21 mar 19

Italy’s new CO2 tax (temporarily) pushes up sales

SUVs and luxury cars enjoyed double-digit growth in Italy in February – but only because stricter tax rules penalise such higher-polluting vehicles from 1 March, Autovista reports.

New-car registrations fell by 4.8% over the first two months of 2019 – not surprising, as the economy of Italy (pictured: Naples) is in recession. But the difference between both months is stark. New-car registrations in January were down 7.5% compared to the same month last year. But the figure for February was only down 2.5%. 

Sports cars
The improvement was due largely because consumers brought forward the purchase of higher-polluting vehicle categories – i.e. luxury and sports cars, and mid-size and larger SUVs. A new emissions-based tax regime would have made it more expensive for them to do so from March. 

Registrations of sports cars increased by more than 40% compared to February 2018, as did those in the category combining luxury cars, full-size and large SUVs. The category combining mid-size SUVs and large MPVs saw sales increase by almost 14%.

NEDC values
Italy’s new emissions-based tax system, approved by parliament only last December, is similar to France’s current system. It introduces a bonus-malus system based on NEDC values, rather than the newer WLTP norm, which will come into effect only from 2021.

The system imposes penalties on new vehicles according to the following scale:

  • €1100 (161-175 g C02/km)
  • €1600 (176-200 g C02/km)
  • €2000 (201-250 g C02/km)
  • €2500 (>250 g C02/km) 

According to Autovista’s calculations, around half of the volume of new cars sold in Italy last year emit more than 160 g/km and would therefore be subject to a penalty under the new system.

Trade-in incentive
Inversely, there are incentives for vehicles with CO2 emissions below certain limits, according to the following scale:

  • €4000 (<20 g C02/km)
  • €1500 (21-70 g C02/km)

The new rules also provide an incentive if a car with an emissions standard below Euro 5 is traded in: an extra €2000 for the lowest-emitting category, and an extra €1000 for the other one.

However, official figures show that the sale of battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) – to which these incentives apply – account for just 0.3% and 0.2% of new-car sales in 2018. 

Residual values
Autovista expects new-car registrations will continue to suffer under the new tax regime – predicting a drop in whole-year registrations from 5% to as much as 10% compared to 2018. 

The analysts also expect that residual values – and especially diesel RVs – will suffer as a consequence of the new rule, due to the flooding of the market with nearly-new high-emission vehicles.  


Authored by: Frank Jacobs