When it came to the impact of the 1 per cent vehicle registration tax (VRT) surcharge on diesel cars, the official voice of the motor trade didn’t pull any punches. “This was a poorly considered measure that appears to have been included to give the perception of an environmental focus in the budget,” said Alan Nolan, director general of the Society of the Irish Motor Industry.
Nolan is normally a voice of restraint compared to many of his members. Yet, for all the good optics about promoting the change to alternatives like hybrids and electric, he was clear that the bigger impact will be on rural and business buyers for whom diesel is still the better environmental choice.
Diesel was always in the Minister’s sights. While a speculated on rise in excise on diesel fuels never materialised, the international campaign against diesel engines and their emissions, which harm air quality, was never going to escape his attention.
The issue for the trade is that it’s not the only price impact in the pipeline. New EU emissions tests, to provide more real-life data, come into force on new cars from September 2019.
As our tax regime is based on these official emissions figures, new car prices are expected to rise by an average of €450 unless the bands are changed in Budget 2020. The 1 per cent surcharge will add an average of €400 from January to a new diesel car’s price.
The problem for an industry already moving away from diesel is managing the transition. We are witnessing a motoring revolution with mainstream electric cars, autonomous driving technology and car-sharing schemes that offer alternatives to ownership.
Many motorists cannot afford to keep pace with the changes and have to opt for older models.
Having tax and road traffic policies keep pace with the new motoring tech may be admirable, but it risks leaving a massive cohort of motorists behind.
As for hybrids and electric cars, while the incentives remain – including the important 0 per cent rate of BIK on the first €50,000 of an electric car’s list price – the choice of vehicles is relatively limited.