The SMMT (Society for Motor Manufactures and Traders) recently published their first half year figures relating to sustainability indicators. There has been a significant drop in the CO2 emissions figures of new vehicles registered in the last six months, decreasing by 4.5% to 145.2 gCO2/km. This is great news for those of us who want to see a move towards a more sustainable personal transport system. What we must find out now is what the reasons behind this decrease are so that we can ensure that they continue and prosper.
The background environment that motorists have found themselves in over the past few years has undergone some considerable changes. Firstly and perhaps most importantly the worldwide economic recession has put a brake on people’s finances encouraging them to consider large purchasing decisions in greater detail and look to save money wherever possible. The previous trend of the last decade of upsizing vehicles has been somewhat reversed with motorists now thinking about downsizing to enjoy greater levels of fuel efficiency.
New vehicle sales fell off rather dramatically during the start of the recession as households put off large purchases due to the increased uncertainty in the economy. The UK Government introduced a stimulus plan that encouraged households to part ways with old vehicles (over 10 years old since first registration) in exchange for a £2000 reduction in the costs of a new car. This incentive was widely subscribed to generating a substantial decrease in the average emissions level of the UK vehicle car fleet (under the principle that a new car will be significantly more efficient than a 10 year old vehicle). This incentive did not have any vehicle requirements attached allowing households to trade in their old cars for any new vehicle they desired. It was observed that households subscribing to this incentive generally tended to purchase new vehicles that were below the average new vehicle emissions vehicle. This was a unplanned for additional benefit of the UK Car Scrappage Scheme which not only helped prop up the UK’s large automotive manufacturing sector but also moved the new vehicle market in the right direction of lowering CO2 emissions.
In 2009 the UK Government updated Vehicle Exercise Duty reclassifying the bands with the most carbon efficient vehicles now being exempt for the tax whilst the biggest polluters now attract a £455 annual charge. This reclassification was intended to encourage households to purchase more carbon efficient vehicles by shifting the goalposts charging heavy polluters more whilst benefiting owners of low emissions levels. The impact of this measure can be debated as vehicle operating costs have been empirically proved to be substantially (between 20-40%) discounted by households. If this is the case, increasing the operating costs of a vehicle will not be as effective as a direct purchasing tax however this is not to say this measure will be ineffective.
Automotive manufacturers are starting to gear themselves up to the introduction of EU wide regulation on new average CO2 emissions of the vehicles they producing. This legislation is planned to come into effect from 2012 with a cap of 130gCO2/km for average new vehicle emissions being introducing that will be lowered on a yearly basis. If manufactures produce vehicles with an average emissions level above this cap stiff penalties will be enforced. This legislation will create a considerable obstacle for the premium, luxury and performance market segments. Manufactures like Ferrari will be able to pass the charges onto their consumers without any impact onto their demand levels however firms like BMW and Mercedes may decide to diversify their range portfolio by including more efficient and smaller vehicles to minimize their exposure.
Over the past few months there has been an increased level of exposure for environmental and green matters. Especially before the recession, environmental concern was firmly in vogue leading to large levels of air time and paper spread. Linked with this, large international summits took place which attracted a large level of public interest especially the UN Climate Change Conference held in Copenhagen in December last year. This increased exposure and public interest could have encouraged households and individuals to make more “green” purchasing decisions.
It is unlikely that any one of the above listed factors can wholly explain the decrease seen in new average vehicle CO2 emissions. I believe all of the above factors will be positively correlated with new average vehicle CO2 emissions explaining this decrease to some degree. My gut instinct is that the recession has played the most important role as empirical research has shown that cost is still the most important factor to households and individuals considering purchasing a new car. This leads me to suggest that if the UK Government really wants to encourage consumers to buy carbon efficient vehicles then the best way to do that would be via the pricing of the vehicles in the market. With this in mind, it is important that the UK Government does not limit itself to one or two measures as it will be a combination of measures that will be most effective. However, it is still important to ensure that households and consumers are not confused by a complex environment when purchasing a new vehicle so streamlining of information will have to be undertaken to ensure consumers are informed as quickly as possible.
No comments:
Post a Comment