According to EurotaxGlass’s, British chancellor (finance minister) Gordon Brown’s plan to introduce a new higher rate of vehicle excise duty (VED) for the most polluting new cars (those above 225g of carbon dioxide emissions per kilometre) will have a negligible impact on vehicle sales.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
For any car falling within the proposed new top VED band, the tax payable will increase by just GBP40 per annum, or a mere GBP3.33 per month – an inconsequential sum compared to the higher fuel and purchase price which typically goes with ownership of such a vehicle.
Similarly, eliminating the GBP55 annual VED on a low-emissions car will offer meagre additional incentive, especially when alternative fuel and petrol-electric hybrid cars typically have list prices above those of conventional alternatives.
However, EurotaxGlass’s suggests that the chancellor’s Budget statement may contribute to negative opinion about the more polluting cars on UK roads.
“We have seen sales of large luxury cars fall markedly over recent years, and SUV demand may start to decline if they increasingly become viewed as less socially-acceptable than other cars,” said EurotaxGlass’s managing editor Adrian Rushmore.
The vehicle pricing specialist has said the price of the average one-year-old prestige brand SUV is currently 7% lower than in March 2005, equivalent to a significant GBP2,500 drop in the typical asking price. These vehicles are becoming increasingly affordable due to improvements in availability, growing competition in the segment, and falling waiting lists for new models.
“Residual values for prestige SUVs are finally falling from the high levels that have prevailed for the last 36 months,” added the firm’s prestige car editor Richard Crosthwaite. “We now expect to see rates of depreciation for these cars level out, and they will still outperform most other prestige car segments.”
A 12-month-old BMW X5 3.0d Sport SE (auto) currently has a trade value of GBP36,625, approximately 9% or GBP3,550 down on what an identical X5 of the same age would have achieved in March 2005. Similarly, a Volvo XC90 D5 SE (auto) now has a value of GBP28,650, some GBP3,450 or 11% lower than at the same point last year.
The Porsche Cayenne has also suffered, with a Cayenne S (auto) now worth GBP40,600 compared to GBP42,825 in March 2005 – a fall of 5% or GBP2,225.
Meanwhile, a Mercedes-Benz ML270 CDI (auto) has a trade value of GBP25,000 this month, around GBP1,150 lower than the GBP26,150 that would be paid for the same age of ML270 CDI in March 2005.
