Car brands face $2.8 billion bill under new emissions regulations - peak body

One of the peak bodies in Australia’s automotive industry has claimed car brands could pay a total of $2.8 billion in penalties by 2029 if they can’t meet upcoming emissions regulations.

A study by Blueflag – published by the Motor Trades Association of Australia (MTAA) in its pre-Budget submission to the Federal Government – claims all brands combined will be hit with penalties totalling $2.8 billion, based on the targets of the New Vehicle Efficiency Standard (NVES).

However, that figure is based on carmakers not making “further adaptation of product offerings”, applying only to the current model lineups and announced plans of carmakers, not future vehicles which are yet to be publicly confirmed.

“These projections can, and should, continue to improve as car companies modernise their lineups,” the MTAA said in a media release for the Federal Budget submission.

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The MTAA pointed to Toyota announcing its passenger vehicle lineup going hybrid-only – albeit only for models with petrol engines available – and the upcoming plug-in hybrid version of Ford’s best-selling Ranger ute as examples of adaptation in the market.

While the NVES came into effect on January 1, 2025, carmakers won’t be penalised for exceeding CO2 targets until July 1, 2025.

All new passenger and light commercial vehicles sold with a mass of less than 4.5 tonnes are covered under the scheme.

If carmakers exceed an average carbon emissions target on the vehicles they sell each year, they will be penalised $100 per g/km of CO2 for every vehicle which exceeds the target.

For 2025, the mandate for passenger cars (Type 1) is 141g/km of CO2, with light commercial vehicles and heavy-duty SUVs (Type 2) set at 210g/km or less.

These CO2 caps will reduce every year until 2029, when they will be much lower at 58 and 110g/km respectively, forcing manufacturers to sell increasingly efficient vehicles.

Brands can also earn emissions ‘credits’ by beating their fleet-wide targets, which can then be used in a subsequent year to help meet tighter CO2 targets, or sold on to other brands to help them reach their emissions targets.

Unusually, the study finds GWM is “unlikely” to meet the Type 2 target for 2025 despite having a hybrid ute and off-roaders and, soon, a plug-in hybrid ute.

It says, however, that it’s “possible” Toyota will meet it despite having no hybrid, plug-in hybrid or electric off-roaders or light commercial vehicles, while Isuzu Ute and Mitsubishi are highly likely to despite also lacking such vehicles.

According to the the study, Hyundai is Australia’s only “leading brand” which it deems highly likely to meet the 2029 Type 2 commercial vehicle target. No brands are set to meet the Type 1 passenger vehicle target, the peak body claims.

Kia could meet the Type 2 target if it makes “reasonable changes”, with Toyota and MG falling under the same category for Type 1 vehicles.

However, based on the current forecast, the MTAA believes Ford, Hyundai, GWM, Kia, Nissan, Mazda and Mitsubishi are among the best-selling brands that’ll miss the Type 1 vehicle target.

Likewise, it’s given the same prediction for Type 2 vehicles from Ford, GWM, Isuzu Ute, Mazda, Mitsubishi, Nissan and Toyota.

In its pre-Budget submission, the MTAA called for greater protections for car dealers, based on the claimed increased costs of carmakers meeting the NVES requirements.

“How manufacturers will manage these additional costs remains uncertain. However, given the highly competitive nature of the market, passing the full cost onto consumers may not be a viable option for all manufacturers,” the MTAA said.

“Instead, strategies may include absorbing costs, trading credits with EV-only brands, adjusting product lineups, or re-evaluating dealership structures to maintain profitability.

“Regardless of how these fines are managed, reduced profit margins for manufacturers will inevitably trickle down to dealerships, making an already challenging business environment even more difficult.

“Dealerships, which operate on tight margins and depend on strong sales volumes, may face increased financial strain, potential consolidation, or even closures if profit pressures continue to rise. Given this increasingly challenging environment, dealers need greater protections than ever before.”

MORE: What the first federal emission standard means for Aussie car buyersMORE: Industry body data shows the carmakers set to miss emissions targetsMORE: All our coverage on the New Vehicle Efficiency Standard