Aftermarket February 2023

FEBRUARY 2023 AFTERMARKET 11 Automotive and Life Sciences at NTT DATA UK&I observed: “With the £54 billion hole in public finances, it was inevitable the government would remove the exemption to Vehicle Excise Duty to mitigate the reduction in the internal combustion engine tax base, particularly when 50% of new vehicles are expected to be electric in 2025. At face value this appears incompatible with the UK’s climate commitments, particularly after the recent COP27. However, although electric cars are beneficial in terms of emissions, they are not an environmental panacea. Taking into account the higher upfront cost of electric vehicles that puts them out of reach for many in a cost-of-living crisis, action to further incentivise the sharing of electric vehicles, improving individual’s wider environmental impact and overall mobility would have been welcome. With vehicles in the UK only in use on average 4% of the day, a valuable resource is available to be tapped.” Short-sighted Ian Plummer, Auto Trader Commercial Director observed: “The Chancellor is clearly looking for revenues, but the prospect of increased running costs will drive more would-be buyers away from EVs when other incentives are being scrapped and high energy bills are eroding the advantages of going electric. The 2030 ban on new diesel and petrol sales is looming ahead but measures like this will hardly encourage motorists to switch amid a cost-of- living crisis. An excise duty raid is short-sighted and sends the wrong message if we’re to be serious about getting EVs into the mainstream and beyond the wealthier car buyers who can afford the c.35% ‘green premium’ of EVs over petrol or diesel equivalents. Our analysis shows that drivers can still save £80 per 1,000 miles by making the switch to electric, but this move will take away a big chunk of the ownership savings that are still very much needed to bridge what remains a significant purchase cost differential for EVs.” Toby Kernon, CEO of vehicle subscription software provider Wagonex said: “The implementation of an electric vehicle road tax to fill a shortfall in budgets is a significant own goal by the government. The UK has specific, ambitious targets to reach net zero, which we are already struggling to meet, so to start taxing EVs will only add to this burden, and more worryingly, could be a sign of things to come. With the sale of new petrol and diesel cars ending by 2030, EVs and hybrid cars are the future of motoring. Ownership of EVs across the UK has increased exponentially in recent years and there are now more than one million EVs on the roads. While they’re often more expensive to buy than many diesel or petrol cars, the running costs are generally lower. So, adding tax to these vehicles could be a deterrent to future growth.” He added: “However, if increased running costs are a concern for UK motorists, one alternative way to own a car is a subscription model which provides a way for UK drivers to trial an electric car on a short-term basis. This way, drivers can also minimise additional costs of owning a car such as insurance, repairs, maintenance – and tax increases – as they’re all included in the monthly fee.” James Tew, CEO at iVendi, said: “There’s a long list of measures in the fiscal statement that add up to one simple fact; Most people will have noticeably less cash in their pocket over the next few years and this will undoubtedly affect how much they have to spend on buying a car. The question facing the used vehicle sector is whether this is point at which the bubble of buoyancy the market has enjoyed in “After many years of paying no car tax at all, it’s probably fair the government gets owners of EVs to start contributing to the upkeep of major roads” ”