We can balance NVES demands: Toyota

TOYOTA Australia says it is in a better position than most when it comes to balancing the demands of the New Vehicle Efficiency Standard (NVES).

With a considerable range of petrol-electric hybrid models countering the large volume of diesel-powered models it sells, the Japanese importer says it can avoid passing on penalties to its customers, at least for the next couple of years.

Speaking with GoAuto at a preview drive of the LandCruiser 300 Series Hybrid in Melbourne this week, Toyota Australia vice president of sales, marketing and franchise operations Sean Hanley said the importer’s hybrid vehicle focus will combine with future product to ensure it can balance its NVES requirements.

“The good news is that when you’re selling nearly half of your vehicles (as) hybrid right now, it is advantageous for Toyota,” he said.

“When you add the product portfolio, we have coming over the next two to three years – more BEVs and more plug-in hybrids – we can start to balance our penalty versus credit (scenario).

“We are still aiming to be self-sustainable on that (NVES) environment – and to be able to offer people the cars that they want.”

When asked specifically whether the volume of diesel-powered vehicles sold by Toyota – including the popular HiAce, HiLux, LandCruiser Prado, LandCruiser 70 Series, and others – could be countered by the number of hybridised passenger and SUV models it sold, Mr Hanley said it was inevitable that the cost of penalties would be passed on to customers as NVES restrictions tightened.

“In the short-term, between now and 2027, yes, they will. Beyond that it becomes very challenging for our commercial vehicles,” he admitted.

“Our first position is to try and be self-sustainable – to offset penalties with credits. We are not going to buy credits from other companies.

“But the reality is we may not be able to offset all of them (the volume of diesel-powered models sold). So, you can’t rule out price increases.

“But these will be minimal because it (the market) is simply too competitive, and I think we’re already starting to see that with a couple of manufacturers.”

Mr Hanley said that while Toyota Australia would monitor the situation closely, avoiding as far as possible an increase in its prices, the time may come where diesel-powered vehicles will wear an NVES penalty at the point of sale.

“I could not sit here in good conscience and say that won’t happen. But I don’t think it will be as dramatic as some might have thought,” he stated.

Under the NVES, vehicles are separated into two categories.

Type 1 vehicles include passenger cars and SUVs, while Type 2 vehicles include light commercial vehicles (utes and vans) as well as heavy off-road passenger vehicles (body-on-frame four-wheel drives) with a braked towing capacity of 3000kg or more.

The NVES sets CO2 exhaust emissions targets (see table below) for all new vehicles sold which importers must meet to avoid being penalised.

Importers may continue to sell high-emissions models but will be required to offset these with the sale of low-emissions vehicles including hybrid, plug-in hybrid, and electric models.

If an importer cannot ‘balance’ its high- and low-emissions vehicles, it will be fined by the federal government at an indexed rate of $100 per gram of CO2 per kilometre for each vehicle sold that it over the limit.

NVES target overview: