Cautious Welcome To Budget From Motor Industry

March 22nd, 2006

• 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 4×4s/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 

Entry Filed under: Automotive Industry, SMMT