Monday 16 July 2018

Drive is on for buyers to be saved higher costs for cleaner new cars

New emissions system prompts push for VRT, road tax bands to be tweaked

Photo posed - Getty Images
Photo posed - Getty Images
Eddie Cunningham

Eddie Cunningham

The 182-reg season is up and running, but in the background there is a lot of activity around the potential impact of a new testing system on prices later in the year.

The looming changes to how new cars are tested for fuel consumption and emissions will push up prices if no action is taken, it is claimed.

From this September, all cars have to have the new WLTP data as well as adjusted existing NEDC results.

The new WLTP system tests new cars longer and harder than under NEDC conditions.

So far it is generally agreed to be registering higher emissions and lower MPG figures in most, but not all, cases.

As a result, there is the likelihood of many cars being shunted into a higher VRT and road tax band when it kicks in later in the year.

And that, in turn, could mean a rise in price and running costs.

But there are now hopes that a two-pronged drive may avert increases and confusion.

The ironic thing is that WLTP-tested cars are cleaner than anything that has gone before.

It is just that the figures for those vehicles are being obtained under far more stringent tests than under NEDC.

They also have to be the cleanest cars to date because they must meet stricter new EU6.2 standards as well.

If older models were WLTP-tested, they'd have far more drastically increased readings.

But the problem for Irish buyers is that if nothing is done to accommodate the new set of results, they could face higher prices from later on in the year.

The issue has been looming for some time, but it has been brought into sharper focus now the 182-reg buying season has begun.

The effect of leaving things as they are under the current taxation system would likely have two major repercussions: fewer people buying new cars and more buying 'dirtier' second-hand imports.

On that basis ,it is being mooted in most quarters of the Irish motor industry that the Revenue Commissioners might consider a two-pronged approach in dealing with the issue.

The first would be to bring in an interim set of tweaked tax bands so new clean cars are not penalised for their more realistic performance figures.

The second could be a fine-tuned solution after more extensive data has been gathered and analysed in the lead-in to 2020.

It is understood from talking to industry sources that this is now a course regarded as the most pragmatic.

The most important thing from a consumer's point of view is that they are not penalised for buying new, effectively cleaner cars.

Indeed, from the outset the EU Commission has insisted that consumers are not adversely affected by the switch to WLTP.

It said: "It should be noted that the introduction of WLTP does not necessarily result in higher car taxes... if the adjustment of national car taxation schemes takes account of the expected increase in CO2 emissions under WLTP."

On the testing front, there is anecdotal evidence of cars registering much higher C02 readings than the much-quoted 21pc average rise.

Of course, some cars are showing a drop, but it is generally reckoned a majority are up.

On the basis that our road tax and VRT charges are based on emissions, it looks like something will have to be done soon.

The real danger of not doing so, from both an environmental and Irish motor industry perspective, is that there would almost certainly be a bigger swing towards buying older and, consequently, dirtier used imports.

While new-car diesel buying is falling here - as the latest SIMI statistics have shown - a high percentage of used imports are older and dirtier, diesels.

So we would effectively be encouraging the purchase of cars that are more damaging to health and environment.

There are Exchequer implications too as new cars bring a lot more VAT and VRT to the Exchequer than would be the case with used imports.

It is a time of great change on several fronts with manufacturers working frantically behind the scenes to have models ready in time.

There are several other downstream implications for them: greater individual and time-consuming assessment of emissions, for example, with sunroofs or larger wheels or added equipment etc.

These all have to be recorded, thereby substantially increasing the volume of tests and the variation of data.

It is likely to mean fewer single options and more bundles of equipment on your new car.

Consumers are becoming more aware of changes due to learning of such practical outcomes but have yet to feel the impact as such.

They must hope the situation will be sorted by the time many of them come to buy a new car in 2019.

Indo Motoring

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