Since I'm the sole European member of the Motor1 team, it's my responsibility to remind my American colleagues how good they have it. New cars are significantly cheaper in the US, and not just because my co-workers don't pay value-added tax. VAT can reach up to 27 percent of the car's value.
High taxes on vehicles that spit out large amounts of emissions lead to crazy situations such as paying six figures for a Toyota GR Yaris or a 1.5-liter Mercedes E-Class. An equally bizarre circumstance discovered by a Redditor can be found in Ireland. The BMW M3 sold there costs €151,675 or about $163,000 at current exchange rates. Unveiled last week, the new M5 is significantly cheaper than its smaller brother, at €137,055 ($147,400).
That's despite the fact it's a far larger and heavier car with a beefy V-8 engine under the hood. How can this be? It all comes down to the Vehicle Registration Tax (VRT), which is based on CO2 emissions.
Thanks to its plug-in hybrid setup, the latest M5 has CO2 emissions of 37 g/km in the combined WLTP cycle. That puts it in the lowest tax bracket (up to 50 g/km) for which the VRT is only seven percent of the car's value. The M3 emits 228 g/km because of its non-electrified six-cylinder engine. Therefore, it falls into the highest tax bracket (more than 190 g/km), so the tax is a whopping 41 percent of the car's value.
The $15,600 difference between the two is downright odd but it goes to show why automakers are keen on launching more plug-in hybrids. I'm looking at you, four-cylinder AMG C63. In the eye of the regulator, PHEVs are less harmful for the environment. Of course, that's assuming the owner frequently recharges the car's battery pack to take advantage of the claimed electric range. In the M5's case, BMW says it can do up to 43 miles in the WLTP cycle without sipping any gasoline.
Emissions aside, the difference in the quoted fuel consumption numbers is preposterous. The M5 theoretically needs only 1.7 liters / 100 kilometers (62 miles) per the WLTP cycle, so doing the math, it returns 138.3 miles per gallon. That's despite the fact it weighs 2,435 kilograms (5,368 pounds) in European specification. The M3 needs 10.1 liters / 100 kilometers, or 23.3 mpg.
We looked at the technical specification sheets and found out the M3 is 655 kg (1,444 lbs) lighter than the M5 and yet it's listed as having far poorer fuel economy. It's worth noting BMW only sells the M3 in Ireland as a hotter Competition model with xDrive. The rear-wheel-drive versions available in other markets are lighter. In addition, the tail-happy M3s are cheaper than the all-paw model.
If I were living in Ireland and had that kind of money to splurge on a car, I'd honestly pay the premium and get the M3 instead. Better yet, the M3 Touring would be my choice.
