Car prices may rise in short term

Car prices could rise as a result of a policy proposed to make New Zealand’s car fleet more efficient, the Ministry of Transport says.

Associate Transport Minister Julie Anne Genter yesterday announced policy proposals that would take a two-pronged approach to tackle small vehicle carbon emissions, which make up about one third of all transport emissions.

The first proposed change is a new fuel-efficiency standard for imported vehicles, dubbed the ‘‘Clean Car Standard’’, that would gradually be phased in from 2021. The standard would force importers to reduce average emissions of vehicles they bring into the country. Failure to meet targets would result in a fine.

To support the Clean Car Standard, the Government is proposing what it calls the ‘‘Clean Car Discount’’ to influence customer demand. The scheme would offer rebates on fuel efficient, hybrid and electric vehicle imports, making some cars up to $8000 cheaper, while imposing fees on imported petrol cars, making the worst polluters up to $3000 more expensive. This will take effect from 2021.

A Ministry of Transport consultation document says the Clean Car Standard will have an emissions target that vehicle traders must meet, on average, across their vehicle fleets. Suppliers can import vehicles with emissions over the target, so long as it is balanced by more efficient imports of vehicles that are under the target.

In 2021, vehicle suppliers would only be required to report the emissions of the vehicles they import. Between 2022 and 2025, suppliers would be required to meet annual emission targets.

The 2025 target of 105g of CO2 per kilometre is consistent with the average vehicle fuel efficiency achieved in the Japanese vehicle fleet in 2014. In 2018, the average vehicle imported into New Zealand emitted around 180g/km.

A fine of $100 for each gram of CO2 per kilometre that a supplier’s fleet exceeds its fleet target would be applied to new imports. Used vehicle importers would pay $50 for each gram of CO2 per kilometre exceeding their target.

Ministry of Transport research suggests households would, on average, be better off as a result of the Clean Car Standard and an increased supply of fuel efficient and electric vehicles could result in average fuel savings of $6800 to a vehicle owner over the life of a vehicle.

‘‘However, there is a risk that average vehicle prices could rise in the short term but then readjust over time,’’ it said. ‘‘Currently there is not enough information to know with certainty how average vehicle prices are likely to change due to the policy.’’