Figure 9
2.3 Increased VED differentials
While it is clear that raising annual VED costs
could have a major impact on purchasing decisions, surprisingly
little work has been undertaken to fully understand how car buyers
would react to it. Further, the research that does exist appears
to be somewhat contradictory. Two studies are briefly summarised
below.
MORI, 2003[21]
A study carried out by MORI for Department of
Transport (DfT) in 2003, investigated the effect that introducing
larger VED band differentials could have on new car sales (ie
increasing the price difference between bands). The MORI study
found that if VED differentials were increased by £50, £100,
or £150, then 33%, 47% and 55% of people would, respectively,
choose a different vehicle (ie a vehicle in a lower VED band)
in order to take advantage of the cost saving. The study found
that people claimed that they would react strongly to the first
£50 increase, and gradually less strongly as the rate increased
(see figure 10 and Appendix Table A1).
Energy Saving Trust has reservations over these
figures. The study ascribes the same reaction to VED to all buyers.
In practice, higher-income consumers who are looking at high-value,
expensive, high-carbon Executive cars are likely to react less
strongly to increased VED differentials than lower-income consumers
looking at cheaper, smaller and more efficient cars.
21 MORI, 2003. Assessing the Impact of Graduated Vehicle
Excise Duty-Quantitative Research. DfT 2003. Back
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