Vehicle data expert Cartell reports that large-engine vehicles (those in excess of 2,000cc ) are in decline.
There has been a 72 per cent decrease in the number of two-litre vehicles registered in 2012 compared with 2007.
Values have fallen such that the tax on 10-year-old large-engined vehicles can be as high as 40 per cent of their value. Even the tax on six-year-old vehicles can represent anything from 10 to 15 per cent of their value. Compare this to a smaller vehicle - a Toyota Yaris registered in 2000 has a market value of approximately €2,300 and annual taxation of €199 – or 8.7 per cent of its value.
The rapid demise of large-engine vehicles can be attributed to a number of factors:
• These vehicles are perceived to have a greater adverse impact on the environment and this is consequently penalised by Government through its motor taxation regime.
• Significantly higher motor tax on large-engine vehicles means residual values of those vehicles are falling faster as recession-hit householders aim to keep annual household costs down.
• Large-engine vehicles are far less fuel efficient – a factor seen by many buyers as a liability to ownership.
• The power to litre ratio has increased making smaller engines as powerful as older large engines.
The taxation system penalises larger engines: an owner of a 3.0 litre engine which is 10 years old will pay tax in the region of 40 per cent of the value of the vehicle in year 10 of ownership. The owner of a 2.0 litre engine will pay tax at around 25 per cent of the value of the vehicle in year 10.
Generally speaking vehicles with larger engines are seen as environmentally unfriendly and consequently have found less favour with a more environmentally conscious buying public. This emerging trend, and the decline in large-engine vehicles generally, is particularly evident since the introduction of the CO2 based regime in 2008 when smaller vehicles, consequently producing less CO2, were better placed to benefit from tax incentives for environmentally friendly vehicles.