05.09.07 New taxes on 4x4s shown to have little effect on demand or price
In a move designed largely to satisfy Britain’s green lobby, former Chancellor of the Exchequer, Gordon Brown chose to raise taxes on so-called ‘polluting’ vehicles last April. However, to the delight of car manufacturers, this decision has not reduced the demand for or the prices of large cars during the first half of 2007.
Composite data gathered by British Car Auctions examined the prices of used 4x4s in the United Kingdom both before and after the introduction of the aforementioned vehicle tax. These figures suggest that the average price of a used 4x4 was actually higher after the introduction of the tax than it had been in early 2007. The resale price of a 4x4 hit £9,098 in June compared to £8,159 in February. Prices did fall somewhat during March, April and May. However, in general, vehicle prices during these months were still higher than they had been during the same period in 2006.
Steady automobile prices have much to do with the market for large cars in the United Kingdom. Large cars, such as 4x4s are generally very expensive to begin with. Additional taxes only account for a small fraction of the resale value of any given 4x4 – a cost which many owners are willing (albeit grudgingly) to shoulder. This leaves demand relatively unchanged.
Instead, average prices are likely to be affected by other factors. For example the increase in 4x4 prices in June was much to do with the fact that “(a number of) desirable, high-value models…hit the used market.” Tony Gannon from British Car Auctions elaborated on the subject in a recent interview. He argues that “while a rise to £300 for the annual Road Fund License for the most polluting vehicles sounds substantial, it is a minor factor in the overall value of most premium 4x4 models. Price movements seen in the sector are very much in line with prevailing market conditions, and in reality average values are ahead, year on year.”
However, little has been done by the government to educate motorists about the new tax regulations. According to BCA, a significant proportion of drivers have been left confused by the wording of the ruling. Simply put you will have to pay the new vehicle tax if:
- Your 4x4 falls into ‘Band G’ on the ranking system for car emissions which has been produced by the government. This means that your vehicle is a heavy polluter.
- Your 4x4 was registered as new after 23 March 2006.
Needless to say, criticism of the road tax has been particularly strong in some quarters. Opponents have argued that the road tax unfairly targets those living in rural areas who require a 4x4 in order to access fields and property. For those living in mountainous regions, 4x4s often provide the safest mode of transport, particularly during the winter months. Proponents of these views argue that the tax should only be levied on those 4x4 owners who live in urban areas, where, according to critics, a 4x4 is often no more than a ‘fashion accessory.’
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Where exactly is the direct link between the tax hike on Band G (ONLY applicable to vehicles registered as new after 23rd Mark 2006) and 4x4s?
Not all 4x4s fall into that category (yes, I agree that many do) but many other cars do as well - why does everyone always seem to forget those?
And if you want some examples, just look at most sporty cars. Porsche, Ferrari, BMW, Jaguar, Mercedes all have non-4x4 models that fall into Band G, and yes, so too the Renault Espace! Yet you don't see these mentioned along with all these "nasty gas-guzzling 4x4s"!
The Liberal Democrats are the sensible ones with regards to 4x4s. A few hundred pounds on VED is simply not enough to discourage people from purchasing these huge, often unnecessary pose vehicles.
The wealthy mainly purchase these expensive vehicles anyway - and they can often afford a few extra hundred quid.
Increase VED to £2000 for the most polluting vehicles.
I feel that a 4x4 is a better option for my work as I carry a lot of folders in my boot and travel a lot of miles including on the motorway so therefore I think it is safer than a normal size car. My daughter was in a small fiesta with her son who got rammed up the back end by a 'white van man' and was pushed into a 4x4. The car was totally crushed every single panel on the car was bent, luckily she got out of it so this has spurred me to get another 4x4.
So my argument is that 4x4's are not a fashion accessory but something that could well save your life in a serious accident.
DS