New CO2 rules could put up car prices

31 December 2007

EU regulations could put up prices by 6%
That’s an increase of £900 on a £15,000 car
Industry warns regulations could cost jobs

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The cost of new cars could climb by 6% if new EU regulations to cut CO2 emissions are adopted.

That amounts to an extra £900 on the price tag of a £15,000 car.

The European Commission’s proposals aim to force manufacturers towards average new car CO2 emissions of 130g/km by 2012, with a further 10g/km reduction through other technological improvements and the increased use of bio-fuels.

However, hitting such a target in just four years would mean a significant increase in manufacturing costs.

The Commission estimates a rise of 6%, which would inevitably impact on the cost of new cars.

Car manufacturers say they support the aim of reducing carbon emissions, but don’t believe the new regulations have balanced this with the need to preserve jobs.

The chief executive of the Society of Motor Manufacturers and Traders (SMMT), Christopher Macgowan, said: ’We support challenging targets. However, proposals must be achievable and cost effective, implementation dates must be realistic and fines proportionate if we are to maintain the breadth and diversity of automotive manufacturing across the UK.’

Macgowan is particularly concerned by the proposed financial penalties for manufacturers which fail to meet their targets. The SMMT has calculated that the fines are 14 times more onerous than the cost of carbon under the European emissions trading scheme.