France Plans to Rise Tax on High-Emission Vehicles image

France plans to increase the maximum levy on purchases of high emissions vehicles from 6,000 euro to 8,000 euro.

This strategy might bring the country 100 million euro in tax receipts in 2014, according to the Les Echos newspaper. This move is expected to include a reduction of subsidies for low-emission cars, according to the report. Back in 2008 former president Nicolas Sarkozy introduced the two-pronged system in an attempt to promote the sales of low-emission vehicles.

Auto sales in France during the July-August period dropped 2.5%, with Ford down 14%, Toyota 13%, Citroen 8%, Peugeot 7% and Renault 1%. Since the beginning of the year new vehicle sales in the region dropped 11% to 85,565 units, with Ford and Peugeot being the leaders of the decline.

“September and October will be critical,” CCFA spokesman Francois Roudier said. “August is always a thin month, but this year it’s particularly low.”

On another matter, analysts believe that by 2018 the UK will surpass France and become the second largest auto manufacturer in Europe. Last year the UK built 1.5 million vehicles, while France manufactured 1.9 million units. Volumes in France have started to drop due to slowing sales at PSA Peugeot Citroen and Renault.

“All the indications appear to be saying yes Britain will be second in a few years,” said Tim Abbott, managing director of German carmaker BMW’s UK operations.

Source: Reuters