Drivers alarmed by the changes to VED road tax are believed to have fuelled a sudden surge in new car sales.
New road tax rules, which come into force this April, will make it much more expensive to tax many of Britain’s most popular cars.
During January, typically a quiet month of the year for new car sales, sales grew by 2.9 per cent. A total of 174,564 were snapped up, marking a 12-year high.
And tellingly, the boom was powered by private drivers, with sales rising by 5 per cent, to 76,729 new cars. By contrast, fleet sales grew by just 1.4 per cent and business sales fell by 1 per cent.
Many buyers have snapped up efficient models which emit less than 100g/km of CO2. Under outgoing road tax regulations, these are free to tax. The new rules introduce expensive charges, hitting drivers of some of the best-selling economical, low-emission cars hardest.
The cost of new road tax regulations
For example, a Fiat 500 Twin Air that would previously have been exempt from road tax will now cost £380 to tax over the typical three year ownership period. A Ford Fiesta 1.0 – also previously exempt from road tax – will be £400 to tax over the first three years, and a Nissan Qashqai dCi 130 rises from £90 to £440 over the same three year period.
The Treasury is making changes to the road tax system, explained in detail in this blog post, in order to make more money from motorists.
Those drivers that were aware of the switch to the new system have been beating a path to car showrooms. John Tordoff, CEO of JCT600, a national dealer group, says that while some drivers have been quick off the mark, others most likely unaware of how the road tax changes could hit them in the wallet.
“We’ve definitely seen evidence of buyers looking to secure a new car for delivery before the changes come into force, mainly off the back of us talking about the implications in our communications,” said Tordoff. “However, there is a definite feeling that the majority of the general public are still unaware of the pending changes. I suppose if you’re not currently in the market for a new car, it’s simply not on your radar.”
James Hind, founder of online car buying site carwow said the VED road tax deadline would give a boost to an industry that is predicted to face bumps in the road.
He said: “There are some great finance deals being offered by manufacturers, and the upcoming change in VED rates means people have a reason to buy before April, so we’re predicting a strong Quarter 1 for the industry. With the UK car market forecasted to decline in 2017, we’re yet to see that forecast become a reality. Our data for January shows consumer interest in new cars is up on last year.”
Drivers and businesses unaware of 2017 road tax changes
While some canny drivers have acted to beat the change, others say they weren’t aware of the revisions.
Giles Atkinson, co-founder of Atkinson McLeod, an estate agents, runs a fleet of Fiat 500s with a 1.2-litre petrol engine, which currently cost nothing to tax each year. When they come to replace the fleet, the road tax bill would rise to £120 for the first year, and then be a flat rate of £140 for each car’s subsequent annual road tax bill.
“This is a nasty surprise,” says Atkinson. “Our business will go from paying nothing in road tax over three years, because we bought efficient cars as the government encouraged us to, to paying £8,000 for our fleet of 20 Fiat 500s.”
On Green Flag’s blog post about the changes to the road tax system, many drivers have commented that the process is flawed, and call for road tax to applied to drivers when they buy fuel for their car.
Ian Kippax says, ‘The issue I have with road tax based on emissions, is that it takes no regard to the annual mileage. A person with a vehicle on the higher rate with an annual 4000 miles, is penalised against someone with a lower rated vehicle travelling 25000 miles.’
Kevin Preston asks, ‘Why not a few pence on fuel duty, that way everyone would pay a proportionate amount of road tax to road use including road tax dodgers regardless of co2 emissions?’
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