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The chancellor's announcement that Euro 5 tractors are to be the subject of a £500 VED rebate from October will kill demand for Euro 4, according to Mercedes-Benz MD Ian Jones.

"Most hauliers will want Euro 5 from now on," he tells Motor Transport. "I can't see any reason why anyone would want to stick with Euro 4 as the RPC lasts the life of the truck." He believes the £500 annual rebate will also serve to boost residual values of Euro 5 trucks.

Tony Pain, UK marketing  director at DAF Trucks and chairman of the SMMT's Commercial Vehicle Manufacturer's Committee, is not so sure. He points out that the full £500 VED reduction is only likely to be available for tractors, with the amount of the rebate diminishing with the size of truck.

With this in mind he believes that while "demand for Euro 4 tractors will diminish to quite a low level", Euro 4 could still prove popular with two- and three-axle rigids.

Pain advises customers who have placed orders for Euro 4 trucks that many will be able to upgrade to Euro 5 if they speak to their truck supplier quickly. He says this is certainly the case for DAF, although only if the truck is due for build after August. Any earlier than this and it won't be fitted with on-board diagnostics - which is required to qualify for the rebate.

The difference in price between a Euro 4 and Euro 5 Daf is £1,200, which Pain believes will be more than offset by improved residual values.

According  to Volvo UK technical manager Brian Smith, customers who have ordered Euro 4 Volvos will be able to switch to Euro 5 just as long as the order has not been firm planned (approx six weeks prior to delivery). The cost difference is £1,700 (list price).

Because of long lead times, caused by exceptionally high demand in Eastern Europe, any Volvo or Daf ordered now will come equipped with OBD and NOx sensor as standard.

Mercedes-Benz on the other hand is presently unable to offer a switch from Euro 4 to Euro 5 (with OBD). Jones says there is a problem with availability of NOx sensors. He explains that Mercedes-Benz had not planned to introduce OBD until it became mandatory in October, as prior to the chancellor's announcement, there was zero demand for it anywhere in Europe.

MAN, which currently only sells Euro 4 trucks in the UK, says it has no plans to bring in its Euro 5 SCR-equipped truck. "The VED rebate won't even cover the cost of the additional AdBlue consumption of a Euro 5 truck," a spokesman says.

"We believe, and recent sales prove, that when operators properly consider Euro 4 EGR and Euro 5 SCR, they will come to the conclusion that they are far better off with Euro 4 EGR."