KGM boss’s message to Rachel Reeves: Stop murdering the motor trade

The UK boss of KGM (formerly Ssangyong) has pleaded with chancellor of the exchequer Rachel Reeves to “stop murdering the motor trade”, after increases to the first year road licence for combustion cars.

Changes that come into effect on April 1 this year will see vehicle excise duty (VED, informally often referred to as “road tax”), increase across the board, with cars emitting over 75g/km of CO2 subject to a doubling of the rate in the first year. That will mean cars emitting between 131g/km and 150g/km, such as the 1.6-litre mild-hybrid Kia Sportage SUV, will see costs rise from £270 to £540.

For KGM, the situation is even more troubling. Its new Actyon model, which is considered a rival for the Sportage, has a less efficient 1.5-litre turbocharged engine that emits 194g/km. Today, that will cost buyers £1,650 in VED for the first year, but from April that rises to £3,300, before falling to the new standard rate of £195 from the second year after registration.

In part as a result of these costs to its customers, KGM has low expectations for sales of the Actyon in the UK. The Korean firm forecasts fewer than 500 of the model will find buyers in 2025, though based on the quality of the vehicle it is “perfectly capable of doing 2,000 and 3,000 units on its own,” according to UK managing director Kevin Griffin.

KGM is aiming to limit sales, anyway, as a result of the government’s zero emission vehicle mandate, which came into effect last year and required all manufacturers who sell more than 2,500 cars each year, and/or 2,500 commercial vehicles, to ensure that 22 per cent of them were fully electric. In 2025, the zev mandate increases to 28 per cent, rising to 80 per cent in 2030. 

For that reason, KGM will ensure that it sells no more than 2,499 cars in total over the next two years, until it can introduce new electric models. At present, its sole EV is the Torres EVX, and the company believes it will only be able to shift 145 of those this year, meaning it will fail to make up anywhere near 28 per cent of the company’s total UK sales.

“We only have one electric vehicle, so if we go above the 2,500 we actually need to sell 28 per cent of that one car [in 2025],” confirmed Griffin. “We need more electric vehicles to be able to help that out, which we get next year, not this year. And that will then help us break through the 2,500 units if we want to.”

For now though, the zev mandate is holding the company back, Griffin claims. “For a company of our size, if we get that wrong, then the fine last year would have been £12 million.”

Companies that don’t meet the target can buy credits from rival carmakers that exceed the mandate target, though that would still mean KGM incurring significant costs.

“The credits are hugely expensive,” said Griffin. “Because we’d buying a credit [for each car sold beyond the quota] for £12,000. All you’re doing is throwing money away. [In the UK] we’re an importer of vehicles, we’re not a manufacturer of vehicles. So our margins within the cars are not 30 per cent, 40 per cent, 50 per cent. They’re not. So we can’t afford to buy credits at £12,000; we’re not going to make that up.”

All of which means KGM is unable to grow to its full potential, much to Griffin’s chagrin. He has a clear message to Reeves: 

“It would be: stop murdering the motor trade. Because that’s what you’re doing with your increase in first year road fund license. And the push towards electrification where the country is not ready to take it on board. Stop it and start supporting [the industry]. And if you support them, you’ll actually find that they’ll support you.”

Related articles

• If you were interested in this story about KGM's UK boss telling Rachel Reeves to stop murdering the motor trade, you might be interested in more details on the zev mandate
• KGM's new Actyon might not be efficient, Will Dron says in his review, but it's a definite improvement on what has come before
• Check out our extended test of the 2021 SsangYong Rexton 2.2 Ultimate, a car that KGM killed off but is now bringing back due to popular(ish) demand

Latest articles

• 
  KGM boss’s message to Rachel Reeves: Stop murdering the motor trade
• 
  Porsche 911 Carrera T Cabriolet 2025 review: Not for the diehards, perhaps, but everyone else will adore it
• 
  Chancellor announces £55m for kerbside EV charging
• 
  Renault revives record-breaking spirit of 1920s with electric Z41, aims for 1000km on single charge at 100kph
• 
  Porsche 911 GT3 2025 review: Bittersweet moment as brilliant performance model draws line under legendary GT3 lineage
• 
  BMW M3 CS now available as an estate with 542bhp, all-wheel drive and all the carbon fibre
• 
  Updated BMW iX goes 426 miles per charge, gets 650bhp … but the design still divides
• 
  Six in ten drivers don’t fully understand insurance excesses
• 
  KGM Actyon 2025 review: Korean brand rises from Ssangyong’s ashes with surprisingly accomplished Sportage rival