Drivers can budget for CO2
TREVOR MANUEL APPEARS TO have stolen a march on the world’s leaders in greenhouse gas emission regulations and standards in Europe and Asia in his recent Budget. The proposed new emissions tax on motor vehicles – to be implemented in March 2010 – is broadly in line with the European Union’s regulations. However, the EU’s targeted emissions standards for vehicle manufacturers has a due date of 2012.
It’s also the subject of furious debate between the manufacturers, which see it as too onerous, and the EU authorities. The European target set for new vehicle CO2 emissions is 130g/km in 2012 and 95g/km by 2020. Some 17% of global CO2 emissions can be attributed to road transport.
In Manuel’s Budget vehicles with emissions of 120g/km attract no ad valorem excise duty tax. It’s mainly small entry-level vehicles that achieve emissions below 130g/km: premium performance vehicles and SUVs typically sit above 200g/km.
Mike Rudman, automotive leader at consultants PricewaterhouseCoopers SA, says: “South African manufacturers take their cue from their parent companies in Europe and Asia. Vehicles aren’t designed and specified in SA and this is the first SA-specific legislation on emissions. And it has definite cost implications.”
The National Association of Vehicle Manufacturers of SA will be engaging National Treasury on the impact of the new taxes ahead of their implementation date. As is the case in Europe, the big question is whether SA’s emission standards apply to the average in a manufacturer’s entire range, specific brands or models or even specific derivatives. The implications for the performance of vehicle manufacturers such as Mercedes-Benz, BMW – and even more so for a brand such as Hummer or Jaguar – are potentially huge. It’s even been speculated Porsche’s “takeover” of Volkswagen is in part prompted by the new standards: the thinking being if manufacturers are allowed to average emissions Porsche will benefit by taking into account the many small cars VW manufactures. Vehicle manufacturers such as PSA Citroën and Fiat are already far ahead of the German companies in meeting EU targets, with average emissions of around 140g/km versus 180g/km.
Concurrent with the introduction of SA’s new green vehicle tax, ad valorem excise duties on luxury vehicles have been reduced (see tables). For SA’s motorists buying a new vehicle costing between R300 000 to R400 000 with CO2 emissions of around 180g/ km the impact will be neutral (if, in fact, the tax is applied to individual vehicles). The new entry level Mercedes-Benz C-Class – SA’s second best-selling passenger vehicle in January – introduced last week would fall into that category. It’s the first vehicle under Merc’s BlueEfficiency banner (a range of technologies to reduce fuel consumption and lower emissions) to be launched in SA and replaces the previous C-180 Kompressor at the same price: R314 000.
However, many vehicles in the luxury and performance segment – especially SUVs – could attract higher taxes. For example, a topend Range Rover Sport 4.2l V8, with a price tag of R865 000 and CO2 count of 374g/km, would attract a net tax increase of almost 5%.
On the other hand, the duties on the hybrid Lexus RX400h SUV, priced at R661 000, will decrease by 1% – thanks to itsCO2 figures of 193g/km.