Expect car prices to go up with new standards, Motor Industry Association says
Monday, 1 February 2021
Drivers should expect car prices to go up over the next decade as the Government introduces its Clean Car Import Standard, Motor Industry Association chief executive David Crawford says.
From next year, newly imported light vehicles will have to meet a carbon dioxide emissions standard., with the threat of penalties if they do not. A ban on imports of petrol cars has also been proposed.
The average light vehicle in New Zealand currently has carbon dioxide emissions of about 171 grams per kilometre. The new policy aims to reduce that for new vehicles to 105g/km by 2025, a standard met by Japan in 2014 and Europe in 2020.
Vehicle suppliers will have different targets to meet, and will only have to ensure that the average efficiency of the cars imported in any given year meets the standard. This means higher-emission vehicles can still be imported but will have to be offset by cleaner vehicles.
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The Government intends to pass the law this year and enact the standard in 2022, with the first charges being levied on importers who miss their targets in 2023.
But Crawford said the aggressive timeline meant importers would fail to meet the targets and would end up passing the penalties on to consumers, a concern shared by other motoring organisations.
The second issue was that electric vehicles and plug-in hybrids were currently more expensive than normal combustion vehicles, Crawford said.
”While Government officials and ministers say there will be price parity between [the two] by the mid-2020s, we don’t see it coming that soon,” he said.
The ambition at the moment for electric vehicles was to increase their range rather than make them more affordable, he said.
“We believe the price of electric vehicles won’t really start to drop until the end of the decade. Invariably, we think the price of the average vehicle will go up as a consequence of this change.”
Crawford said the figures provided by the Climate Change Commission on the availability of low emissions cars for import were quite “hopeful”.
There was global demand for electric vehicles that could make it difficult to import into New Zealand, he said.
There were 80 million new vehicles produced each year, including trucks and buses, and less than 10 million of those were electric vehicles, he said.
“Availability is a big question, and we are not certain we will get them as quickly as they want.”
There will be a waiting list for some years, he said.
Infometrics economist Andrew Beattie said if the policy worked well to change what cars were imported, the expectation would be for the price of older and higher polluting cars to increase while prices of lower emissions vehicles decreased.
“However, the availability of a range of low-emission vehicles will be important in determining how effective the policy is and what happens to prices,” he said.