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MTA welcomes clean car conversation

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MEDIA RELEASE 19 July 2019

The Motor Trade Association (MTA) has welcomed the Government’s release of two proposals designed to encourage the uptake of low-emission vehicles in New Zealand, describing it as the start of a very important conversation.

“The MTA has been looking to the government for clarity on low-emission vehicles for some time now,” said MTA Chief Executive Craig Pomare. “The market responds to demand and we have said to the Minister that consumers need a nudge if they are to consider low emission options, such as EVs and hybrids.

“It’s pleasing to see that message has been taken on board, and the release of these proposals designed to influence demand and supply of vehicles marks the start of a very important conversation with the industry and New Zealand public.”

Mr Pomare said the ‘Clean Car Discount Programme’ (or feebate scheme) should go some way towards educating and supporting consumer decisions about low emission vehicles.

However, he said the MTA had concerns with the ‘Clean Car Standard’ or supply-side proposal from the government.

“We’re not convinced that intervening on both the demand and supply sides is necessary or wise in such a small market.

“There are also inequalities within the scheme as it applies to new and used importers, and there may be several hurdles for NZTA in implementing the Clean Car Standard.”

Among the issues that the MTA has identified are:

  • the scheme treats new and used importers inequitably with respect to trading credits gained on low emission imports;
  • the annual reporting and reconciliation method will be open to abuse and fraud by bad faith participants in the industry;
  • NZTA will need more investment in its database systems to enable things like recording the supplying trader at first registration in the Motor Vehicle Register.

Mr Pomare said the MTA was looking ahead to the possible consequence on the industry of these proposals, especially when combined with the supply-side effect of ESC on small passenger vehicles coming in next year.

“We’re concerned about the potential for market distortion, which will simply shift consumer demand within a category to different makes or models.

“For example, the Ford Ranger is the most popular SUV at present. If Ford cannot offset the emissions profile of the Ranger through other models in its catalogue, it may limit the number of Rangers it sells or brings in. Assuming market demand for Utes remains steady, customers who miss out on a Ranger will most likely then shift to a competitor’s model, assuming capacity still exists. If that is the case the policy might simply ‘shift the deck chairs’.”

The MTA predicts a much more active ‘import broker market’ where an increasing number of consumers (who are not subject to these emission restrictions) enter into a direct import arrangement. Such a market would mean that the Government’s environmental goals are circumvented, and the consumer (as a direct importer) loses the protection they would have under the Consumer Guarantees Act if they bought from a registered motor vehicle trader.

MTA Advocacy and Strategy Manager Greig Epps said this could also spell the end of specialist vehicle traders because a single interest trader will not have a diverse enough import profile to meet average emission targets.

“The government risks not just setting “clean” car standards, but actually preventing businesses from determining their own strategy and business model”, Mr Epps said.

The proposals do not affect existing vehicles, although there are other mechanisms available to the Government, such as in-service emissions testing, that can educate the public on the emissions profile of existing vehicles. These proposals might also be affected if the Government were to introduce a ban on the import of 1 and 2 star safety rated vehicles, as many of those will be small, fuel efficient vehicles.

The MTA is seeking comments from its dealer members and will be submitting to the Government on these proposals.