Will VED changes decrease Fleet?

Will VED changes decrease Fleet?
Sponsored byVolvo UK Ltd

Last month, new rules regarding VED (Vehicle Excise Duty) came into effect.

Put simply, the rule change means that new cars will now cost more to tax while other rates, mainly those relating to older vehicles, drop.

Additionally, concessions have been made for “alternatively fuelled” (think electric or hydrogen) vehicles.

The rules came into force 1 April. In the first month alone there was a 19.8% fall in fleet and registration car registrations, according to figures from the Society of Motor Manufacturers & Traders (SMMT).

Privately, so on a consumer level, there was a 28.4% drop.

This decline can partly be attributed to the preceding record month, although one can’t help but suspect that this was due to a last-minute scramble before the changes were bought in.

March saw 562,337 cars registered, more than double January and February’s total combined – 51% of these were fleet and business car registrations, a year-on-year increase of 12.5%.

Mike Hawes, SMMT’s Chief Executive, was unsurprised by this: “With the rush to register new cars, and avoid VED tax rises before the end of March, as well as fewer selling days due to the later Easter, April was always going to be much slower.”

However, he expects things to turnaround: “It's important to note that the market remains at record levels as customers still see many benefits in purchasing a new car. We therefore expect demand to stabilise over the year as the turbulence created by these tax changes decreases.”

Another factor to consider, is that year-on-year registrations of diesel vehicles are down 250,000. Oddly, sales of alternatively fuelled cars also dropped - for the first time in four years.

Speaking in the April issue of HR Grapevine, Selwyn Cooper, Head of Business Sales at Volvo, said: “Whilst most attention has been given to the cars withdrawal of the tax and employer National Insurance (NI) advantages for cars emitting more than 75 g/km, we remain fully focussed on our ultra-low emission cars . . . which will be unaffected by the new legislation and will therefore continue to offer fantastic tax and NI savings if acquired via salary sacrifice.”

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