Gerald Grimes, Managing Director of Hitachi Capital Consumer Finance.
Make room on your forecourts for electric cars. The popularity of these and other low emission vehicles has surged over the past three years. Thanks to falling costs, improved technology and greater choice, the number of ultra-low emission cars on our roads reached 66,772 at the end of June – a ten-fold increase since 2013. And, with the policies announced in Philip Hammond’s first Autumn Statement, that number is only going to rise further.
Policies for ULEVs
Government policy has been going this way for a few years now. Whether it’s basing Vehicle Excise Duty on emissions, or offering a grant towards the cost of a new plug-in car, politicians have been keen to encourage the uptake of ULEVs. And now the new Chancellor is continuing that trend.
He is particularly eager to provide the infrastructure that electric cars need, with £80 billion for more charging points and extra tax breaks for companies that install them. This addresses one of the concerns that customers may previously have had when considering whether to buy an electric car.
We don’t yet know the future of the Plug-in Car Grant after March 2017, but the general trend of policies is clearly in one direction. The Autumn Statement specified new Company Car Tax bands for 2020-21 that will mean ULEV owners pay less. The 7% rate that’s currently imposed on zero-emission cars will be reduced to just 2%.
Even the Government’s changes to Salary Sacrifice, announced in the Autumn Statement, ended up making special provisions for cleaner vehicles. As of April 2017, all new Salary Sacrifice cars will be subject to Income Tax and employer’s National Insurance Contributions – with the exception of ULEVs.
But Hammond didn’t forget about those of us who haven’t yet made the switch to electric. He cancelled the rise in Fuel Duty that had been planned for next April, meaning that it will remain at 57.95 pence per litre for the seventh year in succession. That provides a little welcome relief for motorists who have seen pump prices rising for the past few months.
Investment in roads
And there was money for roads too. Hammond has set aside £1.9 billion to renovate the road network, as part of his new £23 billion infrastructure fund. This comes on top of the £15 billion that was announced back in 2014. This is all wise investment. No matter the kind of cars we drive, they all need good tarmac beneath their wheels.
Philip Hammond reduced the number of pages in his Autumn Statement compared to those published by George Osborne – in fact he’s decided to abandon Autumn Statements altogether – but, as you can see, he did make room for a number of policies aimed at drivers. These will encourage customers to go green, but also motoring in general. It could be a busy few years for dealerships.