The new AA VED band sees a £30 reduction in the charge, starting from May 2002, and is for cars emitting carbon dioxide below 120 g/km, which were first registered from March 2001.
Alan Pulham, franchised dealers director at the Retail Motor Industry Federation, said the freeze was 'a blessing for motorists.'
There are, however, very few cars that qualify for the new AA band. The winners are models such as the Ford Fiesta 1.4 TDCi (114g/km), Peugeot 206 2.0 HDi 90 ECO (120 g/km CO2), 206 1.4 HDi 70 (113g/km), Vauxhall Astra ECO4 LS 1.7 DTi (119g/km), Renault Clio 1.5 dCi 65bhp (115g/km), the Honda Insight (80g/km) and Toyota Prius (114g/km).
The move signals a further step in the incentivisation of low emission cars, but according to Al Clarke, head of communications at the Society of Motor Manufacturers and Traders, a small one.
He said: 'The more important issue for fleets are wholelife costs like fuel economy, residuals, and emissions, not the VED.
'It's a gesture rather than a serious incentive. It's difficult to see how, as it's such a confusing system, it will make a difference. A fleet car is so many years down the road for the private user that by the time they come to buy it, is £30 a year going to make a difference?'
Ramesh Notra, senior editor at CAP agreed that the VED rate change would have little effect on overall running costs, and was too small to improve residuals of the cars that qualify. New VED rates over 12 months
CO2 emissions (g/km) – diesel - petrol - alternative fuel
Band AA: (up to 120) £80 £70 £60
Band A: (120-150) £110 £100 £90
Band B: 151-165 £130 £120 £110
Band C: 166-185 £150 £140 £130
Band D: over 185 £160 £155 £150.