Ute and 4WD prices could rise under 2025 Australian new-car emissions targets – executive

Prices of high-polluting new ute and four-wheel drives could be inflated starting next year to offset fines – or slow sales to avoid penalties entirely – under new-car emissions targets due in Australia next year, a top executive has warned.

Mitsubishi Australia CEO Shaun Westcott has warned car makers – such as the Japanese manufacturer – may be required to increase prices of 'dirtier' models in their line-ups to ensure the company continues to make a profit under the new rules.

While Mitsubishi is Australia's top-seller of fuel-efficient plug-in hybrid cars, its popular diesel Triton utes and Pajero Sport 4WDs place it at risk of missing the new targets – which are being finalised before coming into effect on 1 January 2025.

The rules – known as the New Vehicle Efficiency Standard – will mandate targets for how much CO2 (carbon dioxide) was produced on average by the vehicles sold by a car maker in a given year.

High-pollution vehicles can remain on sale, but to avoid hefty fines for the manufacturer, they must be offset by volumes of low-emissions and zero-emissions vehicles, to bring down the average.

The Mitsubishi executive has warned the Japanese car maker may not be able to sell enough low-emissions cars to cancel out its biggest polluters – so it may be required to inflate ute and 4WD prices to offset any fines.

"Mitsubishi does have a portfolio that includes plug-in hybrid models, ASX [compact SUVs] and smaller cars. And there is opportunity to offset within there. We have a portfolio of cars. We haven’t yet modelled where that falls out and what that means [for meeting the targets]," Mr Westcott told Drive.

"We are not a state-subsidised company. We are private industry, which has to survive by making a profit. Ultimately, the price of the car will have to cover that equation.

"And if the current equation doesn’t cover that [profit], then there may have to be an increase in prices of cars somewhere."

An increase in ute and 4WD prices could have the side effect of throttling demand – in turn lowering a car maker's average CO2 emissions and reducing the fines it is required to pay.

Under the Federal Government's preferred proposal for the emissions rules, car makers would also be able to purchase "credits" from other car makers who have met the targets, to offset fines.

Mitsubishi is one of three Top 10 selling car makers which does not build an electric vehicle for sale in Australia – or will not within the next six months – but Mr Westcott says the car maker intends to return to the electric-car market after axing the i-MiEV city car a decade ago.

“Every manufacturer is on a journey, we are on that same journey. We have the benefit of being part of an alliance, and through the alliance we have access to, at last count ... 35 [electric-car] platforms by the year 2030," said the Mitsubishi boss.

"So it’s a little bit of an unknown … where [the emissions rules] will fall out [for Mitsubishi Australia in terms of meeting the targets]."

The proposed New Vehicle Efficiency Standard was published by the Federal Government on 4 February 2024, with the automotive industry and the public given a one-month to submit a response before it is locked in, with or without changes.

The government's proposal lists three versions of the standards, with varying levels of strictness. Option B – described as "fast but flexible" – is its preferred option.

Mr Westcott stressed Mitsubishi is in support of a new-car emissions standard for Australia, but one that is "rational, reasonable, logical and achievable".