Feebate 'best' route to lower exhaust emissions

Forget about banning gas guzzlers – convince motorists to buy low-emission vehicles, says the new car industry’s voice.

The lower a passenger vehicle’s emissions, the bigger the incentive, the MIA believes.

NEW vehicle importers have begun urging the Government to introduce a feebate scheme to accelerate the uptake of low-emission vehicles.

In a move obviously designed to see off any chance of an outright ban on importing vehicles fuelled by petrol or diesel, as has just been suggested by the Green Party, the Motor Industry Association, which presents new vehicle distributors, is pushing for new policies aimed at incentivising motorists to buy passenger models with the cleanest exhaust emissions – or none at all.

Chief executive David Crawford says members are strong supporters of having effective policies to encourage the reduction of carbon emissions from transport.

The way to do that is not to introduce policies aimed singularly at limiting vehicle supply. This would happen if the Government adopted the United Kingdom’s decision to ban pure petrol and diesel vehicles from as early as 2030. More preferable is to have policies that influence demand by incentivising the adoption of low technology technologies, Crawford says.

Such policies would be effective tools so long as they were implemented in a way that addressed the price premiums the low-emission vehicles have, he adds.

And the best way to achieve that is to introduce a feebate scheme that encourages car buyers to choose vehicles that are more efficient and less polluting, through rewarding those who do by giving them a rebate on the purchase price, funded by fees added to the price of less efficient vehicles.

“Because the distribution of new vehicles in New Zealand is a derived demand model, a well-designed feebate scheme incentivises change as it influences the purchase decision,” he says.

“This in turn alters the mix of models supplied by distributors which is more influenced by what is bought, and therefore restocked, rather than policies aimed singularly at limiting supply.

“Low emission technology is expensive, so policies that address low emission vehicle affordability are likely to be the most effective tools available to the Government.”

The previous Government proposed a ‘clean car initiative’, a ‘clean car standard’ (which would be a vehicle fuel-efficiency standard) and a ‘clean car discount’ (which would apply a rebate or penalty depending on exhaust emissions).

At the time, the MIA said it welcomed sensible discussions on ways to make vehicles cleaner and greener, and it promised the new car sector would work constructively with Government to help  create the best mix of policies to achieve that outcome.

The organisation didn’t like the ‘clean car standard’, because it implied that distributors had a significant influence on what vehicles Kiwi motorists chose to buy. It claimed that policies aimed at controlling supply into our market, imposed artificial controls that could distort the market.

But the MIA was particularly keen on the proposed ‘clean car discount’, as it would send a very clear signal to consumers and would over time increase demand for lower emitting vehicles. The MIA said that in its view it would be the most powerful policy available to the Government to influence car purchase decisions.

However, later in the year the whole ‘clean car initiative’ came to a screeching halt when the kybosh was put on the proposal by New Zealand First, a partner in the then coalition Government.

The MIA is asking for the ‘clean car discount’ to get picked up again by the new Labour Government, and as originally suggested it should apply to all light vehicles of less than 3500 kilograms gross vehicle mass.

Under the MIA’s proposed feebate scheme, vehicles with CO2 outputs of 230 grams per kilometre and above would pay a penalty, those with emissions of between 100-230 g/km would be in a “neutral” zone, those with emissions of between 50 and 100 g/km – which would be some hybrids and most PHEVs - would attract a low rebate, and those with CO2 outputs below 50 g/km would attract the highest level of rebate.

“If the Government were prepared to put say $10 million a year for several years into the feebate scheme, then the level of rebate for low emissions vehicles could be higher thereby significantly increasing the rate of uptake of low emission vehicles,” says Crawford.

He adds that the level at which a fee or rebate (and the size of the neutral zone) would need to be lowered with each successive year, so that over time these would become more challenging. If the Government agreed to contribute to the rebate fund this would also reduce over time.

New vehicle sales fall confirms Covid-19 recession

Good news and bad in registrations figures for June.

Toyota’s RAV4 was the month’s most popular model.

JUNE’S new passenger vehicle registrations count is proof the country is in a Covid-caused recession.

The easing of the coronavirus lockdown saw Kiwis resume buying new vehicles in June – but the rate is much lower than for the same period of last year.

Registration statistics supplied by the Motor Industry Association show 11,514 new vehicles being sold last month. 

That represents a 17.5 percent or 2438 unit decline on June last year, although it’s also an improvement on counts for April and May, when 1039 and 8313 registrations were respectively recorded.

Theyear-to-date rate is down 29.1 percent on 2019, says MIA chief executive officer David Crawford.

“The first six months of the year has been a year of two quarters,” he said. “The first quarter saw sales of 32,833 new vehicles – while the April to June quarter has seen just 20,866 new registrations, a reduction of 11,967 units for the quarter.

Crawford added the month of June reflected a steady but weaker market compared to 2019. Sales of both passenger and commercial vehicles were down, confirmation the market is tightening its belt in a recession.

Of the total number of new vehicle registrations in June, 7411 of them were passenger vehicles and SUVs which was down 15.3 percent on 2019 volumes, while registrations of 5103 commercial vehicles were down 21.2 percent on the same time last year.

But commercial vehicles continued to dominate individual sales, with the top three models all being utes – the Ford Ranger with 641 sales, Toyota Hilux with 595 and the Holden Colorado with 482.

Easily the most popular passenger vehicle was the Toyota RAV4 medium SUV which achieved 403 sales, followed by the Kia Sportage and Toyota Corolla.

But while the top three models for the month were the one-tonne utes, overall the top segments for June were dominated by SUVs.  Top spot went to medium-sized SUVs with a 19 percent share, followed by compact SUVs with 18 per cent.

Toyota remains overall market leader with a 16 percent share via 1874 registrations, followed by Holden with 9 per cent and Ford on 8 per cent.

Top 15 in June

Ford Ranger                  641 registrations
Toyota Hilux                 595
Holden Colorado          482
Toyota RAV4                 403
Mitsubishi Triton          390
Kia Sportage                 287
Toyota Hiace                275
Toyota Corolla              271
Nissan Navara               251
Suzuki Swift                  227
Mazda CX-5                  216
Kia Seltos                     202
Hyundai Tucson            191
Nissan X-Trail                179
Mazda BT-50                170     

MIA welcomes wage subsidy, trades training

The Budget brings good news for the auto industry, a core involver contends.

NEW Zealand’s troubled new vehicle industry is pleased with the contents of today’s Budget.

The country’s level 4 lockdown during the Covid-19 pandemic has proved disastrous for the industry, with sales down 90 percent during April and little likelihood of things being much better this month.

Motor Industry Association chief executive officer David Crawford said that for the new vehicle market to flourish, the New Zealand economy needs to be strong – and that is going to be a challenge in the current environment.

“A Budget that focuses on jobs while supporting businesses was what I was looking for,” he said.

In that regard the MIA was pleased to see in the budget a $4 billion business support package that included a $3.2b extension of the wage subsidy scheme, and a $1.6b free trades training package.

The wage subsidy scheme has been extended for another 12 weeks from mid-June, and Crawford said this extension will benefit those companies where revenue remains low.

The MIA also strongly supported the trades training package, which aims to open up opportunities for those who have lost their jobs or need to up-skill for a new career.

“We are delighted to see these two initiatives in the Budget,” said Crawford.

Time for cash for bangers

Vehicle scrappage – new car distributors say today’s massively depressed market provides the right climate for action.

Bangers for cash schemes have proven effective overseas.

 FACED with a remainder of 2020 which is going to see demand for new vehicles remain tepid at best, distributors have turned to the Government for help.

They’re seeking fast-tracked introduction of new policies to boost demand - incentives to compel the public to buy into fuel-efficient vehicles allied with others to remove old polluting and potentially unsafe vehicles from the scene.

The Motor Industry Association, the organisation that represents the new vehicle industry, is leading the push.

What spurs this all the more is a dire registrations outcome for April. A sector in lockdown put 90 percent fewer new passenger and light commercials vehicles into public use than it managed in the same month of last year. Year-to-date the market is down 32 percent.

“The Government can play a decisive role in lessening the economic pain we are feeling,” said chief executive David Crawford.

The removal of older vehicles from the roads is hardly unknown. The United Kingdom and many European countries in particular have such ‘bangers for cash’ programmes in place, usually with the dual aim of getting rid of older and more polluting vehicles, improving safety and, of course, stimulating sales of newer – ultimately brand-new – new vehicles.

david crawford

New Zealand has no such thing and this has contributed to the average vehicle age approaching 15 years. For example, the average of vehicles in the United Kingdom is just over eight years, and in Australia and the United States it is just over 10 years. The average age here now is, in fact, higher than it was before NZ accepted used import cars. Lowering the fleet age was given as a reason why ex-Japan used cars were allowed here.

Around four million vehicles are thought to be registered in New Zealand. It’s thought around 68 percent are less than 18 years old. Twenty-one percent are aged between 18 and 27 years. That means we have at least a million vehicles on our roads aged more than 20 years and with exhaust emissions many times higher than modern-day vehicles, and potentially with safety issues as well.

Saus Crawford: “We all know we have an old fleet with numerous polluting and unsafe cars roaming our roads.

“We believe it is time for the Government to provide financial incentives to remove the vehicles which are older than 20 years of age and/or where their exhaust emissions standards are the equivalent of Euro 3 or less.” (Euro 3 is a globally-recognised emissions standard introduced, first in Europe, in 2006).

He added such a move would be in line with New Zealand’s new road safety strategy and the Government’s climate change objectives.

For all that, scrappage is an issue that various administrations have considered for years.

the higher the quality of the fleet, the better the safety standard

Two trials were conducted by the Ministry of Transport, the first in 2007 and another in 2009. The first was in Auckland where owners of old clunkers were invited to hand in their vehicles in return for $400 worth of free passage on the city’s bus and train services. A total of 253 vehicles were scrapped. Organisers determined the benefits of the trial exceeded its $102,800 cost.

The second trial was in Wellington and Christchurch, where owners were paid the scrap metal value of their vehicles plus $250 worth of public transport passes. They also went into a draw to win a new Toyota Corolla.

A total of 349 vehicles were collected, but officials decided the whole thing was not cost-effective due to the low number of vehicles received and the relatively low overall social and environmental benefits relative to the trial’s cost.

Since then nothing else has been tried.

That’s been in stark contrast to other parts of world where scrappage schemes have been introduced. In the UK, for example, the Government introduced a scheme in 2009 where owners of old cars were offered the equivalent of around $6000 to get rid of them. Various car companies have also implemented their own scrappage schemes, most recently in 2017.

Last year our Government looked at a total of 11 potential new policies aimed at reducing New Zealand’s greenhouse gas emissions – and one of those was the introduction of some form of scrappage scheme. Incentives considered included supply of public transport passes, and credits towards the purchase of either a cleaner car or some other form of transport such as an e-bike.

older cars are also generally more problematic for exhaust emissions

But that idea didn’t progress much further, with the Government opting instead to concentrate on the so-called feebate scheme that would financially encourage motorists to buy low-emission vehicles via rebates, and discourage purchases of more fuel-hungry vehicles via fees.

The only thing that happened in relation to scrappage was a statement from Associate Transport Minister Julie-Anne Genter that the subject had been passed on to the NZTA, and that she expected to hear back from the organisation in a few weeks.

That statement was in October last year.

Meanwhile New Zealand’s vehicle fleet is getting progressively older – average age was 11.7 years in 2000, 14.4 years in 2017, and today 14.9 years. Should we be proud of this?

some car brands in the uk remain avid advocates of scrappage.

Covid-19: Green light for sales and servicing – with care

Level three coronavirus regs are a favoured route that nonetheless demands driving with care.

 NEXT week’s diminished national lockdown status will allow car dealerships to entertain a broadened level of sales and servicing, but it isn’t a signal for a return to pre-coronavirus state and showrooms will remain shut.

“It’s nowhere like business as normal and that won’t even start to be until we at least we get to Level Two,” says David Crawford, chief executive officer of the Motor Industry Association, which speaks for new vehicle distributors, in respect to Government’s decision to drop out of the current Level Four condition on midnight of April 27.

The country will remain in that status for a fortnight before another review, on May 11.

The key word during Level Three will be ‘contactless.’ Says Crawford: “What we cannot do is allow customers on sites.” 

Don’t see that as a sign of disappointment: The industry understands why a full lockdown was required and backs the Government. “New Zealand needed to shut down to save lives.”

So easing into Level Three is an important step toward restarting an industry battered by a month of closure. It at least allows “the cash flow to start moving again which will be a great relief.”

Yet he says it is just that, a step and one that demands a high degree of care and responsibility to ensure contactless and interactions to ensure no chance of coronavirus contagion.

“In a Covid-19 constrained world, operating at Level Three will not be business as usual. 

“It is a careful step towards restarting businesses that have put in place adequate steps to limit the transmission of Covid-19.”

Everything comes down to achieving necessary sanitation, distancing, and other health requirements.

It also allows for the sale of new vehicles, but without face-to-face customer contact throughout this and the delivery process, with the onus on the retailer to ensure vehicles are properly sanitised.

“So, for instance, even if the sale is largely done on line they (product) have to be delivered carefully and there are challenges around that.”

Customers will be asked to be patient. “It may not be possible to respond immediately to all requests. We ask the public to be understanding if a request to service or repair your vehicle during this time is not possible or is deferred.” 

There’s good news in respect to parts supply. “The moving of freight and parts under Level Three is unrestricted so that supply will begin to move, which allows us to consider serving of what would be called non-essential vehicles in a way that remains safe.”

Crawford reminds that, in terms of imports, the new vehicle sector is second only to the importation of oil in its contribution towards the New Zealand’s gross domestic product.

“Getting these businesses operating again in a safe way is vital to allowing New Zealand’s economy to begin to recover. 

“The sooner we can stop the spread of the virus the sooner New Zealand can fully reopen for business.”

Covid-19: April set to be worst on record for new vehicle sales

The prognosis for new vehicle sales is bleak and post-lockdown recovery will be a long road.

SALES to essential services have helped some new vehicle distributors since coronavirus hit New Zealand, yet the industry fears April will deliver the lowest registrations count on record.

The tally anticipated might be just 10 percent of the count for April of 2019 which at 10,640 units established a new high water mark for the industry.

If that outcome eventuates it will be the worst in living memory, an expert says.

This scenario and thought that even after the Covid-19 all-clear is given it will be many months before a new vehicle trade currently in complete shutdown in respect to public trading regains the same level of vitality enjoyed before coronavirus, has been expressed by the distributors’ organisation.

Comment from David Crawford (pictured), the chief executive of the Motor Industry Association, comes after release of March data signalling passenger and light commercial (meaning ute and van) registrations were down 4954 units, a 37.3 percent decrease, compared to the same month last year. In all 8317 new vehicles in those categories were registered compared to 13,271 in March of 2019.

The commercial sector lapsed far more than passenger; already in decline, it almost halved (down 40 percent, 1945 units) compared to March 2019. Even though the Ford Ranger remained the most favoured product, in category and overall, it did so with just 444 registrations – half its usual monthly tally.

Toyota remained the overall market leader with 18 percent market share (1515 units), also topped for passenger and SUV registrations and saw its RAV4 position as the best-selling passenger car, albeit with 318 units. Interest in Holden vehicles seems to have lifted in wake of General Motors’ announcing the brand will be gone by year-end; Holden car volume was perky and its Colorado was the third most popular ute.

Year to date, the passenger market is down 15.6 percent (6075 units) on the same period in 2019.

Supply constraints factored but, obviously, the swift move into shutdown, which took effect at midnight on March 25, also effectively reducing March to a three-week trading month in which the ‘vast majority’ of business was conducted, Crawford says.

With April set to be effectively wholly impacted by the Level Four enforcement, it’s only going to worsen, he adds. But how bad can it get?

“We think April could be as low as 10 to 15 percent of last year. The only thing that has been sold at the moment are vehicles required for essential services operations.”

That has brought some business. “I’m aware, for example, of a district health board requiring 40-odd vehicles. But there’s just these little spots of activity.

“But we’re expecting April to be probably the lowest month in living memory.”

The MIA has been collating data since 1975.

Some distributors have laid off staff but the industry is not at a point where operability has ceased, but there is recognition that for some the bills will be piling up. Distributors often have to buy product in advance of delivery and, even if that doesn’t happen, once landed cars are subject to goods and services tax.

“So everyone is working hard on cash flow. It is a testing time.”

Even though most of the world’s vehicle makers have frozen their assembly lines, there is product in the pipeline that might sustain demand if and when it picks up.

However, at present a number of vessels are set to off-load vehicles here over the next few weeks.

The MIA is pleased this seems to set to happen.

“There has been some discussion with officials about can and cannot be done. The ship will have vehicles and parts and some of those will be required for essential services activity.

“It doesn’t make economic sense to the industry or the Government for those ships to be turned away.”

He says procedures put in place by Ports of Auckland that Government is content with for the time being will allow vehicles to be off-loaded then sent to containment, Crawford says.

That will allow access to vehicles on an as-required basis during the lockdown which, he personally fears, might well extend beyond a April 22 release.

The longer it is in place, the more severe the impact could be. But even then it is not as simple when it is lifted, he says.

The disruption to the global vehicle industry will inevitably means that some products will be subject to delayed availability.

“There are stocks around but these will be cleared and it’s the availability of new stock beyond that which is going to be patchy.”

Even if New Zealand is deemed free of the virus, it is very likely our borders will remain closed for travel, which has obvious implications on the national economy.

“The recovery of vehicle sales going forward is going to be dependent on how quickly New Zealand can recover.

“We think it is going to be a slow, fragmented and painful recovery.”