New lower CO2-emitting technologies, notably new engines, driving down emissions.
Government can play key role in helping shape the market, eg through taxation.
New car CO2 targets to contribute to manufacturers development of low carbon cars.
Many factors help shape the new car market and the average CO2 emissions of the new car fleet. Trying to assign how much individual measures influence emissions is difficult, especially as the measures interact, but new technologies and the wider choice of low CO2-emitting variants have been key to driving down emissions across all vehicle types.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
Lower CO2-emitting technologies
Improvements in CO2 emissions across all fuel types, segments and sales types suggest that developments in vehicle technology and a wider choice of models (notably diesels) have helped deliver the greatest reduction in new car CO2 emissions. These technologies have also enabled emissions to fall despite a rise in vehicle weight and size. In part, some of the rise in weight and size has come from added safety features and in some instances technologies to reduce other pollutants. The industry is technology neutral and developing a broad range of technologies to help deliver lower CO2 emitting vehicles – see ‘outlook’ section later in the report for more details.
Technological measures to deliver lower CO2-emitting vehicles
Alternative propulsion/fuels
Biofuels
Diesel-electric hybrids
Electric vehicles
Gas-powered vehicles
Hydrogen vehicles
Petrol-electric hybrids
Plug-in hybrids
Range extenders
General improvements
Aerodynamics
Energy recovery braking
Light weighting
Low rolling resistance tyres
Low viscosity lubricants
More efficient ancillary devices
More efficient cooling and heating systems
Optimised transmissions
Internal combustion engine
Common rail injection
Direct injection
Downsizing of engine capacity, with forced
induction (eg turbocharging)
Stop-start systems
Variable valve lift
Non-test cycle
Gear-shift indicators
Smart satellite navigation systems
Consumer information
CO2 emissions from vehicles have been in the public conscience for more than a decade. CO2 is used for Vehicle Excise Duty (VED) and Company Car Tax (CCT), manufacturers are required by law to display fuel consumption and CO2 data for their cars in promotional material and since 2005, the industry has also had a voluntary agreement to show the colour-coded new car efficiency label at point of sale, developed in partnership with the LowCVP. The Government also provides consumers with advice about buying a ‘green’ car.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
New car fuel economy label (VCA)
Consumers may still be more at ease with, or aware of, their vehicle’s MPG (miles per gallon). CO2 emissions and MPG are directly related, although the conversation factors for petrol and diesel are different. As CO2 emissions have fallen, so MPG has risen as shown below.
Change in new car CO2 and MPG, 2000 to 2012
Average new car CO2 emissions and MPG, 2000-2012 (SMMT)
2000
2007
2011
2012
MPG
39.6
44.3
52.5
54.5
CO2
181.0
164.9
138.1
133.1
Regulation
It takes several years to design and bring to market a new product. The introduction of a new engine will be a key component of a new model. Manufacturers face two challenges, reducing CO2 emissions and regulated emissions. Optimising an engine for one may have adverse impacts upon the other. Euro standards are set in reduce regulated emissions (like NOx and PM), and as these standards change, as they did with Euro 5 in 2011, so the engines will be developed. Typically, simultaneously CO2 reducing technologies will be applied at this time.
Manufacturers have developed low CO2-emitting cars ahead of the European New Car CO2 Regulation (EC443/2009), which started in 2012. Under this regulation manufacturers face corporate fleet average targets, based in part on vehicle weight, designed to reduce the EU new car fleet average to 130g/km by 2015 (65% of fleet must meet the target in 2012, rising to 100% by 2015). Failure to achieve target will result in fines, up to €95 per gram of CO2 away from target multiplied by the number of cars registered. Past progress will also have come from action to meet the European voluntary agreement to deliver 140g/km in 2008/09.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
Government influence
Government has an array of measures that can influence the type of car bought and used, including regulation, taxation and incentives, as well as softer measures such as information and advice. Predictability and consistency of government policy would allow manufacturers to develop products suitable for the market and give consumers guidance. Ensuring motoring costs are fair and reasonable will also allow for all members of society to enjoy the benefits of individual mobility cars help deliver.
Vehicle Excise Duty (VED) has been CO2-based for all cars registered since March 2001 and Company Car Tax (CCT) became CO2-based in 2002. Both these regimes use CO2 bands to apply differential tax rates to encourage the take-up of lower emitting cars, including a zero rating for pure EVs introduced in CCT in 2009 and set for five years. VED and CCT rates are set at the Chancellor’s discretion.
SMMT would support a stable, transparent and long term fiscal policy in the UK. Radical or unexpected changes to key motoring taxes that would distort or undermine recovery in the UK new vehicle market should be avoided. Any potential changes to VED, CCT or write down allowances in the period before 2020 need early discussion and signposting to industry and the market to ensure that changes are based on a shared understanding of market developments.
SMMT calls on the government to avoid surprises, and engage on a continuous basis with industry to ensure any significant changes to motoring taxes have a three to four year lead-in time, accompanied by periodic review in consultation with industry.
SMMT will review the following section of this report post the Budget on 20 March, to reflect any announcements on motoring taxes.
Vehicle Excise Duty – VED
VED is an annual fee levied on the registered keeper of a vehicle. Originally VED was to help pay for the building and maintenance of roads, but has since become a general source of tax revenue for government. For cars registered since 2001 VED has been based on CO2 emissions, to help encourage the shift to more efficient vehicles. Cars registered before this time are taxed on a two band system, depending if engine size is above 1,549cc or not, and cars produced before 1 January 1973 are exempt from VED.
In 2010 first year VED rates were introduced, which show a greater differentiation of rates for new cars. Rates are provided in the following tables on VED. VED rates are currently differentiated by 13 CO2 bands (up from 4 originally). These range from sub 100g/km to over 255g/km. Cars emitting up to 100g/km pay nothing under the standard rate. Cars emitting up to 130g/km pay nothing under the first year rate, cars between 131-165g/km pay the standard rate and cars over 165g/km pay above the standard rate. Cars in the highest VED band (over 255g/km) pay £1,000 in the first year since April 2011, over twice the standard rate of £460.
Rates announced in Budget 2012 are provided in the following tables on VED and CCT rates.
In Budget 2012 the government announced it would review VED. SMMT believes a reform of VED would become more relevant after 2020, when more significant numbers of ultra-low and zero carbon vehicles are expected to enter the UK market.
Company car tax – CCT
CCT is a benefit in kind tax paid by those using a company car for private use. Since April 2002 CCT has been based on the car’s list price including any accessories and VAT, its CO2 figure and the fuel type. The standard CO2bands in 2011 start at vehicles sub 130g/km equating to 15% of the car’s list price, rising by 1% for each 5g/km CO2 emitted, up to a maximum of 35%. In April 2010 a 0% rate was introduced, for five years, for zero emission cars. In 2012-13 a 5% rate was introduced for cars emitting 75g/km or less CO2 and the 10% rate was reduced to cars emitting 99g/km or less. Diesel cars pay a 3% surcharge, although the rate cannot go above the 35% ceiling. These and future rates to 2016-17, as announced in the Budget, are presented in the table below.
As an example of how CCT is calculated – a low earner with a diesel car emitting 84g/km and costing £10,000 will face a CCT tax charge of £260. This results from 13% (10%+3% diesel surcharge) of a £10,000 list price multiplied by 20% income tax rate.
The changes on CCT in 2015 onwards see the removal of the 0%, 5% and 10% rates and by 2016-17 the minimum CCT rate is 15% and the maximum rate is 37%. The 3% surcharge on diesels will be dropped from 2015-16.
SMMT believes the CCT rates for ultra-low carbon vehicles should be reviewed and would recommend that HM Treasury retains differentiating bands for cars below 95g/km. SMMT would support break points at 50 and 75g/km, recognises the importance of vehicles at 0g/km attracting the lowest CCT rate and the potential for further differentiation at an 85g/km break point.
Fuel duty
Fuel duty is a direct tax on the use of the vehicle and, given the frequency of refuelling, consumers may be more aware of fuel price variation than changes to VED or CCT. Rising fuel prices encourages consumers to reduce fuel use, which could include measures such as driving less and switching to more efficient cars.
In 2012 some 56-57% of the price at the pump is made up from taxes (fuel duty and VAT). In the 1990s the fuel duty escalator pushed the price of fuel up rapidly. Rises in oil prices just ahead of the recession again saw fuel prices rise rapidly. Oil prices then fell back in 2009, but in 2011 and 2012 they have risen again, on the back of increased global demand for oil. The government has deferred planned rises in duty to help offset the inflationary impacts of rising oil prices, but pump prices reached an annual high in 2012.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
UK fuel price, include taxes (average petrol/diesel), 2000-2012 (Source – The AA)
The price of unleaded fuel rose by 70% between 2012 and 2000, with a 1.5% in the past year. Over the same period diesel prices rose by 75% and 2.2% respectively. Diesel is currently 4.7% more expensive at the pumps than petrol, compared with premium of less than 2% in 2000. This will mean that diesels have to cover a larger mileage to help offset their generally higher initial purchase price.
Price of fuel, pence per litre (Source – The AA)
Fuel
2000
2007
2011
2012
Unleaded (95 octane)
79.9
95.0
133.9
136.3
% tax
75.6%
66.3%
56.8%
55.8%
Diesel
81.3
97.4
139.2
142.5
% tax
75.2%
65.0%
58.5%
57.3%
Government revenue from fuel duty and VED is shown in the chart below (data from Department for Transport’s Transport Statistics GB publication). This shows revenue from fuel duty and VED both fell in 2011 by 0.3%. This was the first declines in either since 2001. Note the data relates to all revenue, not that specifically from cars and is not adjusted for inflation. Fuel duty revenue fell £90 million to £29.9 billion in 2011, but was still £3.9 billion or 16.8% above the amount collected in 2000. VED revenue fell by £20 million to £5.8 billion, but was up 26.4% or £1.2 billion on the 2000 level.
Department for Transport Statistics show that the total number of vehicles in use in Great Britain rose by 0.3% in 2011 to 34.2 million, an 18.4% rise on 2000 levels. On a crude revenue per vehicle basis (total revenue divided by total vehicles in use) the revenue was unchanged between 2000 and 2011 at £957. The distance travelled, by all vehicles, rose by 0.2% in 2011 and by 4.8% since 2000, implying vehicle use has not risen as quickly as vehicle ownership levels and non-inflation adjusted revenue has increased broadly in line with vehicle ownership levels.
Biofuels offer a way to reduce CO2 emissions from transport. At present biofuels account for around 3% by volume of blend in petrol and diesel fuel. New petrol cars are generally capable of running with a blend of up to 5% biofuel, while for diesels it is 7%, but concerns about the sustainability of biofuels have so far limited their reach. The Renewable Transport Fuels Obligation requires the biofuels share by energy to rise to 10% by 2020. The Committee on Climate Change supports a rise to 8%, as in the Gallagher report. Industry is developing cars to run on higher blends of fuel, but at present not all cars can do so.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
Capital allowances
Since April 2002 the capital allowance treatment of cars has been designed to benefit lower CO2 emitters. Businesses can claim capital allowances to reduce the tax they pay on profits for the purchase of certain products or investments, called writing down allowances (WDA). Expenditure on cars registered after 1 April 2009 with CO2 emissions above 160g/km attract a 10% WDA and for those with emissions of 160g/km or below attract 20% WDA (from April 2012 rates will be 8% and 18% respectively). From April 2013 the main rate of capital allowances for business cars will reduce from 160g/km to 130g/km. The threshold above which lease rental restriction applies will also reduce from 160g/km to 130g/km at this time. From April 2010, cars emitting less than 110g/km of CO2 or pure electric vehicles qualify for first year WDA of 100% (due to expire for cars in 2013 and for vans in 2015).
SMMT believes government should review its Budget 2012 decision to change the WDA threshold for new vehicles. Introducing a significant reduction in thresholds without appropriate signposting for industry distorts competition in the market, undermines planning horizons for manufacturers, and artificially creates competitive disadvantages for UK businesses in the UK market.
Support for ultra-low carbon vehicles
There are measures in place to support the take-up of ultra-low carbon vehicles, including pure electric vehicles (EVs). Pure EVs are zero rated for VED and CCT. Through the Office for Low Emission Vehicles there is also the Plug-In Car Grant, which since April 2011 gives a 25% incentive, up to £5,000, off the price of a qualifying car emitting less than 75g/km of CO2.
Polices that encourage the uptake of ultra-low carbon vehicles such as the Plug-In Car and Van Grants are welcome interventions, particularly the commitment from government to the incentives for the duration of this Parliament. This early and emerging market needs stable, consistent and long-term policies in order to grow and become self-sufficient. SMMT would urge government to make an early commitment to continue incentivisation of vehicles post-2015, which will provide confidence for business, investors and consumers. It is imperative for government to signal its intent from the period between 2015 and 2020 when it is hoped that this market will strengthen.
Some local authorities use CO2 as a basis for differential charging with parking permits and sub-100g/km Euro 5 compliant cars get a 100% discount on the London congestion charge. Transport for London are currently consulting on whether the London CC will be revised, and in particular if the discount will only apply to vehicles emitting 75g/km or less and what will be the sunset clause for vehicles that are currently exempt.
Household and business finances and budgets will also shape the type of cars purchased and used. The UK has a high degree of car ownership and consumers look for high levels of specification on their cars. The recession cut new car demand sharply and slowed the replacement of the fleet. However, it also focused consumer attention on efficiency and reducing running costs.
In 2009/10 the scrappage scheme was introduced to support the market. This may have brought a step-change in consumer buying habits, with the scheme resulting in a rise in demand for Superminis. Cars registered through the scappage scheme had CO2 emissions some 10% below the market average and 30% below the car they replaced, according to figures supplied by participants to SMMT.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
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Influences on new car CO2 emissions
Report contents: New car CO2 emissions | Influences on new car CO2 emissions | Total CO2 and other emissions | Light Commercial Vehicle CO2 emissions | Outlook for new car CO2 emissions
Page contents: Lower CO2 technology | Consumer information | Regulation | Government influence
Many factors help shape the new car market and the average CO2 emissions of the new car fleet. Trying to assign how much individual measures influence emissions is difficult, especially as the measures interact, but new technologies and the wider choice of low CO2-emitting variants have been key to driving down emissions across all vehicle types.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
Lower CO2-emitting technologies
Improvements in CO2 emissions across all fuel types, segments and sales types suggest that developments in vehicle technology and a wider choice of models (notably diesels) have helped deliver the greatest reduction in new car CO2 emissions. These technologies have also enabled emissions to fall despite a rise in vehicle weight and size. In part, some of the rise in weight and size has come from added safety features and in some instances technologies to reduce other pollutants. The industry is technology neutral and developing a broad range of technologies to help deliver lower CO2 emitting vehicles – see ‘outlook’ section later in the report for more details.
Technological measures to deliver lower CO2-emitting vehicles
Biofuels
Diesel-electric hybrids
Electric vehicles
Gas-powered vehicles
Hydrogen vehicles
Petrol-electric hybrids
Plug-in hybrids
Range extenders
Aerodynamics
Energy recovery braking
Light weighting
Low rolling resistance tyres
Low viscosity lubricants
More efficient ancillary devices
More efficient cooling and heating systems
Optimised transmissions
Common rail injection
Direct injection
Downsizing of engine capacity, with forced
induction (eg turbocharging)
Stop-start systems
Variable valve lift
Gear-shift indicators
Smart satellite navigation systems
Consumer information
CO2 emissions from vehicles have been in the public conscience for more than a decade. CO2 is used for Vehicle Excise Duty (VED) and Company Car Tax (CCT), manufacturers are required by law to display fuel consumption and CO2 data for their cars in promotional material and since 2005, the industry has also had a voluntary agreement to show the colour-coded new car efficiency label at point of sale, developed in partnership with the LowCVP. The Government also provides consumers with advice about buying a ‘green’ car.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
New car fuel economy label (VCA)
Consumers may still be more at ease with, or aware of, their vehicle’s MPG (miles per gallon). CO2 emissions and MPG are directly related, although the conversation factors for petrol and diesel are different. As CO2 emissions have fallen, so MPG has risen as shown below.
Change in new car CO2 and MPG, 2000 to 2012
Average new car CO2 emissions and MPG, 2000-2012 (SMMT)
Regulation
It takes several years to design and bring to market a new product. The introduction of a new engine will be a key component of a new model. Manufacturers face two challenges, reducing CO2 emissions and regulated emissions. Optimising an engine for one may have adverse impacts upon the other. Euro standards are set in reduce regulated emissions (like NOx and PM), and as these standards change, as they did with Euro 5 in 2011, so the engines will be developed. Typically, simultaneously CO2 reducing technologies will be applied at this time.
Manufacturers have developed low CO2-emitting cars ahead of the European New Car CO2 Regulation (EC443/2009), which started in 2012. Under this regulation manufacturers face corporate fleet average targets, based in part on vehicle weight, designed to reduce the EU new car fleet average to 130g/km by 2015 (65% of fleet must meet the target in 2012, rising to 100% by 2015). Failure to achieve target will result in fines, up to €95 per gram of CO2 away from target multiplied by the number of cars registered. Past progress will also have come from action to meet the European voluntary agreement to deliver 140g/km in 2008/09.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
Government influence
Government has an array of measures that can influence the type of car bought and used, including regulation, taxation and incentives, as well as softer measures such as information and advice. Predictability and consistency of government policy would allow manufacturers to develop products suitable for the market and give consumers guidance. Ensuring motoring costs are fair and reasonable will also allow for all members of society to enjoy the benefits of individual mobility cars help deliver.
Vehicle Excise Duty (VED) has been CO2-based for all cars registered since March 2001 and Company Car Tax (CCT) became CO2-based in 2002. Both these regimes use CO2 bands to apply differential tax rates to encourage the take-up of lower emitting cars, including a zero rating for pure EVs introduced in CCT in 2009 and set for five years. VED and CCT rates are set at the Chancellor’s discretion.
SMMT would support a stable, transparent and long term fiscal policy in the UK. Radical or unexpected changes to key motoring taxes that would distort or undermine recovery in the UK new vehicle market should be avoided. Any potential changes to VED, CCT or write down allowances in the period before 2020 need early discussion and signposting to industry and the market to ensure that changes are based on a shared understanding of market developments.
SMMT calls on the government to avoid surprises, and engage on a continuous basis with industry to ensure any significant changes to motoring taxes have a three to four year lead-in time, accompanied by periodic review in consultation with industry.
SMMT will review the following section of this report post the Budget on 20 March, to reflect any announcements on motoring taxes.
Vehicle Excise Duty – VED
VED is an annual fee levied on the registered keeper of a vehicle. Originally VED was to help pay for the building and maintenance of roads, but has since become a general source of tax revenue for government. For cars registered since 2001 VED has been based on CO2 emissions, to help encourage the shift to more efficient vehicles. Cars registered before this time are taxed on a two band system, depending if engine size is above 1,549cc or not, and cars produced before 1 January 1973 are exempt from VED.
In 2010 first year VED rates were introduced, which show a greater differentiation of rates for new cars. Rates are provided in the following tables on VED. VED rates are currently differentiated by 13 CO2 bands (up from 4 originally). These range from sub 100g/km to over 255g/km. Cars emitting up to 100g/km pay nothing under the standard rate. Cars emitting up to 130g/km pay nothing under the first year rate, cars between 131-165g/km pay the standard rate and cars over 165g/km pay above the standard rate. Cars in the highest VED band (over 255g/km) pay £1,000 in the first year since April 2011, over twice the standard rate of £460.
Rates announced in Budget 2012 are provided in the following tables on VED and CCT rates.
In Budget 2012 the government announced it would review VED. SMMT believes a reform of VED would become more relevant after 2020, when more significant numbers of ultra-low and zero carbon vehicles are expected to enter the UK market.
Company car tax – CCT
CCT is a benefit in kind tax paid by those using a company car for private use. Since April 2002 CCT has been based on the car’s list price including any accessories and VAT, its CO2 figure and the fuel type. The standard CO2bands in 2011 start at vehicles sub 130g/km equating to 15% of the car’s list price, rising by 1% for each 5g/km CO2 emitted, up to a maximum of 35%. In April 2010 a 0% rate was introduced, for five years, for zero emission cars. In 2012-13 a 5% rate was introduced for cars emitting 75g/km or less CO2 and the 10% rate was reduced to cars emitting 99g/km or less. Diesel cars pay a 3% surcharge, although the rate cannot go above the 35% ceiling. These and future rates to 2016-17, as announced in the Budget, are presented in the table below.
As an example of how CCT is calculated – a low earner with a diesel car emitting 84g/km and costing £10,000 will face a CCT tax charge of £260. This results from 13% (10%+3% diesel surcharge) of a £10,000 list price multiplied by 20% income tax rate.
The changes on CCT in 2015 onwards see the removal of the 0%, 5% and 10% rates and by 2016-17 the minimum CCT rate is 15% and the maximum rate is 37%. The 3% surcharge on diesels will be dropped from 2015-16.
SMMT believes the CCT rates for ultra-low carbon vehicles should be reviewed and would recommend that HM Treasury retains differentiating bands for cars below 95g/km. SMMT would support break points at 50 and 75g/km, recognises the importance of vehicles at 0g/km attracting the lowest CCT rate and the potential for further differentiation at an 85g/km break point.
Fuel duty
Fuel duty is a direct tax on the use of the vehicle and, given the frequency of refuelling, consumers may be more aware of fuel price variation than changes to VED or CCT. Rising fuel prices encourages consumers to reduce fuel use, which could include measures such as driving less and switching to more efficient cars.
In 2012 some 56-57% of the price at the pump is made up from taxes (fuel duty and VAT). In the 1990s the fuel duty escalator pushed the price of fuel up rapidly. Rises in oil prices just ahead of the recession again saw fuel prices rise rapidly. Oil prices then fell back in 2009, but in 2011 and 2012 they have risen again, on the back of increased global demand for oil. The government has deferred planned rises in duty to help offset the inflationary impacts of rising oil prices, but pump prices reached an annual high in 2012.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
UK fuel price, include taxes (average petrol/diesel), 2000-2012 (Source – The AA)
The price of unleaded fuel rose by 70% between 2012 and 2000, with a 1.5% in the past year. Over the same period diesel prices rose by 75% and 2.2% respectively. Diesel is currently 4.7% more expensive at the pumps than petrol, compared with premium of less than 2% in 2000. This will mean that diesels have to cover a larger mileage to help offset their generally higher initial purchase price.
Price of fuel, pence per litre (Source – The AA)
Government revenue from fuel duty and VED is shown in the chart below (data from Department for Transport’s Transport Statistics GB publication). This shows revenue from fuel duty and VED both fell in 2011 by 0.3%. This was the first declines in either since 2001. Note the data relates to all revenue, not that specifically from cars and is not adjusted for inflation. Fuel duty revenue fell £90 million to £29.9 billion in 2011, but was still £3.9 billion or 16.8% above the amount collected in 2000. VED revenue fell by £20 million to £5.8 billion, but was up 26.4% or £1.2 billion on the 2000 level.
Department for Transport Statistics show that the total number of vehicles in use in Great Britain rose by 0.3% in 2011 to 34.2 million, an 18.4% rise on 2000 levels. On a crude revenue per vehicle basis (total revenue divided by total vehicles in use) the revenue was unchanged between 2000 and 2011 at £957. The distance travelled, by all vehicles, rose by 0.2% in 2011 and by 4.8% since 2000, implying vehicle use has not risen as quickly as vehicle ownership levels and non-inflation adjusted revenue has increased broadly in line with vehicle ownership levels.
Biofuels offer a way to reduce CO2 emissions from transport. At present biofuels account for around 3% by volume of blend in petrol and diesel fuel. New petrol cars are generally capable of running with a blend of up to 5% biofuel, while for diesels it is 7%, but concerns about the sustainability of biofuels have so far limited their reach. The Renewable Transport Fuels Obligation requires the biofuels share by energy to rise to 10% by 2020. The Committee on Climate Change supports a rise to 8%, as in the Gallagher report. Industry is developing cars to run on higher blends of fuel, but at present not all cars can do so.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.
Capital allowances
Since April 2002 the capital allowance treatment of cars has been designed to benefit lower CO2 emitters. Businesses can claim capital allowances to reduce the tax they pay on profits for the purchase of certain products or investments, called writing down allowances (WDA). Expenditure on cars registered after 1 April 2009 with CO2 emissions above 160g/km attract a 10% WDA and for those with emissions of 160g/km or below attract 20% WDA (from April 2012 rates will be 8% and 18% respectively). From April 2013 the main rate of capital allowances for business cars will reduce from 160g/km to 130g/km. The threshold above which lease rental restriction applies will also reduce from 160g/km to 130g/km at this time. From April 2010, cars emitting less than 110g/km of CO2 or pure electric vehicles qualify for first year WDA of 100% (due to expire for cars in 2013 and for vans in 2015).
SMMT believes government should review its Budget 2012 decision to change the WDA threshold for new vehicles. Introducing a significant reduction in thresholds without appropriate signposting for industry distorts competition in the market, undermines planning horizons for manufacturers, and artificially creates competitive disadvantages for UK businesses in the UK market.
Support for ultra-low carbon vehicles
There are measures in place to support the take-up of ultra-low carbon vehicles, including pure electric vehicles (EVs). Pure EVs are zero rated for VED and CCT. Through the Office for Low Emission Vehicles there is also the Plug-In Car Grant, which since April 2011 gives a 25% incentive, up to £5,000, off the price of a qualifying car emitting less than 75g/km of CO2.
Polices that encourage the uptake of ultra-low carbon vehicles such as the Plug-In Car and Van Grants are welcome interventions, particularly the commitment from government to the incentives for the duration of this Parliament. This early and emerging market needs stable, consistent and long-term policies in order to grow and become self-sufficient. SMMT would urge government to make an early commitment to continue incentivisation of vehicles post-2015, which will provide confidence for business, investors and consumers. It is imperative for government to signal its intent from the period between 2015 and 2020 when it is hoped that this market will strengthen.
Some local authorities use CO2 as a basis for differential charging with parking permits and sub-100g/km Euro 5 compliant cars get a 100% discount on the London congestion charge. Transport for London are currently consulting on whether the London CC will be revised, and in particular if the discount will only apply to vehicles emitting 75g/km or less and what will be the sunset clause for vehicles that are currently exempt.
Household and business finances and budgets will also shape the type of cars purchased and used. The UK has a high degree of car ownership and consumers look for high levels of specification on their cars. The recession cut new car demand sharply and slowed the replacement of the fleet. However, it also focused consumer attention on efficiency and reducing running costs.
In 2009/10 the scrappage scheme was introduced to support the market. This may have brought a step-change in consumer buying habits, with the scheme resulting in a rise in demand for Superminis. Cars registered through the scappage scheme had CO2 emissions some 10% below the market average and 30% below the car they replaced, according to figures supplied by participants to SMMT.
If you wish to read the report offline, click here to download the SMMT New Car CO2 Report 2013 as a PDF. If you would like to continue reading online, use the tabs at the top of the page to navigate between the different sections of the 2013 report.