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Budget will 'not curb sales of high emission cars'

Chancellor Gordon Brown’s plan to introduce a new higher rate of Vehicle Excise Duty (VED) for the most polluting new cars (those above 225g of carbon dioxide emissions per kilometre) will have a 'negligible' impact on vehicle sales.

For any car falling within the proposed new top VED band, the tax payable will increase by just £40 per annum, or a mere £3.33 per month - an inconsequential sum compared to the higher fuel and purchase price which typically goes hand-in-hand with ownership of such a vehicle, says EurotaxGlass’s.

Similarly, eliminating the £55 annual VED on a low-emissions car will offer 'meagre additional incentive', especially when alternative fuel and petrol-electric hybrid cars typically have list prices above those of conventional alternatives.

However, EurotaxGlass’s suggests that the Chancellor’s Budget statement may contribute to negative opinion about the more polluting cars on UK roads. “We have seen sales of large luxury cars fall markedly over recent years, and SUV demand may start to decline if they increasingly become viewed as less socially-acceptable than other cars,” said Adrian Rushmore, managing editor at EurotaxGlass’s.

Falling SUV values

EurotaxGlass’s has said the price of the average one-year-old prestige brand SUV is currently 7 per cent lower than in March 2005, equivalent to a significant £2,500 drop in the typical asking price. These vehicles are becoming increasingly affordable due to improvements in availability, growing competition in the segment, and falling waiting lists for new models.

“Residual values for prestige SUVs are finally falling from the high levels that have prevailed for the last 36 months,” said Richard Crosthwaite, prestige car editor at EurotaxGlass’s. “We now expect to see rates of depreciation for these cars level out, and they will still outperform most other prestige car segments.”

A 12-month-old BMW X5 3.0d Sport SE (auto) currently has a trade value of £36,625, approximately nine per cent or £3,550 down on what an identical X5 of the same age would have achieved in March 2005. Similarly, a Volvo XC90 D5 SE (auto) now has a value of £28,650, some £3,450 or 11 per cent lower than at the same point last year.

The Porsche Cayenne has also suffered, with a Cayenne S (auto) now worth £40,600 compared to £42,825 in March 2005 - a fall of 5 per cent or £2,225. Meanwhile, a Mercedes-Benz ML270 CDI (auto) has a trade value of £25,000 this month, around £1,150 lower than the £26,150 that would be paid for the same age of ML270 CDI in March 2005.

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