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Car Features

Will the new car tax changes effect prestige vehicle sales?

20 Apr , 2017  

January saw a spike in new car registrations, 174,564 to be precise. That’s a 2.3% increase on last year. 76,729 of those were private punters, that’s 44%. Why? Well the increase in car tax has scared many, the things people do to save a few hundred quid.

But how has this effected the costliest of cars? Has the prestige and luxury market taken a knock?

Well, hybrids, plug-in hybrids, hydrogen and pure-electric cars accounted for 4.2% of those new car registrations in January, that’s a record.

It would appear buyers are becoming more conscious about their engine choice. Astonishingly though 91.2% of the £5.15 billion will be generated from cars emitting just 1-130g/km of nasties.

 

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However, ‘Premium’ motors, those costing more than £40,000 will be slapped with an annual tax of £310 a year for the first five years, as well as the standard first year tax cost.

So take a Tesla Model S for example. The 70kWh version will set you back £59,935. If you purchased your car last month you’ll never pay any road tax. Buy one now, and the first six years of motoring will cost you an extra £1,550.

A £48k Audi A7 3.0 litre TDi would have previously cost just £550 for six years of trundling around the UK. Now, expect to pay £2,410 – an increase of £1,860.

 

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It gets worse…

The eco-friendly 49g/km BMW i8 – cost £104,540 – sees an increase from 0 to £2,260 over six years.

But the biggest hike of all is left for the Mercedes C300 BlueTec Hybrid, a huge £2,370, upped all the way from £0 yet again.

Will it harm sales? Probably not. Let’s face it, the majority of cars that price are leased, either through the dealer or via a broker.

 

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Dividing it up over the six years, including the initial first year cost, and the £2,370 equals out at just £395 a year. Split it again by 12 months, and that’s an extra of £32.92 a month. That bumps what will be roughly a £420 a month lease to around £450, hardly breaking the bank for either a business or a private buyer.

You could opt for a lower spec car to come in under the £40k limit. There are versions of the Land Rover Discovery Sport, and Range Rover Evoque that, if had option-less would slip in below the threshold.

So whilst there may be shock and awe amongst the car buying public, the resulting tax on premium cars comes down to a few drinks at the bar each month, or a couple of bottles of wine!

 

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By  -  
Owner / Editor of Carwitter - French car fiend, hot hatch lover. Follow @car_witter