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Cautious Welcome To Budget From Motor Industry

March 22, 2006 By
  • Does this signal a budget-by-budget bidding war for road tax increases?
  • Automotive sector £9.8bn value-add to UK economy, 12.4 per cent of exports
  • Budget unlikely to stem the erosion of UK competitiveness

SMMT, the body representing automotive manufacturers, has warned that today's road tax changes send a worrying message to consumers and car makers about the future of motoring taxes.

'Stability, certainty and long-term must be the watchwords when changing sensitive tax instruments', commented SMMT chief executive, Christopher Macgowan. 'None appear to have been applied here. Now the uncertainty that followed the collapse of grants for the cleanest vehicles1 will be mirrored by fears about a budget-by-budget bidding war on road tax changes.'

The industry acknowledges some reduction for lower emitting models but buyers of many other larger family cars and saloons will pay more at the new top rate; eight per cent of the market.2

The changes will also bring more administrative pressure to manufacturers and dealers in replacing all colour-coded environmental labels in new car showrooms. This comes at a time when manufacturers, dealer staff and consumers are becoming more familiar with this fledgling initiative, designed to give buyers more information about CO2 emissions – and annual running costs – at the point of sale.

On wider competitiveness issues, Christopher Macgowan added, 'The motor industry is a key value-add sector. The media focus on VED masks the more serious issue of support for manufacturing. As cost and legislative pressures mount, we heard nothing to help ease costs, reduce the amount of red tape and drive a manufacturing sector accounting for more than 220,000 jobs to a more competitive future.'

Cars affected by new rate of tax: this is a selection of cars, which are not 4x4s/SUVs, but whose owners will pay the new highest rate VED

  • BMW 130i automatic petrol: 226 g/km
  • Chrysler PT Cruiser 2.4 hatch automatic: 251 g/km
  • Citroën C5 3.0i V6 automatic petrol: 238 g/km
  • Fiat Stilo 2.4 20v manual petrol: 231 g/km
  • Ford Galaxy 2.8i CD-V6 24v manual petrol: 259 g/km
  • Honda Accord tourer 2.4i-VTEC Ex (ADAS) automatic petrol: 229 g/km
  • Mazda 6 2.3 MPS manual petrol: 245 g/km
  • Peugeot 407 SportsWagon 3.0 V6 automatic petrol: 236 g/km
  • Renault Espace 3.5V6 24v automatic petrol: 292 g/km
  • Toyota Previa 2.4 vvt-i automatic petrol: 259 g/km
  • Vauxhall Signum 2.8i V6 24v turbo manual petrol: 257 g/km
  • Vauxhall Vectra 3.2i V6 24v 5 dr hatch automatic petrol: 252 g/km
  • Volkswagen Sharan 2.0 automatic petrol: 264 g/km
  • Volvo V70 2.4 automatic petrol: 231 g/km
  • Volvo S80 T6 executive automatic: 268 g/km 
Filed Under: Automotive Industry, SMMT

Brown Gives ‘Green’ Light To Cleaner Motoring

March 22, 2006 By

The RAC Foundation described today’s reforms to VED as a "green light for cleaner motoring" and welcomed the Chancellor’s decision to keep fuel duty increase on ice for a further 6 months.

The Chancellor’s decision to introduce a new top band for VED, offset against reductions in the cost of VED for cleaner vehicles, will help motorists to make a greener choice of car.

The RAC Foundation will carefully examine the details of the scheme to make sure that the overall burden of VED will not increase, in line with our proposals which were made in a pre-Budget letter to the Chancellor.

The RAC Foundation also welcomed the Chancellor’s announcement that inflation-linked fuel duty increases would be kept on ice until September. The cost of fuel has risen by 12% in 12 months – six times the rate of inflation – and any additional increase would disproportionately hit those on low incomes. Low income motorists already spend 24 per cent of their household outgoings on motoring, and fuel makes up around half of those costs.

Edmund King, executive director of the RAC Foundation, said: "Brown’s radical tax disc reforms give a green light to cleaner motoring. Reduced tax for cleaner vehicles is a great incentive to help motorists choose the most environmentally friendly model suitable for their needs."

Other announcements today:-

Alternative fuels and incentives:

The RAC Foundation welcomed the continued duty incentive for greener fuels.

The RAC Foundation Budget fact file:

  • Motorists pay £43.5bn to the Treasury in motoring taxes. Only £6.58bn of this is re-invested in the road network.
  • 93% of passengers and 89% of UK freight traffic travels by road.
  • A vehicle moving at 50mph emits just ½ of the carbon dioxide of a vehicle traveling in congestion at 5mph.
  • The CBI estimates that congestion costs British industry £20bn each year.
  • The average new car emits 10% less CO2 than its 1997 equivalent. The average 4×4 emits 15% less CO2 than its 1997 equivalent.
Filed Under: Automotive Industry, RAC
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