IT WILL be less punitive to own a diesel-powered passenger car from July, a development that should be a boon for European marques such as Mercedes, BMW, Audi and Volkswagen.

The Government has announced that it will reduce the supplementary tax for diesel cars, reversing a 30-year stance that has made these vehicles much costlier to own than petrol models.

The National Environment Agency (NEA) had maintained for years that diesel cars - even newer and cleaner models - produced more particulate matter, a fine soot that could cause serious respiratory ailments.

From July 1, however, diesel cars that meet the stringent Euro IV emission standard will attract a supplementary tax of $1.25 per cubic cm of its engine displacement.

For bigger cars, this works out to half or less of the previous amounts. A 1,600cc model will attract a supplementary tax of $2,000, down from $2,976 now; a 2,000cc, $2,500 from $4,856; and a 2,500cc, $3,126 from $7,200.

The new tax is subject to a minimum of $1,250 per year.

"This is certainly good news for us," said Audi Asia- Pacific spokesman Pauline Cheah. "Audi is a market leader in this segment. In a lot of markets, our turbodiesel cars sell very well."

Mr Say Kwee Neng, managing director of multi-brand agent Vantage Automotive, said: "This is very interesting for us. We have a 2.7 litre diesel Land Rover and a 2.2 litre Peugeot, among others."

Mr Say said he would study the new scheme carefully before deciding which models to bring in.

Ms Belinda Bay, a spokesman for BMW agent Performance Motors, said the firm would "certainly consider" offering diesel Beemers.

Mr Karsono Kwee, who owns multi-brand Trans-Eurokars group, said: "We will probably start with diesel models of the Saab 9-3, Opel Astra and Opel Vectra."

Diesel advocates have long been lobbying for diesel cars to be made more assessable. German car parts maker Bosch, for instance, argues that motorists in Singapore will save more than $600 million worth of fuel a year if all cars here are diesel-driven.

Singapore would also cut emissions of carbon dioxide, which causes climate change, by about 300,000 tonnes a year.
The NEA is not moved, saying even Euro IV diesel cars emit more soot and nitrogen oxide - another pollutant - than their petrol equivalents.

There is only one privately-registered diesel car in the Republic - a Mercedes owned by taxi company CityCab.
Will consumers bite now?

Businessman Leslie Chia, 43, said: "I use a turbodiesel when I am in Germany. If it can be brought in at a competitive price, I will consider."

Watch importer Leslie Chang, 43, said: "Last time, when you drive a diesel car, you had to sacrifice performance. But no longer."

However, he added that it would make economic sense "only if you clock more than 25,000km a year".

Petrol costs around $2 a litre before discount, versus $1.50 for diesel. Diesel typically offers 30 per cent better mileage than petrol.

A Daimler manager said diesel cars would be more attractive to fleet management companies than individuals, unless the latter spends $600 or more on fuel a month.

This story was first published in The Straits Times on Feb 16, 2008.