Secret budget car tax rise to hit dealers

02 May 2008 from Motor Trader Magazine

Older cars will now be more difficult to sell

The Treasury’s introduction of new Vehicle Excise Duty rates could have a major impact on car dealers, according to data provider Cap. “CO2 hasn’t really mattered too much in the past for the private motorist, but it’s our belief that it will become as important to consumers as issues like insurance,” said Mark Norman, operational development manager at Cap.Norman emphasised that dealers should be careful when buying stock, as older cars with higher emissions were now going to be a struggle to sell. The Treasury has announced plans to abolish the exemption from higher road-tax rates for cars emitting over 225 g/km of CO2, registered between March 2001 and March 2006.Norman added that it was low-mileage users who were going to suffer the most. “Cars with higher fuel consumption have always been worth proportionally less, but people who have taken advantage of that have been low-mileage users,” he said. “The drivers I feel sorry for are the retired people only doing 3-4,000 miles and year who have treated themselves to a Mercedes or something similar. “The cars themselves don’t produce CO2 – it’s driving them that does. But with this tax you pay the same whether your car’s sitting in the driveway or you’re driving all over the place.” The National Franchised Dealers Association has also criticised the tax, its director Sue Robinson saying: “The extra costs involved in running these older vehicles will make them extremely unattractive to potential buyers, thereby ruining trade-in values for dealers. “At the same time, many motorists may feel that they are better off running these vehicles into the ground rather than lose money selling up. “As a result the measure is unlikely to achieve any substantial reduction in CO2 levels.”