With Vehicle Excise Duty fees now based on CO2 figures and company car tax also to be based on the same figures from April next year — low CO2 figures are essential for keeping both VED and company car tax bills down. Manufacturers also say that exhaust after-treatment, which may be needed to ensure Euro IV emissions levels are achieved, could increase list prices by around £200. The Government has said that when the emissions-based company car tax system is introduced, drivers of diesels which do not meet Euro IV will have to pay an extra 3% in benefit-in-kind taxation.
Euro IV standards cut emission limits by half when compared to Euro III, but there is no stipulation on reducing CO2 emissions. Instead Euro IV focuses on cutting carbon monoxide, nitrous oxides and hydrocarbons. One manufacturer insider told Fleet NewsNet that although emissions would be lower overall under Euro IV, CO2 emissions were likely to increase to a level which would mean company car tax bills were higher than with the 3% supplement. He added that the increase in list price from the after-treatment systems would also mean higher company car tax, and that manufacturers think fleets would be better off under the proposed system with Euro III compliant diesels plus the 3% supplement until a solution can be found.
The diesel Ford Mondeo is Euro IV compliant in mainland Europe, but has been de-tuned to meet Euro III criteria in the UK because of a reported 5% increase in CO2 emissions and fuel consumption. And the new 1.4-litre diesel engine unveiled this week by Ford and PSA Peugeot Citroen is also Euro IV compatible but will initially be only Euro III in the UK.
But other manufacturers say Euro IV can be achieved without harming fuel consumption or CO2. Volkswagen introduced a Euro IV version of the Lupo, which can achieve more than 90mpg and has the lowest CO2 emissions of any vehicle it has produced (81g/km). However the car is only available in left-hand drive. Volkswagen is lobbying its German headquarters to speed up the availability of Euro IV diesels for the UK market.