The recent changes in CO2-based car tax bandings, announced in the Chancellor's recent Budget report, will have an impact on used car residuals, but only in the long run according to a new study by motor business intelligence firm EurotaxGlass's.
The firm's managing editor Adrian Rushmore said that despite almost doubling annual VED of some models, used car values are only expected to decline in the long term.
The motor industry expert said that many perspective used car buyers had yet to work out the impact of the changes, which will see many cars made between March 2001 and March 2006 that produce over 226g/KM of carbon dioxide move from band F to newly created L or M bands.
As a result, owners of cars in such bands will now have to pay an annual road tax charge of £415 - up from the current £210.
"As prices for older cars reduce over time, the tax burden comes into greater focus for prospective buyers, affecting demand and values," commented Rushmore.
"Such a sharp rise in VED could well have implications for the used car market in the coming months and years, but much will depend on customers understanding of the changes," he added.
Meanwhile the European Automobile Manufacturers' Association (ACEA) has urged European Governments to match their CO2-based vehicle taxation systems .
The European body said that despite most EU governments using CO2 to grade car tax, the range of systems could actually penalise some cleaner models using technologies that weren't recognised by individual countries' tax laws .
Instead the ACEA is calling for the introduction of a 'linear' system, which works by levying universal charges for tailpipe CO2 emissions without favouring particular fuels or engine technologies.
