Motoring tax shifts up a gear
Despite sitting in their individualised metal boxes, motorists present a formidable collective brake horse power.
And with voting intentions to the fore over the next month or so, they've been given plenty more ammunition for complaining.
Thursday has seen a rise in petrol tax of 1p per litre, with more to follow later this year and again at the start of next.
But there's more. The requirement to include more biofuel in petrol and diesel is increasing at least some suppliers' prices by around 0.8p per litre.
We have now seen the removal of a biofuel tax relief, though there's still a 20p per litre advantage for reprocessed cooking oil.
And from 15 April, the Renewable Fuels Agency implements the legal requirement to ratchet up the content of biofuels in transport fuel. It's been 3.25%, and it's rising to 3.5%.
That is likely to make petrol and diesel more expensive, either through the processing costs or through the requirement to purchase Road Transport Fuel Obligation certificates.
If fossil fuel prices rise, however, that can make the biofuel elements relatively cheap, as was thought to happen the oil price spiked in 2008.
Gas guzzling
The industry is also being hit by a new showroom tax designed to steer buyers towards models that pollute less.
If you choose a gas guzzling 4x4 with automatic gearbox, you could find your car tax disc costing an eye-popping £950.
That only lasts for the first year, and then it's cut in half. But there's still a wide differential.
If you choose something with less than half that top threshhold for emissions, you could find the first year's car tax disc reduced to zero.
Of course, the idea is that this should skew sales towards lower emissions. But if you take last year's sales, the industry reckons that the top whack would be paid by fewer than 2% of buyers, while the zero rating could have affected 7%.
And it's not all about demon 4x4s.
Some of them rule the road with relatively low emissions, so there's a wide variation in the tax that gets levied.
Indeed, there are signs from manufacturers that they're already responding by adjusting design to make cars more tax-efficient as well as fuel-efficient.
Swerving potholes
The bad winter has helped 4x4 sales.
And my guess, based on my own experience of swerving round Glasgow, is that the appearance of potholes and the disappearance of public funding to mend damaged roads will help 4x4 sales further.
That's being helped in this globalised industry by the US pressure being exerted to raise its average miles per gallon from 25 to 35, within the next six years.
The industry faces a new challenge from the end of the scrappage scheme, also known as bucks for bangers or cash for clunkers.
With a £1,000 grant from the UK government and as much from the industry, for replacement of a car aged over 10 years with a new one, that helped drive nearly 400,000 sales between last May and this week.
What surprised me is how many owners of old cars were up for buying brand new ones.
According to a survey carried out last October, more than half of those involved in the scheme had never bought a new car before.
Presumably very low interest rates made a big difference.
Costs and risks
But there's a problem, in that the scheme probably brought forward car replacement transactions.
Dealers are concerned about a dearth of customers to be had in the next few months.
For manufacturers, the scrappage scheme helped put several English assembly lines back into full production.
But the industry has reorganised to cut costs and risks by holding far less stock.
If you want to buy a new car now, the chances are you'll have to wait far longer than used to be the case, as it will have to be built for you rather than being sourced from a very large, crowded car park.
Hullo, I'm Douglas Fraser, and I'm business and economy editor at ³ÉÈË¿ìÊÖ Scotland. Welcome to my blog, where you can read my take on money matters, viewed from a Scottish perspective.
Comment number 1.
At 1st Apr 2010, digitalpuppy wrote:Hi,
Is there some indication as to how many of the total sales were, as you say surprisingly numerous 'new' cars, made in the UK? The idea being, if I recall correctly, that it would boost UK car manufacturing. So the split would be UK made (per company) or Imported (per company)
Regards
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Comment number 2.
At 1st Apr 2010, kaybraes wrote:Dealers have still not made any great effort to reduce prices, when the scrappage scheme came in the list price went up to match. There is still way too much mark up on a new car in spite of what the dealers claim, (check prices on the internet sites )main high street dealers can be several thousand pounds dearer than the internet dealers. As for the low emission cars, the price on these is proportionately higher than other models, though I suspect they cost the same to produce but the makers hope the punter will be conned into paying more for something supposedly less polluting.
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Comment number 3.
At 1st Apr 2010, Neil wrote:BTW before people laugh at 35mpg, let's translate it into Imperial gallons - 43mpg. Which is pretty reasonable. Why don't the ³ÉÈË¿ìÊÖ do this?
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Comment number 4.
At 1st Apr 2010, jammy codger wrote:Sorry i'm new here and a bit puzzled i used to be a petrol head but am having trouble trying to understand what your point is? 1st para ? prices go up, prices go down , how much ? sorry no idea
2nd para, nope
3rd equally muddled
concluding 4 th?
well there's insight, do you drive, do you wave at cars, do you get paid for this?
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Comment number 5.
At 1st Apr 2010, DevilsAdvocate wrote:Hi Just checking this blog was open, what has Nick Robinson done to be closed down so quickly ?
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Comment number 6.
At 2nd Apr 2010, A Hamilton wrote:A quick look at the oil price shows Brent Crude up from $54 a barrel a year ago to $84 today.
Listen to Richard Branson whose Virgin group are part of the UK Industry Task Force on Peak Oil and Energy Security ( which "finds that oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity within five years".
Or listen to Sir David King, the Government's former chief scientist whose recent academic paper pointed to exaggerated oil reserves and a peak in production in the 2010 - 2015 time frame (Nick A. Owen, Oliver R. Inderwildia and David A. King; "The status of conventional world oil reserves—Hype or cause for concern?", Energy Policy, 2010).
As North Sea oil production declines, the UK becomes more and more dependent on imported oil - just like the USA. Major oil exporting countries in the middle east - the countries with most of the reserves - have rapidly growing internal demand for oil, production entering decline and crucially for oil importers like us, declining exports at a time when demand is increasing from countries like India and China. The only middle eastern country with significant scope for increased production of cheap, easy oil is Iraq.
I would bet that, by the end of this decade, the number of oil fueled vehicles on our roads will have declined dramatically - not because of tax - but because of a lack of available oil.
Ever wondered why Nissan are to start producing electric cars in Sunderland from 2013?
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Comment number 7.
At 3rd Apr 2010, bmc875 wrote:5. DevilsAdvocate
Try Blether with Brian(Scotland/Politics) if you want to see heavy handed moderators at work. They have advised that that particular blog will, generally, only stay open for 24 hours.
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Comment number 8.
At 4th Apr 2010, Doctuer_Eiffel wrote:Overly complicated money sink holes.
Nothing new from the auto motive industry then. Dead loss. Expect more jobs to go.
Raise fuel tax and get it over with soon. We need better vehicles.
Send all children to the nearest school that should reduce carbon and traffic and best of all ensure education standards are increased overnight.
Because we wouldn't have anything less right?
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Comment number 9.
At 4th Apr 2010, romeplebian wrote:It never ceases to amaze me that whilst Scotland produces almost as much as the UK consumes that oil prices hence petrol and derv prices are so high, but of course Westminster has seen that fuel prices in the UK are amongst the highest in developed countries.
Why we have set such high targets for carbon reductions is beyond me, noble and right as it may be, do you see the like of the US and China two of the largest consumers on earth backing down on their consumption ? no , so our wee bit is hardly going to help, although I would agree to cutting down in a sensible fashion.
the main reason for these carbon targets is not because it helps the environment, its so that Wall Street and London can extract even more money out of the economy trading carbon contracts, it list like a a who's who the companies that are involved, and because it is such an emotive subject, saying something must be done because its kind to the environment is like using the ah but it says it in the bible argument, ie you can't argue against it.
The costs to Scotland alone are worrying with the introduction of bio derv and ethanol petrol. The ethanol petrol has a short shelf like( so rural sites who would have a tank of fuel being sold slowly over the winter) will suffer, the ethanol acts as a detergent causing damage to engines as the tank debris is sucked through the system. Where does the bio plants come from ? they must be transported from somewhere, the process of manufacturing ethanol is a big energy consumer.
Water in fuel tanks is a common problem, up till now it just sits on the bottom of the tank separate from the fuel, but ethanol has a natural bond with the water which has and will cause whole tanks of fuel to go "off spec" and useless to use. Where are they putting the burden of this problem onto ?
yes the filling stations, many of the sites in the rural Highlands, that have managed to hang on despite the Supermarkets moving in and using the fuel as a loss leader until they put most of the competition out of business.
Its a terrible idea, there will be more engineer visits to clean the filters on the pumps thus more fuel consumed, the ethanol petrol cannot be transported by ship so that rules out the depots at Portree, Inverness and Scrabster, Stornoway and Kirkwall which are sea fed, which mean that assuming they can work out who will be running Grangemouth given the financial mess it is in through its new owners, that all the ethanol based fuel will be shipped from there or the Clydebank Ethanol plant throughout Scotland, meaning more road trips for the lorries.
Who ever took this decision on behalf of Scotland wants to rethink their ideas
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