What does the Budget mean for motorists?

Last month’s Budget announcement contained a bit of cheer for Britain’s motorists – the planned 1.89p per litre rise in fuel duty, which was due to take effect in September, has been scrapped. It’s the longest fuel duty freeze in over 20 years, and in spite of steep rises in both petrol and diesel prices at the pumps, they remain below the record highs seen in March 2012.

According to the latest AA fuel price report, the cost of both diesel and petrol has increased since January, although diesel prices have been coming down again recently: falling from a year high of 146.46p per litre on March 4th 143.57p on Easter Monday. The motoring organisation also blasted retailers for failing to pass on a dip in wholesale fuel costs.

President Edmund King said: “Unlike the US, drivers in the UK and Europe have been left high and dry by the lack of fuel price transparency. This has denied them the ability to spot short-term pump price spikes and prepare their budgets and planning for the hit. It has also allowed retailers to decide when and where savings for this essential part of family spending are passed on.”

This wasn’t the only point of interest for motorists in the Budget: from April 1st, vehicle excise duty (VED) rates were increased in line with RPI apart from for heavy goods vehicles, which will be frozen for 2013/14. Perhaps more significantly, the government announced that from April 6th 2015, two new company car tax bands will be introduced, with cars emitting 0-50g/km of CO2 costing considerably less in tax than those that emit 51-75g/km and above.

This change will likely get companies of all sizes thinking about their car buying policy, potentially leading more to switch to more fuel-efficient and eco-friendly diesel cars. Their focus may well fall on manufacturers whose cars have been ranking well in the efficiency stakes: for instance, Ford’s ECOnetic diesel-powered models, which are sold in Europe. The Fors Fiesta 1.6 TDCi 95 ECOnetic was recently named one of What Car? magazine’s top five “True MPG” performers, for which it tested cars in real-world motoring conditions rather than the laboratory conditions often employed by manufacturers and government tests.

These cars offers an alternative to hybrid vehicles, and the 2012 Ford Focus ECOnetic has been tipped to achieve up to 80 miles per gallon while emitting less than 95g/km of CO2, putting it in the lowest VED bands in the UK. The overall tax savings, combined with good mileage should make cars like this attractive to cost-conscious companies when the policy comes into force in 2013, prompting them to start browsing the likes of Evans Halshaw’s Ford range when replacing their fleet.