The move comes in reaction to the Government’s changes to VED in the 2006 Budget.
Although bandings for vehicles producing low CO2 emissions have been reduced in VED liability and two remain unchanged, the F banding into which a wide range of popular vehicles fall has been increased by £25 a year, and a new G category for vehicles producing higher CO2 emissions has been created. This has a £210 VED liability, £45 more than previous highest banding. The lowest banding has a zero liability but is applicable only to all-electric vehicles.
Examples of some of the vehicles affected include the Honda Accord Tourer 2.4i V-TEC Ex, Vauxhall Vectra 3.2i 24v V6 5dr and BMW 130i, and the manual Fiat Stilo 2.4 20v. In addition many MPVs will incur higher costs. All diesel-engined vehicles are subject to an additional duty of between £5 and £10.
The result is the model mix in a typical fleet will lead to an overall increase in costs, with around 220,000 vehicles being affected. It is estimated that additional revenue of close to £4 million will be raised from fleets during 2006.
"One of the key selling points of contract hire is predictability of costs," says Lombard Vehicle Management head of sales, Edward Pigg.
"In addition we try to reduce the variables to an absolute minimum by, for instance, keeping damage charges exceptionally low, and we are also committed to being a genuine partner for our customers. With that in mind we are removing this additional financial burden for existing customer’s vehicles to make the job of fleet funding and management as seamless as possible in the wake of the new regime," said Pigg.