A NEW car labelling system to give people information about vehicle running costs has been praised by the Retail Motor Inductry Federation (RMI).

A colour-coded CO2 label system is to be introduced in new car showrooms in the UK this summer to allow consumers to make informed choices about fuel economy when buying a vehicle.

It comes ahead of EU legislation amending the current EU Labelling Directive and is hoped to demonstrate the UK's commitment to combating climate change.

The label will tell people the estimated fuel cost, based on the annual mileage of 12,000 miles, and the cost of the 12-months of Vehicle Excise Duty.

Matthew Carrington, chief executive of the RMI, said: "The emissions figures on the existing label are not put into context and it doesn't get the message across that good fuel economy is good for your pocket as well as the environment.

"However, the new enhanced labelling system can be understood at a glance. Consumers will now be able to make an informed choice about running costs when choosing a new vehicle."

The new label is the result of an agreement between the Low Carbon Vehicle Partnership (LowCVP) Passenger Car Working Group, and vehicle manufacturers. Dealers will begin to roll out the labels in July in time for September's new car registrations.