Thursday, 24 September 2015

NEWS - RAC report on the evolving car

The RAC annual report on motoring 2015 is out, and tackles the most popular topics from the last 12 months. I find the section on the evolution of the car particularly interesting, and wanted to share some bits with you. It may or may not surprise you to hear that the environmental impact of the cars they drive is low on the list of concerns of most motorists. Motorists are in favour of technology which can improve vehicle safety, but the extent to which they are willing to pay extra for such features is limited. There are also concerns about the safety of driverless cars, the development of which is being strongly supported by the Government, although most drivers recognise the benefits such vehicles could offer older and disabled people.

Environment

The potential environment impact of vehicles appears very low on the list of most motorists’ concerns in the 2015 Report on Motoring. Only one in every 50 drivers note it as their top concern and just 7% number the environment among their top 4 concerns. This is not to say, however, that drivers have no interest in low-emission vehicles: but the main factor behind choosing such cars is economic (keeping their own running costs down) rather than social responsibility (saving the world).

A rather significant 19% of motorists say they would consider a hybrid or electric vehicle as their next car. But of this group, half  say this would be because of the potentially low running costs rather than low emission levels. In particuar the rise of the company car has contributed to an increased number of hybrid and electric vehicles. There are advantages for both the employer (from accelerated capital allowances) and employees (from a reduced BIK on a P11d)

Figures published in June 2015 by the Society of Motor Manufacturers and Traders (SMMT) show that sales of ultra-low-emission vehicles (predominantly pure electric cars such as the Nissan Leaf and plug-in hybrids such as the Mitsubishi Outlander) are increasing significantly. In the first five months of this year, purchases were four times higher than in the same period of 2014 – but nonetheless this sector represents little more than 1% of the total market.

Figures from the Department for Transport show that between the start of 2010 and the end of March 2015, more than 36,000 ultra-low emission vehicles had been registered in the UK. Overall, combined hybrid and electric car sales add up to less than 3% of the UK new car market. Among all motorists, running costs are the most significant factor when it comes to choosing a new
car: 40% say this has the greatest impact on their buying decision.

Changes to the Vehicle Excise Duty (VED) system announced by the Government in its summer 2015 Budget will reduce incentives to buy low-emission vehicles. From 2017, only new cars which produce zero emissions will be exempt from VED in the first and subsequent years. Lower-emission models (up to 100g/km) will pay between £10 and £100 in first-year VED. After year one, all vehicles other than those with zero emissions will face a flat £140 annual charge. At present, cars which produce 100g/km or less in carbon dioxide permanently avoid VED. While falling tax revenues from the current VED system need to be addressed, the RAC has some concerns that this new regime may slow the significant progress that has been made in reducing carbon dioxide emissions from passenger cars and light commercial vehicles in the UK. As annual running costs play a significant part in the choice of new vehicle, the new regime from 2017 carries some risk of slowing the sales of low-emission vehicles.

“We recognise the current VED system needs to be reformed and SMMT highlighted this in a recent
report. The Chancellor’s Budget announcement... ...on the regime came as a surprise and is of considerable concern. While we are pleased that zero-emission cars will, on the whole, remain exempt from VED, the new regime will disincentivise take up of low-emission vehicles. As it stands,
new technologies such as plug-in hybrid, the fastest growing ultra-low emission vehicle segment, will not benefit from the long-term VED incentive, threatening the ability of the UK and the UK automotive sector to meet ever stricter CO2 targets.” says Mike Hawes, Chief Executive of SMMT

Technology drives safety improvements

The vast majority of motorists (86%) believe that cars are safer today than at any point in the past and almost two-thirds (63%) say that in-car technology plays an important role. What's surprising though is that the extent to which drivers are willing to pay for additional safety measures is limited. Highlighting this attitude are the number of safety features considered useful by motorists: parking sensors (92%), automatic emergency braking (74%), dashcams (73%) and automatic self-parking (67%). But less than a third of drivers would be willing to pay more than £100 to have any of these features added, whether by manufacturers or after buying their car.

Telematics insurance policies are becoming more popular, particularly among younger drivers: these involve a unit being installed in a car to record factors such as speed, braking and cornering, and are designed to give motorists the chance to demonstrate to insurers that they are responsible, low-risk drivers and therefore deserving of lower premiums. Research from Consumer Intelligence published in June 2015 found that take-up of telematics insurance was highest among drivers aged between 18 and 24, with 22% of men in this group and 14% of women using such policies. Part of this increased uptake is down to requirement; often a 17-year old driver will have limited choice of insurers, and the only way to avoid paying an arm and a leg to insure a 1.0-litre Citroen is to agree to one of the 'Big Brother' black boxes.

It is widely believed that telematics policies can improve driver behaviour not only by providing a financial incentive to drive sensibly, but also by giving customers the chance to analyse data about their own driving habits and providing suggestions on how they can improve. The Report on Motoring found that 75% of drivers say a telematics unit would be a useful feature on their vehicle. But a significant minority – 30% – say they would be opposed to new technology which recorded how well (or not, as the case may be) they were driving. The level of opposition is even higher – 40% – among drivers aged between 17 and 24.

Mixed messages on diesel

Around half of all new cars sold in the UK run on diesel. Figures published by the Society of Motor
Manufacturers and Traders (SMMT) show that in the first half of 2015, diesels accounted for 48.3% of the market against 48.9% for petrol. But there is growing awareness that the levels of nitrogen dioxide emitted by diesel cars manufactured over the past decade have been significantly higher than were predicted by the EU standard tests used to approve vehicle emissions. As a result, there has been a greater than forecasted impact on local air quality.

There is significant variation in the way that local authorities are dealing with air quality issues and the Report on Motoring found some support among motorists for measures designed to tackle such problems. More than half (54%) support the introduction of penalty charges for more polluting vehicles which enter their local area while 43% think that stronger action needs to be taken locally to reduce pollution. Views on penalties that specifically target diesel vehicles are more mixed: 39% say they back charges for diesel cars which do not comply with the latest emission standards but 34% are against them.

“Today’s diesel engines are the cleanest ever, and the culmination of billions of pounds of investment
by manufacturers to improve air quality. Indiscriminate and inconsistent bans and parking taxes on diesel vehicles will undermine the take up of these newer, cleaner vehicles. We need to avoid penalising one vehicle technology over another and instead encourage the uptake of the latest low-emission vehicles which best suit consumers’ needs.” says Mike Hawes, Chief Executive of SMMT.

However, the RAC believes that the rapid introduction of severe penalties for owners of all diesel
vehicles, is unjust. Many motorists have bought small fuel-efficient diesel vehicles over the last ten
years because of their high fuel economy and low carbon dioxide emissions. The Government’s
taxation regime has incentivised this and it is therefore unfair to punish these people because the
scientists and officials got the test cycles wrong.

“Because we are increasingly worried about air quality, we are on the verge of demonising the
diesel engine – it feels like a simple solution. But this is a complex issue, and this country is at the forefront of developing clean diesel technology – it would be a pity to find a knee-jerk reaction threw that international commercial advantage away.” says Steve Gooding, Director of RAC Foundation.

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