Aussie drivers set to see prices skyrocket due to new law: '$20,000 more expensive'
Car expert Paul Maric said the NVES could see car prices skyrocket for Aussies. (Source: Instagram/Getty) Australia has welcomed a new vehicle law that could see some of the most popular cars jump dramatically in price. The New Vehicle Efficiency Standard (NVES) kicked in on January 1 and the government hopes it will "incentivise" manufacturers to supply new cars that use less fuel per kilometre. Car companies will have a set CO2 target for passenger and light commercial vehicles they produce, which they have to meet or beat each year. But CarExpert.com.au founder Paul Maric told Yahoo Finance that it'll be the consumer who will likely be worse off. "The cost of that vehicle is now more expensive because the government's trying to push people into electric vehicles that simply can't do the same job," he said. Maric highlighted Toyota as a manufacturer that will likely be hit hard by the NVES. "It's going to be huge... They sell a huge volume of HiLuxes, Prados, and Land Cruisers," he said. "Toyota just launched the new Prado in Australia and even though the engine is a carryover from the previous generation Prado, they've now added what's called AdBlue, which is this additive that gets mixed into the exhaust and is designed to reduce the CO2 emissions. Do you have a story? Email stew.perrie@yahooinc.com "This is a car that didn't need to have that technically, but they've added it because it's a high-volume seller for Toyota and because they don't really sell many electric vehicles, it helps reduce their fleet averages. "That Prado is now some $15,000 to $20,000 more expensive than the previous generation. And while it is a new model, a lot of that will come down to the costs that Toyota will have put on it this year from the government." Maric said other manufacturers like Ford and Isuzu will likely be impacted by this update as well. "Some of them may take a margin hit, but I think that given that they've got shareholders and no one likes to lose money, I think they're just going to end up passing the cost of that onto consumers," he said. The Ford Ranger was the most popular car in Australia in 2023, followed by the HiLux in second place, and the Isuzu D-MAX came in third, meaning this new law could cause financial nightmares for many across the country who want to buy a new car. In March last year, Toyota said the NVES concept was a "positive step forward" for the industry but admitted the policy would be a big change for them. "Toyota and the industry face huge challenges that must be addressed before these significant reductions can be realised," Toyota Australia President and CEO Matthew Callachor said. "Our task now is to get on with the job of delivering diverse technologies that will enable our customers to choose vehicles with lower or zero carbon emissions that best suit their circumstances." Ford believes it will be able to navigate the NVES but didn't elaborate on how. “[With the introduction of NVES] we're actually catching up to what other markets are doing as well. So it's no different to what the United States has gone through, Europe has gone through, as well as New Zealand, for example," Mustang product and marketing manager Geroge Thomas told Drive. “So as long as we can build them, we'll find a way.” Isuzu added that price hikes won't be out of the question once the NVES kicks in. "The implementation of the NVES proposed by the Government presents timing, financial and engineering challenges for many vehicle brands, particularly those brands that provide Australians with utes and large-SUVs as part of their range, and ultimately risks negatively impacting Australian consumers," it said. While the new standards officially started on January 1, lawmakers won't start counting emissions until July 1 this year. The law will apply to all new passenger and light commercial cars supplied to Australia from the start of the year. "Suppliers can still sell any vehicle type they choose but they'll need to sell more fuel-efficient models to offset any less efficient models they sell," the government said. "If suppliers meet or beat their target, they'll receive credits. If they sell more polluting cars than their target, they will have two years to either trade credits with a different supplier, or generate credits themselves, before a penalty becomes payable." Cars like the Toyota HiLux could go up in price thanks to the government's new car emissions policy. (Source: Getty) · Thales Antonio via Getty Images Every manufacturer will have their own targets set from this year, and that will gradually be lowered over time. The government is fairly confident the NVES won't impact car prices in Australia. "There is no evidence to suggest that the Standard will increase vehicle prices," it said. "In jurisdictions that have had a standard in place for some time (around 50 years in the case of the US and Canada), real-world evidence has not shown an increase in price for consumers in the cost of cars." Instead, the new standards try to encourage manufacturers to import more fuel-efficient vehicles, whether they are petrol, diesel or electric and give customers more options. Maric pointed to the credit system embedded in the NVES as one way that Aussies could snatch a bargain. If a manufacturer receives a penalty from the government for being over their CO2 target, they can either pay up or buy credits from a car company that's below their target. That fine for not adhering to the target will be an index rate of $100 per gram per kilometre of CO2 each vehicle sold is over the limit. He said a company like Tesla, which will be in the negative because they make electric vehicles, could stand to benefit massively from the NVES. "Globally, Tesla makes a huge portion of its profit from selling credits in Europe and in other sort of developed countries, to other brands, and it'll be the same in Australia," he told Yahoo Finance. "So what you're going to find is that Tesla can then come in and drop the price of their cars by $5,000 or $10,000 because it's selling credits to brands like Toyota, who have had to increase the price of their cars." Get the latest Yahoo Finance news - follow us on Facebook, LinkedIn and Instagram.
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