March 16, 2021
European OEMs and LSPs impacted by varying CO2 taxation
- CO2 based vehicle taxes vary significantly across European countries, impacting OEMs and LSPs ability to successfully implement WLTP solutions
- Vehicles taxation policies can also be changed at the discretion of the government in each country – meaning OEMs and LSPs must continuously monitor for changes
- Ireland and Finland both have relatively small automotive markets in comparison to their peers, however they have taken a strong approach to CO2 based vehicle taxation
- France employs a bonus/malus system for acquisition costs, which reward or penalise depending on the quantity of CO2 emitted, as well as a scrappage scheme
- The Netherlands has a very progressive approach to regulation and electrification, and customers here face some of the strictest tax measures
A key barrier preventing OEMs and leasing service providers (LSPs) from successfully implementing WLTP solutions is that CO2 based vehicle taxes vary significantly across European countries. For many of these countries, CO2 based vehicle tax is influenced by WLTP values, with each government setting its own taxation policies.
As many OEMs and LSPs operate across numerous countries, they need to be aware of any local changes to vehicle taxation. And, as the policies for each country are not set-in stone – and can be changed at the discretion of each government – OEMs and LSPs must continuously monitor for any changes in order to stay competitive across local markets.
In our latest “Unpacking WLTP” report, we explore the CO2 based vehicle taxation currently in place across Ireland, Finland, France and the Netherlands, highlighting exactly how policies can vary and the resulting implications for automotive players.
Each country has been selected for analysis based on its size, market structure or unique approach to regulation.
Ireland and Finland both have relatively small automotive markets in comparison to their peers, however they have taken a strong approach to CO2 based vehicle taxation – employing weighty acquisition tax, and ownership tax.
As Europe’s second largest market, France employs a bonus/malus system for acquisition costs, which reward or penalise depending on the quantity of CO2 emitted. The country also has a scrappage scheme, with a bonus incentive of up to €2,500 for scrapping an old vehicle and replacing it with a low-emissions one.
Although the Netherlands has a midsize automotive market, it has a very progressive approach to regulation and electrification, and customers in the Netherlands face some of the strictest tax measures. For acquisition costs, rates range all the way up to €432 per gram of CO2 for vehicles emitting 172g/km of CO2 or more.
Our snapshot of these four European countries highlight the complex landscape OEMs and LSPs must navigate in order to successfully operate across the continent – and how each must keep its finger on the pulse to remain competitive in the fast-changing market.
As governments are now enforcing stricter CO2 taxation policies to discourage the rise of high emissions vehicles, the need for real-time WLTP data is more crucial than ever. OEMs must be able to deliver this information or risk producing vehicles that do not comply with their customers’ car policies, budgets and fleet strategies – damaging revenue and business relationships for all involved.
Should you use JATO Dynamics’ “Unpacking WLTP” report we would be very grateful if you could include or imbed the following link, to allow your readers to download the full report: https://www.jato.com/jato-wltp-report-part1/
- European car market stabilises during 2018, as Alternative Fuelled Vehicles record best ever year, but diesel sees lowest market share since 2001
- JATO Whitepaper – ‘Fiction to Reality – The Evolution of Electric Vehicles’
- 13% of total new car registrations in Europe made up by EVs in January 2020
- Growth Slows as European Car Registrations decline by 0.5% in October
- Small SUVs continue to gain traction as European registrations remain stable in May 2018