Impact on energy consumption from tax reductions on specific types of passenger cars

This project assess the impact on energy consumption from reduced purchase tax on two specific types of passenger cars which for different reasons have had a reduced purchase tax compared to regular passenger cars: 1) the 3 litre cars (100 km on 3 litre of diesel) VW Lupo 3L and Audi 1,2 TDi and the Smart Fortwo 0,8 CDi. 2) MPVs (Multi Purpose Vehicles) and SUVs (Sport Utility Vehicles) converted into vans with two or three seats and used as private passenger cars. The car ownership in Denmark is quite low compared to other European countries. The main reason is the high purchase tax on cars. The goal of this project is to estimate the changes of demands for transportation derived from the reduced purchase taxes as well as to quantify the effects in terms of energy. The results will provide input for future considerations on changes of taxes on passenger cars. The study shows that a reduction in purchase tax clearly affects the choices of type and model of vehicle making the 3 litre cars, the MPVs and the SUVs as vans much more attractive than regular passenger cars. In many cases these vehicles are bought as an additional car or as a new car in families that previously did not have a car. On the other hand most of the new car owners express that they would buy a car under any circumstances. In addition, the results show that the cars with reduced purchase tax are used more compared to the previous cars they have replaced. The highest increase in the driven distance per year is measured for owners of 3 litre cars. This is partly due to the high fuel efficiency. Nevertheless, the increased use is more than complemented by the excellent fuel efficiency of the 3 litre cars. The MPVs and SUVs as vans are also used a bit more than the vehicles they have replaced. However, these changes are more seen as an illustration of the general increase in car driving. While the owners of MPVs show only a slight increase in their energy consumption for transport, the owners of SUVs experience a more remarkable increase in their fuel consumption compared to the consumption in the cars they have replaced. The combination of longer distance driven annd lower fuel efficiency of the SUVs means a higher overall energy consumption for these cars