Penalties loom for ‘dirty’ cars
Dealers will queue up this month to register any unsold and high CO2 emission cars, vans and utes ahead of the penalty fee being introduced on 1 April.
The second stage of the Clean Car Discount (feebate) scheme offers a sliding scale of rebates for zero and low emission cars (EV and hybrids) and penalties for high emission ICE vehicles. Rebates end at 146g CO2/km while fees start at 192g CO2/km.
Dealers around the country have had strong sales over the past 12 months and some report being very low on stock. There are lengthy waiting lists for new cars, while the battle to find quality used stock in New Zealand and overseas has put pressure on prices and supply.
Expect high demand
Matthew Foot (Brendan Foot Supersite) in Wellington is expecting “massive” commercial vehicle sales in March as businesses wind up the tax year and upgrade their utes ahead of the introduction of the fee.
“Some dealers have accumulated a lot of stock ahead of this, so they will need to pre-register any unsold, high emitting utes before the end of the month.” But he warns that dealers will need to be careful not to flood the market.
“This is the year that manufacturers will clear their ‘dirty’ range ahead of the new Clean Car Standard that takes effect in New Zealand at the beginning next year.” However, those brands with limited EV or hybrid models are going to pay a hefty penalty under the Standard.
“I’ve heard of one manufacturer who is facing around $30 million in fees because they will have just one hybrid available here in 2023.”
The Clean Car Standard encourages importers to bring in zero/low emission cars to offset the high emitters they import – using a tradeable credit and debit system.
Just what impact the new clean car regime will have on demand is unclear; however, Matthew Foot is certain of one outcome. “Cars are going to get more expensive.” A brand that has to pay an extra $30 million to sell its cars in New Zealand is going to pass that cost on to the customer, he says.
Muscle car market
Darryn Caulfield owns Auto 66 in Hamilton and specialises in importing used muscle cars for enthusiasts. Many of his cars will attract the maximum $2,875 CO2 fee for used imports, and he’s not sure if this extra cost will put off some buyers.
“I will be competing with the New Zealand-new used cars already in the fleet, which won’t have the tax on them. We will just have to wait and see what the market does.” He has about 20 vehicles to pre-register before 1 April.
Craig Wall of Wall Motors in Onehunga sells a range of larger-engined used vehicles, including American left-hand-drive muscle cars for the enthusiasts.
“I think that once the pre-registered stock runs out, we will see a big change in sales.” He’s not worried about his American car sales: “People who are prepared to spend $30,000 to $50,000 aren’t going to be put off by another $3,000.” However, he’s not so sure about sales of two-litre and six-cylinder cars.Demand for those may reduce as the price tag goes up and if petrol prices stick at $3 or more a litre, he reckons.
“Next year I will have to bring in small engine hybrids to even out the average CO2 emissions of my stock so I can meet the Clean Car Standards that come in at the beginning of the year.” He’s worried that his customers won’t want the smaller cars. He says most of them are looking for big cars for big families.
“They don’t want a Leaf or a plug-in hybrid – they are too small or there’s nowhere to plug them in at their homes.”
Brent Cooper at Wairarapa Mitsubishi also has very little stock left to worry about pre-registering it ahead of 1 April. The brand’s PHEV models are selling well with a new model Outlander arriving this month. His tradie customers will bear the brunt of the new fee.
“There’s nothing in the EV or PHEV line for the commercial sector, as yet.”
MTA dealer sector specialist Tony Everett says the government’s last-minute rush in February to get the legislation through has left dealers short on detail for managing the ‘feebate’ in the sales process.
“Customers claim the rebate after they have registered their EV, PHEV, or hybrid, but they have to pay the fee before they register their high emission car.”
At the time of writing this article, there was no guidance from Government on how dealers must advertise or manage the process.
“It’s also not clear what happens if a car is successfully rejected and returned to the dealer. Will the Government refund the fee, or claw back a rebate? Does the dealer wear the costs, or does the customer?” In the absence of government guidance, we may have to wait for tribunal decisions to see where this will land.”