A RISE IN DIESEL CAR PRICES PREDICTED
14 December 2006 - SMMT

NEW DIESEL CARS COULD COST £600 MORE

(buyers may switch to petrol; that''s bad news for CO2)

New diesel cars could rise in price by up to 900 Euro (around £600), according to experts in Europe. That''s because air quality limits in forthcoming Euro 5 and 6 emission standards1, supported by a vote in the European Parliament this week, could add significant cost to diesel models. For example, to meet Euro 5 particulate limits, even the smallest car would require the addition of a particulate trap to the exhaust system.

If diesel cars are more expensive they will be less attractive to buyers. More consumers will be tempted by petrol variants which can be up to 30 per cent worse for fuel consumption and CO2 emissions. The move threatens to halt what the European Commission recently described as the ''significant progress'' made by car makers in cutting CO2 output since 1998. Estimates suggest the resultant CO2 penalty could be as high as six per cent.

''Urban air quality problems are not caused by new cars'', commented SMMT chief executive Christopher Macgowan. ''Today''s models are around 95 per cent cleaner on things like diesel particulates than models sold just 15 years ago. The truth is that air quality problems come from older and poorly maintained vehicles and by poor traffic management.

He added, ''The dark side of Euro 5 and 6 limits is the impact on CO2 reduction targets. We should therefore re-affirm the importance of proper impact assessments on all new legislation, one of the key recommendations made by the high-level CARS212 group in its report last year. We must also make it clear that factors outside the motor industry''s control may continue to skew the progress we have made on bringing cleaner models and new technologies to market.''

In the UK, diesel car sales are already far lower than in other European states. This is partly because diesel is more expensive at the pump and partly because the UK government applies disincentives like the three per cent surcharge on company car drivers'' tax liability. While new diesel sales hit 50.3 per cent over the first nine months of the year across Europe, in the UK penetration reached just 37.9 per cent.

Across Europe, trade associations are making the case for an integrated approach in driving down CO2 from new cars. Car makers have embraced their responsibility to deliver cleaner technologies, but other parties including fuel companies, drivers, and NGOs also have a role to play too.

Crucially, national and European legislators must ensure they support technological progress through clear and joined-up policy measures, as well as incentives to drive the market for the lowest carbon cars.

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