Blog: Dave LeggettUK Government attacks gas guzzlers/4x4s

Dave Leggett | 22 March 2007

It was ‘Budget Day’ in Britain yesterday. It’s the annual ritual in which the Chancellor takes with one hand and gives with the other in order to approximately balance the books and play with taxation policies. Changes to annual road tax (Vehicle Excise Duty - VED) will raise the annual charge for Band G passenger cars (CO2 >225g/km) by 90% to GBP400 by next year.

The newspaper headlines here have been dominated by things like ‘Chancellor attacks 4x4s’ (and lest there is any doubt what he has in mind with the hike in Band G VED, the Chancellor himself referred to the ‘tax on 4x4s’ on the radio this morning – loose language I thought).

According to CAP, used car price experts, the first quarter of 2007 saw 4x4s and other large luxury cars bucking a generally rising market trend and decreasing in value compared with the same period last year.

Do sagging prices for use 4x4s and high-end cars mean that the market is being driven by increasing fuel costs and other factors such as congestion charging?

Actually, the CAP people argue that higher running costs are playing a relatively minor role in weakening used values for 4x4s and point instead to the simple mechanics of supply and demand. The transformation of the 4x4 from a workhorse into a lifestyle vehicle in recent years has led to major growth in volume, they say, which is demonstrated by the 150% increase in the number of models available new over the past three years. In 1998 there were 282 4x4 models available new – a figure which has grown to more than 700 today, CAP says.

CAP Forecast Manager for passenger cars, Jeff Knight, said: “As volume increases, used values inevitably adjust downward as the old image of exclusivity is eroded and increased choice makes competition to sell used examples more fierce.

“Although this budget is likely to provoke speculation about 4x4 values meltdown, an increase to GBP300 in the Road Fund License, rising to GBP400 next year, is a small sum for those who are prepared to pay a retail price of, for example, around GBP26,500 for a three year old BMW X5.”

Reminds me of the old adage: ‘Dear boy, if you have to ask about the cost of filling the tank on the Roller, you probably can’t afford it."

But a proliferation of models, lower residuals and more bad publicity - which the targeted VED hit undoubtedly is - won't be helping the sector.




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