Congestion Charge increase could have impact on used car values

The residual values of some vehicles could suffer a marked decline if Transport for London’s current proposals on increasing the Congestion Charge are passed unchanged, according to EurotaxGlass’s. Transport for London began a consultation on Friday (10 August) on a scheme to increase the Congestion Charge to £25 per day for vehicles it describes as ‘gas guzzlers’, which would cover all cars with emissions above 225g CO2 per km and those registered before March 2001 with an engine capacity exceeding 3.0 litres.

“There would be an inevitable and potentially profound impact on the residual values of higher-emissions cars if these proposals come into force,” comments Adrian Rushmore, Managing Editor at EurotaxGlass’s. “There would likely be a surge in part exchanges as some motorists attempt to reduce their daily running costs for commuting into the Zone, and the resulting increase in volumes of cars passing through dealers and auction houses would quickly depress prices, with no prospect of any recovery.

“Meanwhile, dealers in and around the congestion zone would need to change the profile of their used car stock to reflect the shift in demand towards lower-emissions vehicles. They would also come under pressure to move affected stock into parts of the UK where prices have been hit less hard, using the internet more intensively to reach potential buyers nationwide. However, given that other major cities are already looking to follow London’s example with congestion charging, coupled with the inevitable further negative publicity about gas-guzzlers, the downturn in values could easily spread beyond the South East.”

Some vehicle marques and segments could be more affected than others. “In Greater London specifically and the South East generally there are already a disproportionately high number of the premium brand, sports and luxury cars which would be most affected by the proposed changes.

“Some vehicle brands might see improved sales for smaller, lower-emissions models in their range, with hybrids doubtless gaining further ground. Worst affected would be those marques whose ranges are dominated by higher-emissions cars and who currently rely on sales within the South East of England.”