The NVES is Australia’s New Vehicle Efficiency Standard which establishes targets for emissions on new cars for manufacturers to meet, with penalties applicable. This new Standard is seen as one of the biggest changes to Australia’s new vehicle market in decades. The Standard came into effect on January 1 this year and, understandably, buyers planning new car purchases may have concerns about how it will affect their purchase and their finance.
The effects are set to primarily change the range of EV or ‘clean’ vehicles which are available in the Australian market, while many petrol and diesel models may disappear where manufacturers face fines for not meeting the emissions target across their ranges.
The Standard aims to reduce vehicle emissions in Australia. The emissions are averaged across the range of each manufacturer so the greater number of low-emission models in the range, the better the prospect of the brand meeting target and avoiding a penalty. Where the target is not met, fines will be imposed on the manufacturer, not on the buyer.
The Standard is aimed at increasing EV sales and encouraging brands to bring more low-emission models into the local market. Buyers will then have more choices than currently available when it comes to buying a low-emission vehicle. Australia has been behind the global trend in this area and this Standard brings us in line and presents new car buyers with a way to save on their fuel costs.
But with fines applicable, the Standard is seen by some as potentially increasing the price of high emission models, some of which are Aussie favourites. There are reports that at least some manufacturers will have to pass on their increased costs imposed with the fines to buyers. It is expected that brands will axe some high emission models from their line-up in order to meet targets.
There is a lot for new car buyers to unpack with this change and we provide a basic explainer of some of the key aspects to clarify the situation for buyers. Be assured that car loans and motor vehicle finance products are not affected by this change and buyers are not fined for buying petrol and diesel models. But the Standard is set to have an effect on our choices of new cars and potentially on the price.
New Vehicle Efficiency Standard Overview
NVES applies to new vehicles that are sold in the local market and set CO2, ie emissions, targets. The targets differ for passenger and light commercial vehicles less than 4500kg GVM. Each model in the range of each brand is checked when the model is introduced and annually. The average for emissions of all models is calculated to establish if the manufacturer is meeting their target. In order to achieve their target, brands will need to include a larger number of low emissions compared with ‘dirty’ fuel vehicles. The targets and assessment process only applies to brand new models, not to the second-hand market and not to vehicles that are currently owned.
There are many aspects to the Standard and the Government has set up a website to explain the details and address questions for car owners and buyers.
Car Choices Under New Vehicle Efficiency Standard
When it comes to selecting a new car to purchase, buyers are likely to see changes in the range of models available, especially in low-emission options. Manufacturers have known about the introduction of the new Standard for some time, and we are seeing a number of new brands and models being released.
Buyers can expect to see more EVs with models not previously launched in Australia becoming available. Current ranges including the very popular utes such as the HiLux and Ranger will not be banned from sale. But brands will need to better balance their line-up with both low and higher emission options to avoid penalties. Some models may disappear from the market, so be prepared to be open-minded when it comes to choosing your next car. The wider selection can provide buyers with the opportunity to test drive brands and models not previously considered and to give more serious thought to going with an EV or hybrid.
The penalty system will be phased in and as fines are applied to manufacturers, buyers are likely to see increases in the prices of some models from some brands. Buyers are not fined, but brands will likely want to cover their increased costs with the fines with increased pricing. Upgrading sooner rather than waiting may be a smart move.
Pricing on EVs may become more competitive and more affordable models may become available than currently in the local market. Pricing has long been considered an obstacle of EV take-up in Australia. To help with selecting a vehicle where financing is required, use our Finance Calculator to compare models with different prices.
Finance Impacts of New Vehicle Efficiency Standard
This significant change to the new car market will not affect the personal car loan and business vehicle financing products available. The same features, tax benefits and interest rates will continue to apply. What may affect financing for some buyers is if the price of their vehicle of choice increases. This may increase the loan required and place even greater importance on achieving our highly competitive interest rates.
For competitive rates on personal and business car financing, contact Jade Finance.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.
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