UK Motorcycle Industry Asks For Tax Holiday

by Robin Pilgrim, LawAndTax-News.com, London

11 March 2009

The UK motorcycle industry is asking the government to suspend vehicle excise duty (VED) and the first registration fee on all new mopeds, scooters and motorcycles for a minimum of one year to support the market and recognize the green advantages of motorcycling.

According to the industry, a tax holiday on new powered two-wheelers (PTWs) would cost only GBP13m (USD17m), but protect 15,000 jobs by providing an urgently needed boost to the UK’s motorcycle industry. Encouraging the sales of new PTWs would also help meet greener transport targets - all new PTWs having to comply with strict EU rules on CO2 and pollution emissions.

Support for the UK’s motorcycle industry is now urgently needed. While the market has shown great resilience to date, figures released by the Motor Cycle Industry Association (MCI) show that registrations dropped by 25% in February 2009 compared with the same month last year.

The UK motorcycle industry employs over 15,000 people and turns over more than GBP3bn (USD4bn) a year. Triumph is the largest, solely UK-owned, automotive manufacturer in the UK. Despite this, government support packages have been aimed at the car and commercial vehicle sectors, overlooking and in some cases excluding the motorcycle industry – a situation that must now change.

The industry believes that an excise duty holiday would also help the government to realize its environmental goals. Recent research into the CO2 outputs of new PTWs of all sizes has revealed that, with an average CO2 output of 110 grams per kilometre, motorcycling has already beaten the EU’s 2012 target for CO2 reductions from the automobile industry.

February is the fourth consecutive month in which new registrations have fallen compared with 12 months ago. While winter is traditionally a slow sales season, and the February market is affected by potential buyers waiting until March to get the latest registration number, the size of the market decline last month is a warning sign.

The number of mopeds registered in February 2009 fell to 900, a drop of 33% on February 2008. 3,205 new motorcycles were registered, 931 fewer than this period last year, and a fall of 22.5%. For the first time since the credit crunch began to bite, the fall in the motorcycle market is greater than the fall in the new car market (21.9% in February 2009).

Registrations of all styles and engine sizes have fallen, though naked, scooter and supersport styles have fallen less than the average.

The MCI’s Sheila Rainger commented:

“The motorcycle market has held up well in the recession, but cannot struggle on alone. Since November we have seen small but steady monthly declines, with a much steeper drop last month."

“A VED and first registration holiday would cost relatively little and really help to encourage customers into dealerships. A tax break on new sales will also encourage people onto brand new ‘Euro 3’ motorcycles which have even lower emissions and more fuel efficient engines than older models", she continued, adding:

“The environmental and congestion-busting benefits of motorcycling are unarguable and are worthy of support, as is an industry which employs so many people, predominantly in small and medium-sized businesses.”

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