Luxury car buyers buy higher CO2 vehicles

The recent increase in Band G road tax (technically known as Vehicle Excise Duty or VED), has led to buyers trading down from models just over the threshold, according to cleangreencars.co.uk. That would be very good news - except the threshold is in the wrong place. Virtually all cars currently on sale (99.8%) emit somewhere between 100 g/km and 450 g/km CO2 - yet the top band is set at just 225 g/km. Therefore someone wanting a large off-roader is going to pay the same tax on a Land Rover Discovery TDV6 (244 g/km) as a Range Rover Supercharged (376 g/km). With no incentive to downsize, luxury car buyers are actually buying higher polluting cars in the first half of 2007 than they did in the equivalent period of 2006.

Comments Jay Nagley, Publisher of www.cleangreencars.co.uk, “What we need is a new Band H, set at around 275 g/km. That would give luxury car buyers an incentive to think about CO2 outputs – at present, virtually every car on their shopping list is in Band G, so why would they consider CO2 figures when buying a car?”

In fact, out of 257 models on sale costing over £40,000, only 23 (less than 10%) fall into Band G. However, 114 emit under 275 g/km. With a Band H set at £500 per year, buyers would have a real incentive to choose the less polluting alternative. The fact that they could afford the extra road tax is not the point. Band H cars would be worth thousands of pounds less at resale time than Band G models*, and that would be a factor even the richest consumer would take into account.

* currently a Ford Mondeo 2.5 Ghia X auto that falls into Band G loses approximately £1,500 more in depreciation than the Ford Mondeo 2.0 Ghia X auto in Band F. The gap is likely to be even bigger between Band G and Band H models, as used buyers are very sensitive to road tax rates.