Does enduring ute popularity suggest Kiwis are ignoring, or misunderstanding, the impact of the impending Clean Car Standard?

ONGOING dominance of a vehicle type specifically targeted for its CO2 output has occurred as Government details its next phase of regulation designed to shift buyers into low emissions vehicles.

Release of additional detail about the Clean Car Standard (CCS) coming into effect on January 1, 2023, is hot on the heels of registrations data suggesting October as one of the stronger months Ford’s Ranger has enjoyed since 2006, when the nameplate introduced.

Ranger’s 1491 registrations cemented it as the top-selling new model within the combined light commercial and passenger categories last month, with comfortable leeway over the Mitsubishi Outlander, the top pure passenger choice.

The Blue Oval model’s tally has been wholly sustained by the market-fresh new-generation of the model which in preceding form was a big success.

While buy in for fully and partially electric models is also climbing, the new Ranger’s storming start could be seen as a further reminder about ongoing Kiwi reluctance to break addiction to one-tonne pick-ups – regardless that they have been paying a CO2 penalty atop the purchase price since April 1 – when there are no electric alternates, for load carrying and with four-wheel-drive.

Ford in commenting this week reiterated that Rangers are overwhelmingly being bought for purpose, and not as “mum’s grocery-getters.”

However, it has also conceded that a contributor was the new Ranger Raptor flagship (above), a $95,000 (when CO2 penalty includes) plaything that abdicates some payload and towing capability and takes a twin turbo 3.5-litre petrol V6 that has much greater thirst and emits higher emissions than the ‘regular’ types’ diesels.

Ford expected a Raptor rush ahead of CCS as it is designed to put off interest in such fare, but upping the penalty for buy-in.

However, it is perhaps not generally well understood that the legislation, due to its structure and specific requirement for percentage decline in CO2, will also affect much less avaricious choices, including light cars with established reputation for thrift such as the evergreen Suzuki Swift (above).

While Ranger rampaged, its closest rivals in the sector – the Hilux and Triton - had quieter months; the Toyota snaring 638 units and the Mitsubishi 230, however, that might be a momentary dip.

In September, Hilux hit 989 units, just 54 behind Ranger, which year-to-date is maintaining its usual position as top selling ute, with 8939 units, followed by Hilux (8256). Ford’s success with Ranger has not enable it to beat Toyota as the dominant brand overall, for the month and year to date.

Even so, the commercial sector into which utes locate has taken a hit, according to the Motor Industry Association which speaks on behalf of most new vehicle importers.

It says the October tally of 3965 commercial registrations represents a 16.9 percent decline on October last year, while year to date sales are down 2922 units (6.7 percent) year-on-year.

The major impact of CCS is that it will charge distributors a fee for every high-emissions vehicle imported. But it’s not simply the higher the CO2 rating of a vehicle, the greater the fee.

Small lean-burning cars that cannot show enough improvement in CO2 reduction could well be hit as hard as big drinkers in the heavyweight division. This is why Suzuki NZ has also signalled intent to introduce price increases from January 1.

Importers are best able to off-set penalties if they have low CO2 cars – and electric vehicles are the ace card, for obvious reason – which earn credits.

Those that don’t have those products can buy credits from those that do.

Brands that only sell EVs – and Tesla is the best example – will likely sell their credits, for whatever the market will stand.

But importers aren’t necessarily individual brands; they can be companies with distribution rights to multiple marques. Ateco could conceivably use credits from BYD, which represents simply with the Atto3 electric, to offset its RAM models. Giltrap Group, through having a huge collation of brands - including everything in the vast Volkswagen Group - some with EVs, some without, is sitting especially pretty. Marques that have direct factory representation have less flexibility.

The Clean Car legislation has been called the ‘ute tax’ because one-tonne utes, which mostly run diesel engines in mainstream form all deliver CO2 counts higher than the current tipping point for penalties of up to $5175 (and rebates of more than $8000 for electric cars) enacted on April 1.

Ford is among brands that has already warned that additional costs from CCS will be passed on to customers. However, it is also delivering more plug-in hybrids to the showroom and will have a full electric, the Mustang Mach-E, from early next year. 

Additional detail about CCS released this week by Waka Kotahi NZ Transport Agency included notice vehicle importers need to register a CO2 account by December 1, when the system goes live. This allows importers to view and manage all imported vehicles with the option to have one new and one used account.

It also detailed payment methods – on a per vehicle basis called ‘pay as you go’ with the alternative of an annual schedule, ‘fleet average’ – and how importers can also earn, spend or transfer CO2 credits. 

In its announcement, Waka Kotahi said that, for ‘pay as you go’, a credit is applied if a vehicle’s CO2 emissions are less than the individual target for that vehicle. 

With ‘fleet average’, a CO2 credit is applied if the actual average vehicle CO2 emissions across the importer’s total fleet, during an obligation year, are less than the target for the year.  

Conversely, importers of high emitting vehicles will have to pay a charge per vehicle based on the annual rate under ‘pay as you go’. The charges for next year are $36 per gram of CO2 in excess for new vehicles, and  $18 per gram of CO2 in excess for used.

“If a vehicles’ CO2 emissions are greater than the target, a charge will be due at time of accepting each vehicle in the CCS System unless credits are used to offset,” states Waka Kotahi.

 Fleet average charges next year are $45 per gram of CO2 in excess for new, and $22.50 per gram of CO2 in excess for used.