A recent study from the company reveals that the cost of taxing some cars that are just seven years old now adds up to a third of their total value. CAP says this problem stems from 2006, when changes to Vehicle Excise Duty bands were introduced to penalise higher CO2 vehicles.
Essentially, this means that cars registered since March 2006, with CO2 emissions between 226 and 225g/km now cost £475 to tax.
Meanwhile cars that emit over 255g/km cost £490 per year. As a result, higher CO2 vehicles now cost between 28 per cent and 34 per cent of their total value just to tax for the year.
CAP says the danger is that these vehicles could rapidly become worthless in the trade, regardless of whether or not they still have a serviceable life remaining, and will be scrapped unnecessarily.
To resolve this issue, CAP suggests that lowering VED rates for the top two CO2 brackets after vehicles have reached a certain age, would prevent a number of well-maintained vehicles being scrapped.
CAP’s car running costs expert, Mark Norman said: ‘We are now in the crazy situation where perfectly good cars have become uneconomical to own because the cost of taxing them could soon approach half their car’s value.
‘This means more and more cars will become unsalable and will have to be scrapped long before the end of their useful life.’
Norman added: ‘Scrapping serviceable cars for the sake of a tax disc makes a mockery of environmental taxes as owner already tend to limit their mileage because the cars are relatively uneconomical. Throw in the carbon footprint of building the cars that replace those that are scrapped and the environmental justification for taxing these cars off the road collapses.’