Effect of new VED bands on UK car market

[Nasher]

I think anyone with even a bit of sense would realise that it should be a tax on fuel rather than anything else but the people who decide these things are clearly from another planet.

Yes but then they won't get much tax from people's barely used weekend rides etc :/

But the system is a bit broke. People will buy cars with basic equipment and have the dealer fit the options after they pay for it. It will be quite an interesting new game.

"Yes I'll just buy the Ferrari's chassis, I'll book it in for the rest to be fitted next week"

There will also be a big demand for 5 year old cars on the used market.

 

[carrot1401]

Factory Fitted Options count towards taking the vehicle over the £40k threshold and be applicable for the extra VED, Dealer Fitted Options don't count towards this (I work in vehicle finance as an application tester and literally was testing this functionality today)

Today I learned

Things like those you listed aren't factory fitted options though and shouldn't be included in the actual list price.

I must be being stupid...what are factory fitted options (apart from better speakers?)

Think we've got nearer to an answer (above).

 

[paradigm]

what are factory fitted options (apart from better speakers?)

Loads of things, literally.

Anything that isn't standard fit, but typically would have to be installed when the car is built. Like upgrading from Halogen to Xenon/LED headlights. Changing from a normal radio to Satellite Navigation. Adding parking aids (sensors, cameras, visual aids). Driver aids (cruise control, radar guided cruise control, lane departure assistants, hill hold assistants, pre-crash sensors).

The list goes on and on.

 

[carrot1401]

Loads of things, literally.

Anything that isn't standard fit, but typically would have to be installed when the car is built. Like upgrading from Halogen to Xenon/LED headlights. Changing from a normal radio to Satellite Navigation. Adding parking aids (sensors, cameras, visual aids). Driver aids (cruise control, radar guided cruise control, lane departure assistants, hill hold assistants, pre-crash sensors).

The list goes on and on.

Fair enough. But my suggestion of the smaller extras (wind deflectors, roof racks) that are typically installed at the dealer do seem to not count, so you can at least play around a little bit with the system

 

[Mysterae_]

Are people still losing out on tax when selling and buying a used car? If your yearly tax is £1200 and sell at the beginning of the last month (therefore lost £100) and the buyer taxes it at £1200 again, that's going to be a lot of double-bubble for the Gov. How will it work if your taxing it for 12 months but the car is 4.5 years old, so the rate changed? Pro-rata?

 

[Nasher]

Yea the used car double tax thing is a total scam. I heard they are making quite a killing from it :/

Could always buy the car and garage it until the start of the next month

 

[Ahleckz]

Generally speaking, customers just don't know about it. Of course, if you're into cars then you will but the average buyer hasn't a clue. I work in a major dealership selling new cars (though our used sales far surpass the new car sales) and we literally have had less than 5 inquiries (we sell over 200 cars a month at our site) and comments on the new VED bands. The majority of the sales staff don't know anything about it either. It just hasn't been communicated.
I think it's going to be a big shock and new registrations will be hit over the next six months, but then things will likely even out. I'm looking forward to a bump in pre-registered sales though.

 

[HangTime]

I guess the reason it is base price plus options is because an easy work around would be to just have cars top out at £39995 and then get them up to the spec they would have been with options. Especially so as many different engine levels are nothing more than a software swap these days.

Definitely. If you set the debate about whether a £40k threshold is right or wrong to one side, if you are going to have such a threshold, then you need to pre-empt loopholes like that. You'd end up with so called 'poverty spec' being even more poverty as everything gets left out of the base level trim and classed as an option instead. To the extent that the base spec on a model starting at £39,xxx would probably be worse than the base spec on the next model down from that marque.

 

[Joe T]

People will buy cars with basic equipment and have the dealer fit the options after they pay for it. It will be quite an interesting new game.

"Yes I'll just buy the Ferrari's chassis, I'll book it in for the rest to be fitted next week"

Eh? The vast majority of factory fit options are not available as dealer fit so I dont think this is relevant. Accessories yes, options no.

 

[Nasher]

Eh? The vast majority of factory fit options are not available as dealer fit so I dont think this is relevant. Accessories yes, options no.

That can easily be changed. You can fit anything as long as you can get hold of the parts.

 

[Orionaut]

That can easily be changed. You can fit anything as long as you can get hold of the parts.

Indeed, manufacturers can respond to this sort of thing very quickly.

Remember how quickly manufacturers came up with 1799CC engines when the government changed the tax bands?

(Cannot remember the exact date, but basically the standard engine sizes went from 1.6 to 2.0, government introduced a tax break at 1.8 and what do you know....)

 

[Nasher]

And we still have engines 1 or 2 CC smaller than they should be. Because in some countries it's still like that

 

[[TW]Fox]

That can easily be changed. You can fit anything as long as you can get hold of the parts.

The cost of paying for people to fit an entirely different nav system or adaptive lights or whatever is probably more than the extra taxes!

 

[SDK^]

My view is the £40k threshold is too low - These days £40k is entry level exec and with the German brands being tight on spec you can very easily go above £40k.

For example, adding the split fold rear seat option (£360) to some 5 Series saloons (just under £40k) means you’ll be paying an extra £1,690 in tax over 5 years for an option which has been standard on the most basic of cars for the last 25+ years.

 

[Peerzy]

That can easily be changed. You can fit anything as long as you can get hold of the parts.

I think the key thing here is the basic radio is built into the price of the car and if you spec the satnav with screen and it's a £500 factory fit option it would be way more as a dealer fit option. Speccing the satnav at factory means they don't need to include the parts for the standard radio so they save money.

If we did things this way you'd actually end up paying for the standard radio and satnav so costs would rise.

 

[lordrobs]

They will have picked £40k based upon what they think the public will swallow with minimum uproar, not whether you can still spec certain 5 series' with split fold rear seats. Whenever something like this is introduced there will be current examples where making such a specification selection becomes pointless but as has been pointed out the manufacturers will adapt to that very quickly.

I can see lots of "Buisness spec" and "Technology pack" models being introduced with key options bundled in to get consumers below the threshold. What I wonder is if there will then be a price void between £40 > £50k? Your not going to want to spend £1.6k on tax because a car is £2k over the threshold whereas if it is a £50k car you are way over the threshold so it would probably be slightly easier to stomach.

 

[Nasher]

I think the key thing here is the basic radio is built into the price of the car and if you spec the satnav with screen and it's a £500 factory fit option it would be way more as a dealer fit option. Speccing the satnav at factory means they don't need to include the parts for the standard radio so they save money.

If we did things this way you'd actually end up paying for the standard radio and satnav so costs would rise.

The cost of tax would definitely outweigh the cost of getting a dealer to swap the head unit out by quite a lot, it's not a hard job. I've done it on my own cars.

If I was a manufacturer I'd actually look at making cars with no radio fitted at all, just the connectors. Then let the customer pick the radio at dealer level. Just slot/screw it in place, done. A 40k car becomes a 39k one for tax purposes.

You could do that with pretty much any interior equipment quite easily. Obviously the manufacturers would need to adapt to make it quicker and easier to fit some things to save the dealers time. But they could factor that in to new designs very quickly.

 

[Rilot]

The cost of tax would definitely outweigh the cost of getting a dealer to swap the head unit out by quite a lot, it's not a hard job. I've done it on my own cars.

Only a very, very small number of modern cars have easily replaced headunits these days. Have a look at any BMW, Mini, Audi, VW, Jaguar, etc etc.
Eveything is connected by LAN-like interfaces so that all the displays work. In many cases the difference between nav-equipped cars and those without is a completely different dash top section.

In fact, I can't think of a single car that's on the market today that has a normal DIN-sized headunit.

 

[Nasher]

But as I said, manufacturers would simply change the design to exploit the new loophole

Like they did when tax was based on engine size. Then again with emissions (though, they did cheat with that one!).

 

[Rilot]

They aren't going to change the entire interior design just to get around a tax system in the UK.