle (HGV), such as large trucks
• Construction Vehicles, such as cranes, bulldozers and tippers
• Transit Vans, which we have featured in an article recently
• Buses, such as school buses and private buses
• Emergency Vehicles, such as ambulances and fire-trucks
• Commercial Cars, such as taxis and delivery cars

Heavy Goods Vehicles (HGVs)

HGVs play a vital role in the UK and global logistics industry. Without them, retail and other industries would very quickly come grinding to a halt. Historically in the UK a HGV was regarded as vehicles over 7.5 tonnes, whilst vehicles under 7.5 tonnes were classed as Light Good Vehicles (LGVs). However, in recent years that has changed to fall in line with EU legislation, and LGV stands for “Large Goods Vehicles”. As a result, this can lead to some confusion. However, in terms of licensing, Category C1 licence allow you to drive a LGV between 3,500kb and 7,500 MAM (maximum authorised mass), and a C1+E licence allows you to add a trailer of up to 750kg in weight . Above that, you need a C class licence to drive a rigid HGV or a C+E licence for articulated HGV. The latter being the ones people are most familiar with.

In terms of financing, HGV loans for a new lorry will typically be for around £80k to £200k depending on the size and specifications of the vehicle being purchased. The most popular means of financing is a Hire Purchase Agreement spreading the payments over 4 years as this provides the “sweet spot” for many businesses in terms of the vehicle holding its value. Deposits on a hire purchase agreement will normally start around 10% of the purchase price, and whilst interest rates are constantly changing, some are available from as little as 4.5% flat*.

(*subject to status. Data correct at the time of writing but please contact us for the latest interest rate data)

Construction Vehicles

Construction vehicles are another common Commercial Vehicle seen daily in the UK, especially because of the current demand for housing which has led to a greater demand for construction vehicles. Around 233,000 new homes were built in 2021/22; and without construction vehicles, we simply would not be able to develop sites at the rate in which we do. If you’re a key decision-maker within a construction company, construction vehicles are a must, although they come at a cost, and a large one at that when considering larger vehicles, such as cranes. These vehicles are often hired or financed, as opposed to outright purchasing.

Transit Vans

Transit vans (typically around 3.5 tonnes) are used through a whole host of different employment sectors; they’re well-valued workhorses capable of carrying goods for various needs, such as delivering parcels, moving stock from one place to another or carrying sports equipment. They’re not as capable as HGVs for larger loads, but they are significantly cheaper; with businesses often hiring, purchasing or finance leasing a van for company use, as discussed in our how to buy a van for your business article.

Buses & Coaches

In urban surroundings, bus services are frequently seen transporting people from one place to another; we’re so used to seeing them that it’s easy to forget that they are also classified as Commercial Vehicles. Local council services purchase buses for commercial usage, where a local community can benefit from their public use, and private bus companies may offer buses for specific uses, such as for schools or sporting events. If you’re a business owner in a remote location, you may want to consider hiring, leasing or purchasing a bus to shuttle staff to your workplace.

Emergency Vehicles

Another type of vehicle that falls into the category of “commercial” is an emergency vehicle such as a fire engine, ambulance or police van (typically around 3.5 tonnes). They operate to serve the needs of a business, such as the NHS or Hertfordshire Constabulary. Emergency vehicles can be hired privately for events such as festivals or sporting matches.

Commercial Cars

Many people confuse commercial cars with company cars. Company cars are supplied by an employer for an employee, for both private home life and commercial use. Commercial cars serve the business's needs and exist to provide a useful service that people alone could not complete. An example of this is a taxi, which is used solely for taking passengers from A to B for a flexible fee.

UK Insurance Policies For Commercial Vehicles

Commercial Vehicles within the United Kingdom have their own insurance policies, due to the fact they’re essentially a tool for a business. Insurance for Commercial Vehicles is essential to protect businesses and drivers from potential financial losses in the event of accidents, theft, or other incidents. There are multiple different examples of insurance for Commercial Vehicles, including the following;

• Third-Party - Every Commercial Vehicle must have this insurance policy as a minimum in the UK. It covers liability for injury to others as well as damage to their property but does not cover damage to yourselves.
• Third-Party, Fire and Theft - Similar to third-party insurance in terms of liability cover to others, however, this type also covers you from damage caused by fire and theft.
• Comprehensive - This insurance policy covers third-party liability, fire, theft, and damage to your own vehicle, even if the accident is your fault. This is the most extensive form of commercial vehicle insurance and can apply to most Commercial Vehicles.
• Goods In Transit Insurance - This type of insurance applies to vehicles such as HGVs which are transporting goods, where the contents of the vehicle are insured against theft, loss, or damage whilst in transit.
• Fleet Insurance - If your business operates a fleet of Commercial Vehicles, fleet insurance can be a cost-effective way to cover multiple vehicles under a single policy. This is particularly effective for chains of taxis or buses, for example.

Finance Solutions For Commercial Vehicles

There are a range of different finance solutions available to obtain a Commercial Vehicle for your business. Typical options include Hire Purchase, Full Payout Lease, Residual Value Lease and Asset Finance, with each finance solution providing business-specific benefits, depending on what vehicle you need, how long and for what purpose. It’s worth speaking to a broker such as Union Business Finance in order to make an informed decision on what finance suits best for your business needs; the experts are there to take the stress away.

The Future Of Commercial Vehicles: Going Green

In the modern world, it's important for a business to be as environmentally sustainable as possible, with businesses looking for new ways of going green and abiding by emissions laws within the UK.

Commercial Vehicles have the potential to fit in the category of “going green”- and in some instances, they already do. For example, many forms of taxis use hybrid or electric cars to combat emission levels and over time more urban bus companies are making the shift to electric vehicles. Many businesses are turning to autonomous vehicles, such as self-operating trains on the Docklands Light Railway in London. Autonomous commercial vehicles can be programmed to optimise routes, cut down fuel consumption, and reduce emissions through smoother driving patterns. Away from the vehicles themselves, businesses can use logistics to target more fuel-friendly routes, increase infrastructure to house greener vehicles (perhaps through electric charging points) and use load consolidation, where multiple smaller shipments are reduced into larger, single loads. A short-term investment into greener transport will bring long-term benefits for the environment; and ultimately, your business.

Interested in a vehicle for your business?

We’re here to help with advice on financing a Commercial Vehicle to benefit your business. Our expert team will assist you in exploring the range of finance options available and will ultimately help you make the best decision for your business.

For more information, please get in touch.