New car registrations: Tax changes crucial to a low carbon future

Paul Everitt, chief executive, SMMT

The fleet sector accounts for more than half of all new car registrations in the UK.

This part of the market is traditionally less volatile than private demand, a factor that is highly important as we continue to navigate an uncertain economic landscape.

The sector recovered sharply from the recession-induced lows of 2009, rising more than 15% by 2011 and helping to stabilise the overall new car market.

The fleet sector is expected to be broadly stable this year and next – dipping 1.4% in 2012, before recovering 2.4% in 2013.

The forecast shows an underlying business confidence fuelling a return to regular purchase cycles.

The latest wave of attractive, fuel efficient, low emission vehicles coming on to the market is an important step in the recovery, but we are unlikely to see a return to pre-recession levels in the near term.

The continued uncertainty within the Eurozone is a drag on the global economic outlook and it is extremely important all governments play their part in securing the financial stability required to kick-start growth.

The UK government has recognised the importance of the automotive industry and through a genuine collaboration has seen significant new investment committed
to the country by global vehicle manufacturers.

The challenge is to ensure that all elements of government policy are better co-ordinated so that the benefits of the latest vehicles are spread speedily through the market.

To buy with confidence, fleet managers need a stable and consistent set of vehicle taxes and incentives.

Abrupt changes to vehicle excise duty, company car tax and capital allowances are unhelpful and undermine the great work being done to speed up the development of a flourishing early market for ultra-low carbon vehicles.

The success of carmakers in bringing lower emitting vehicles to market will necessitate changes to the tax regime, but these changes should be undertaken through collaboration with industry to ensure fleet managers and consumers have the appropriate time to adapt.

The fleet sector and the choices it makes are vital for the UK motor industry and the sustained improvement of the vehicle parc.