Luxury car buyers choose higher CO2 cars by Jay Nagley

Exclusive research by www.cleangreencars.co.uk has shown that luxury car buyers are choosing models with higher CO2 outputs than they did last year - and it is the result of the government's decisions about CO2 road-tax bands.

The problem is that the top road-tax band (Band G), is set at 225 g/km. However, the actual CO2 output of cars on sale in the UK ranges up to 450 g/km, so the top band is only half way up the CO2 scale (99.8% of cars sold in the UK fall between 100g/km and 450 g/km). Over 90% of cars costing over £40,000 fall into Band G, so luxury car buyers are deciding they might as well get hung for a sheep as for a lamb. For example, if someone is choosing a large off-roader, they will pay the same tax on a diesel Land Rover Discovery (244 g/km) as a petrol Range Rover Supercharged (376 g/km).

While the new Band G is reducing the number of cars emitting just over 225 g/km, it is doing nothing to discourage sales of cars emitting over 275 g/km, whose sales are actually going up. It seems perverse that a family that wants to buy a Renault Espace 2.0T Auto (234 g/km) pays the same tax as a Ferrari F430 owner (420 g/km).

The logical thing to do would be to have a new Band H set at 275 g/km, costing around £500 per year. That would provide a real incentive to luxury car buyers to choose the less polluting alternative, as 45% of cars over £40,000 fall between 225 g/km and 275 g/km. While the extra cost of the road tax would not be significant, the impact on resale values certainly would be. Given that the loss in value of a car just over the Band G threshold is around £1,500 more than an equivalent car in Band F (e.g. a 2004 Mondeo 2.5 V6 compared to a Mondeo 2.0), the loss for a Band H car compared to a Band G car would be over £2,000. That would be enough to make even luxury car buyers think twice.

Clean Green Cars completely supports the idea of paying road tax according to CO2 emissions - but it would be better if the bands were actually put in the right place. At present, CO2 considerations only affect buyers of quite modest cars, as they look for a model which falls into the lowest possible band. Buyers of expensive cars exist in a market where CO2 ceases to matter, as virtually all their choices fall into the same tax band. The whole point of the road tax bands for CO2 is to change people's behaviour and the current system is clearly having no effect at all on the cars that emit the most pollution. People will only change their behaviour if they are given an incentive - so it is time the government gave luxury car buyers a real incentive.

* Proposed new tax band for luxury models