Friday 23 March 2018

Testing time as car prices and motor tax set to rise again

A new system for testing the emissions and fuel economy of cars is sound but comes at a price, writes Geraldine Herbert

COMPLEX: The CO2 figures for a particular vehicle will vary according to any optional extras that are fitted
COMPLEX: The CO2 figures for a particular vehicle will vary according to any optional extras that are fitted

Changes to the tests for emissions and fuel economy in new cars are likely to result in higher car prices and increased motor tax. The new vehicle test procedure, known as the Worldwide Harmonised Light Vehicles Test Procedure (WLTP), will replace the long-established New European Driving Cycle (NEDC).

The NEDC test has been repeatedly criticised for its inability to reflect real-world fuel economy as the gulf between what can be achieved on the road and the results from ideal laboratory conditions increases. Eight separate studies concluded that the gap between the certified and actual levels had widened, on average, from 8pc in 2001 to 38pc in 2013.

As a consequence, consumers pay more at the pump because of the inaccuracy of the NEDC fuel consumption figures, while the Government misses out on revenue due to unreliable CO2 figures.

As the new test will be more accurate, it is expected that fuel economy figures will decline and CO2 emissions will increase, which is likely to cause a lot of confusion among prospective car buyers as new cars will appear to be less efficient than older ones.

The choice of car options may also shrink as a result of the test, since, for the first time, optional extras will also have an impact on the car's CO2 rating - so two identical cars but with different options may be in a different motor tax band.

This may change the way consumers value options and the number of them available. Currently, only wheel size, number of seats and the choice of manual or automatic transmission impact on CO2 levels, whereas now all available options from air-conditioning to a sunroof will make a difference.

This could potentially lead to an increasingly complex system resulting in possibly thousands of different CO2 figures depending on the number, type and combinations of options chosen.

Peter Mock, managing director of the International Council on Clean Transportation Europe, believes that a more streamlined approach to options is likely.

He said: "Now with WLTP, each vehicle model version will receive its specific CO2 emissions level, so one might expect that the manufacturers will now spread the different optional equipment more between the various vehicle model variants."

But what impact will higher CO2 levels have on the motor tax system? Little is known about how the WLTP will work with regard to taxes, but it is certain that the value for CO2 will be higher than with the present testing system. A rise in CO2 will lead to cost increases across all models due to higher VRT and motor tax rates.

The test will only apply to new car models introduced for the first time from this September, but all new cars sold in Europe will be subject to the test from September 2018. To avoid penalising new car buyers, the EU is advising that countries such as Ireland, where the motor tax system is based on CO2 levels, should amend their systems so that no additional costs are passed on to the consumer.

With new car sales down almost 10pc so far this year, any increase in motor tax on new cars could have a negative impact on sales.

Alan Nolan, director general of the Society of the Irish Motor Industry, cautioned that while the test was "good news for the environment and in assisting us in Ireland to try and reach our emissions targets as the information on these newer cars will be far more accurate than we have had in the past", it was important that the changes did not "simply lead to consumers paying more tax on what will be cleaner vehicles".

But what of older cars with inaccurate CO2 emission levels? From September 1 until January 2019, both the old NEDC figure and the new WLTP values will be available for new cars, so the gap between them will be clearly identifiable to all, including prospective buyers and the Government.

As cars bought before September 1 will have been tested under an inaccurate system, how likely is it that their underestimated CO2 emission figures will be "readjusted" for motor tax purposes in order to correlate to the new, more accurate figures? A Department of Finance spokesperson told the Sunday Independent that "tax policy and operational implications" arising from the new system were being considered and the department "will be liaising with other relevant authorities in this regard".

Although the new test is a step in the right direction, it is still not going to give fully accurate figures for consumers. According to Julia Poliscanova, clean vehicles and air quality manager at the European Federation for Transport and Environment, "an average EU driver will still use around 20pc more fuel than the new lab test will claim after September".

The European Federation for Transport and Environment is recommending that in order to close this gap real-world tests conducted on public roads must be incorporated into the test.

Sunday Independent

Life Newsletter

Our digest of the week's juiciest lifestyle titbits.

Also in Life