Small diesel vehicles hampered by RUC

Media Release 13 January 2012

Small diesel vehicles hampered by RUC

Highly fuel efficient diesel powered passenger vehicles continue to be more popular with motorists, despite the disincentive of the current Road User Charges system (RUC) says the Motor Trade Association (MTA).

MTA spokesperson, Ian Stronach says, “Even though the current system does little to promote what is a very efficient form of technology, we are concerned that Government may be considering a move to a single rate of RUC as part of its Road User Charges Bill, and this would only make diesels even less attractive than they currently are.”

A review of 2011’s new passenger vehicle sales indicates that the average monthly share for diesel powered passenger vehicles grew to 17 percent.

While up significantly on the 10.5 percent recorded just five years earlier, New Zealand’s uptake of diesel powered passenger vehicles continues to remain low. In the EU, sales of diesel powered cars accounts for around half of all new vehicles, with penetration reaching 70 percent in some countries.

“Diesel powered passenger vehicles provide proven advantages in terms of fuel efficiency, economy rates and their overall emissions profile, yet New Zealand motorists are being denied true choice when it comes to diesel powered passenger vehicles because of the way RUC charges are applied. A system with a graduated charging scale would be much more appropriate,” says Stronach.

In New Zealand, a ‘straight line’ approach is applied, with all diesel powered passenger vehicles effectively paying the same rate of $45 per 1,000km. This means that a small 1.6 litre diesel powered vehicle is paying RUC at the same rate as a large 3 litre SUV, one that possibly consumes twice as much fuel and is double the weight.

Petrol powered passenger vehicles benefit from the application of an excise tax, that in part covers roading costs via a simpler and more cost effective ‘pay at the pump’ approach. Excise tax is built in to the price of petrol and as a result more accurately recognises the overall fuel efficiency of vehicles. Small engine vehicles generally use less fuel and thus pay less excise tax. In the case of diesel powered passenger vehicles however, the straight line approach fails to take into account overall fuel efficiency, and thus penalises more economical diesel powered passenger vehicles.

MTA says “Why doesn’t Government provide motorists with a simpler, and ultimately fairer and more efficient system like they do for petrol powered vehicles? That way, by applying an excise tax at the pump, buyers would at least have a true choice between petrol and diesel vehicles.”

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