Italy’s new car tax system to use NEDC figures until 2021

31 January 2019

Italy’s new emissions-based tax structure will still use NEDC CO2 figures instead of the new WLTP values. The new system is due to come into force on 1 March and will only change to WLTP figures from 1 January 2021.

Statements issued by the Motorizzazione Civile (the ministry of transport) confirm that ′until December 31, 2020, the CO2 value will be reported in the second box of the registration certificate and will be that of the NEDC test cycle whereas for WLTP-homologated vehicles, the correlated CO2 value will be reported, additionally, in the descriptive lines on page 3 of the registration document.’ However, Italian automotive publication Quattroruote has confirmed that it will still be possible to register cars using NEDC values until 28 February 2021.

The new tax system introduces a ′bonus-malus’ (incentives-penalty) scheme based on NEDC (or NEDC-correlated) values that is similar to that in effect in France. The incentive is also increased if a car that only conforms to emissions standard Euro 4 or below is traded in as part of the transaction.

Penalties and incentives in effect on new car registrations from 1 March 2019

Quattroruote has published a comprehensive list of all the model variants that have over 160g/km CO2 that will be subject to tax penalties and a list of cars that emit 70g/km CO2 or less that are eligible for the incentives. .

Numerous FCA models will be subject to the penalties but there is currently not a single FCA offering – even from the FIAT brand – that is eligible for the incentives.

Given this, we expect a high volume registrations of new cars with more than 160 g CO2/km in the first two months of 2019. The boom in new cars that will then go on sale with 0km will create oversupply in the used car market. One of our key predictions for 2019 is a weakening of residual values in Italy as these 0km cars will be priced low to be sold on quickly.

Stefano Ferruzzi, Country Manager for Autovista in Italy, reiterates that ′this will further penalise the used car market, already impacted by the enormous stock of 0km used cars available.’ Ferruzzi added that ′I expect a further penalisation of diesel cars as almost 70% of the 0km stock is diesel.’

The original proposal to revise the tax system would simply have penalised ICE cars and was not emissions-based. However, this led to disagreement between the governing parties and, further to intervention by FCA, a new tax regime proposal based on CO2 emissions gained final approval on 30 December, the final working day of 2018.

Fiat Chrysler Automobiles (FCA) is reviewing its investment plan for Italy and Automobilwoche reported on 25 January that Pietro Gorlier, head of FCA in Europe, even wrote a letter to the regional government threatening the withdrawal of its €5 billion investment programme.

Autovista considers the impact of the new tax structure in Italy on demand and residual values here.