The AA has estimated that the average price of vehicles will increase by $3,000 if the current targets in a Bill aimed are reducing vehicle emissions are retained.
Feedback closed on 4 November on the Government’s Clean Car Standard, which is the legislation that will require vehicle importers to steadily lower the emissions-profile of their imports or face penalty fines.
The Government wants the legislation in place by early next year so the scheme can start from 1 April. Dealers will have 2022 to get familiar with the system before the penalty regime starts in 2023.
The vehicle industry, including the AA, is supportive of the overall intent of the Clean Car Standard because it will introduce a workable framework to incentivise a faster move to a cleaner fleet, but the pace of change the Government wants is too fast, says AA Motoring Affairs Principal Policy Advisor Terry Collins.
“The unfortunate reality is that vehicle manufacturers haven’t produced enough low-emission vehicles yet to meet the targets. If the Bill proceeds with the current rate of reductions, it will be a steeper decline in emissions than planned for anywhere else in the world.
“It’s not fair to compare our situation with reductions already achieved in Japan and the European Union when you delve into the details. For example, in the case of Japan, 35% of the vehicles that helped the country comply were Kei class cars which are 660cc micro cars limited to 47Kw in power. We don’t allow these in New Zealand because they don’t meet our vehicle safety standards.
“The industry is hoping the Select Committee considering public submissions over the next couple of months will make some changes before the Bill goes back to Parliament in early February.
“We have tried to point out that New Zealand could get better emissions reductions if people can continue to afford to upgrade their vehicle, rather than costs becoming so prohibitive that it stops them from upgrading. If the Government imposed slightly more realistic targets, we would see a faster turnover in the fleet, which would bring a small improvement in transport emissions initially that would pick up pace as a wider range of EVs become available.
“Instead, if the Government goes ahead with their current targets, we think it will result in Kiwis paying higher purchase prices and penalty fees to get the vehicle they want or delaying upgrading. Neither of these outcomes will achieve the emissions reduction goals the legislation is hoping for,” says Terry.
Terry says that because New Zealand’s new car market is essentially a sub-set of the Australian new car market, where targets are only half as strong, most dealers have limited influence over what is available to import. Under the current proposals, many new cars (unless they are EVs or PHEVs) will have to pay emissions penalties in just a few years’ time. “By as early as 2026, under the proposed regime only EVs and PHEVs will qualify for credits with all other vehicles having to pay a penalty. Even some hybrid vehicles will be subject to penalties in the not-too-distant future.”
The penalties could equate to around $16.4m in 2023 and jump to $269.4m by 2027, according to AA calculations. The AA has calculated that the average cost of vehicles could rise by at least $3,000 because of supply constraints and the fact that a larger proportion of vehicles imported will need to be newer to meet emissions standards.
The AA’s view is that it will be better to successfully hit realistic targets for emissions reductions than fall short of unobtainable ones. But whether the Government listens to the valid concerns that the industry are raising will remain to be seen.