New CO2 Laws Could Drive Increase In Car Prices

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Thu, 03 Jan 2008

New EU regulations to reduce CO2 emissions could force the cost of new cars to rise by 6 per cent, if adopted.

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

However, being able to reach such a target in the next four years would mean a considerable increase in manufacturing costs, inevitably leading to a rise in the cost of new cars .

An increase of 6 per cent, as stated by the EU, would mean an extra £900 on the price tag of a car worth £15,000.

Car manufacturers say they support the aim of reducing CO2 emissions, but don’t believe the new regulations have taken into consideration the need to preserve jobs throughout the man car manufacturing industry.

Christopher Macgowan, chief executive of the Society of Motor Manufacturers and Traders (SMMT), commented: "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 said he was particularly concerned by the proposed financial penalties for manufacturers which fail to meet their emissions targets.

According to the SMMT, the fines are 14 times more arduous than the cost of carbon under the European emissions trading scheme .