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France Cuts High-Mileage Car Bonuses, Hikes Gas-Hog Levies

Executive Summary

The government says adjustments to the incentives program will not affect its support of electric- and hybrid-vehicle purchases.

PARIS – France will reduce its consumer incentives for buying fuel-efficient cars but increase the penalties for purchasing gas hogs in 2012.

The changes, announced at the recent Equip Auto show for suppliers here, are meant to reduce the deficit in the country’s bonus-malus program while continuing to encourage purchases of high-mileage cars.

Penalties on gas-guzzlers haven’t raised enough revenue to completely cover the bonus payouts. However, the system rapidly has reduced carbon-dioxide emissions by new cars.

"The adjustments we have decided on will ensure a balanced budget” for the incentives program, says Eric Besson, minister of industry. “We will continue to support the greening of the fleet in France and the spread of electric and hybrid vehicles.”

Since the program launched in 2008, average CO2 emissions by new cars in France have dropped from 149 g/km to 128 g/km, Besson says. The CCFA auto makers’ association says only Portugal, Denmark and Ireland had lower averages in the year’s first half.

For a gasoline engine, 128 g/km corresponds to 44 mpg (5.5 L/100 km), while 149 g/km is 37 mpg (6.4L/100 km).

The bonus-malus system amounts to indirect support for the two French auto makers that dominate the country’s small-car market. Through September, the B-segment Renault Clio was France’s best-selling car, followed by the Peugeot 206+/207. The only non-French car in the top-10 was No.9 Volkswagen Polo; the only cars not in the A-, B- or C-segment were the Peugeot 3008 cross/utility vehicle (No.8) and Dacia Duster CUV (No.10).

The A and B segments comprise 53% of the French market, compared with 41% in the rest of Western Europe. The C-segment makes up 30% in France, 29% elsewhere.

Unchanged is substantial government support for the purchase of electric vehicles and plug-in hybrids.

Buyers of vehicles emitting less than 50 g/km, a standard met only by EVs, will get a €5,000 ($6,940) bonus starting next year. Cars emitting 50-60 g/km, including the forthcoming Toyota Prius and the Peugeot 3008 PHEVs, qualify for €3,500 ($4,860). Vehicles in the 60-90 g/km range fetch a €400 ($555) bonus, and those emitting 90-105 g/km get €100 ($139).

Depending on the engine, cars including the Renault Clio, Peugeot 207, Citroen C3, Opel Corsa, VW Polo and Ford Fiesta qualify for bonuses.

Currently, cars in the 61-90 g/km range get an €800 ($1,110) bonus; the payout for those emitting 91-100 g/km is €400 ($555). Starting in January, cars in the 105-140 g/km range will be in neutral territory, getting nothing and giving nothing.

From 141-150 g/km, the malus is €200 ($278); at 151-155 g/km it is €500 ($694). The malus tax rises until it reaches €3,500 ($4,860) for cars such as the Porsche Cayenne or Infiniti EX37 that emit more than 231 g/km.

For those exceeding 190 g/km, the penalty will have to be paid annually, not just once. This year, the top malus for vehicles exceeding 240 g/km is €2,600 (3,610), paid once.

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