Fleet association warns of NoVA burden on SMEs

Fleet association warns of NoVA burden on SMEs

A full 99.6 percent of all companies registered in this country are small and medium-sized enterprises (SMEs). In 2018 - according to “KMU Forschungs Austria” there are no more recent figures yet - they generated 504 billion in sales. 87 percent of SMEs were micro-enterprises with fewer than ten employees. For them, the planned NoVA increase or its introduction for light commercial vehicles is a catastrophe, as the fleet association warns. 

Its chairman Henning Heise says: "236,000 of these companies can be assigned to trade and crafts. There are also 6,200 small transport companies, 48,000 tourism businesses and 25,100 companies that produce goods. And they have one thing in common: for them, the introduction of the standard consumption tax for light commercial vehicles is a catastrophe, because their fleet costs will increase massively from July 1, 2021." 

Commercial vehicles have no alternative

Because one thing is clear: "The vans, flatbeds, refrigerated vans, delivery vans, personal transporters and sales vehicles are tools on four wheels; they are the core business of the company. They need the commercial vehicles to transport tools, materials, goods, food, guests or other products to their customers. If a vehicle breaks down or is a total loss, a new one has to be purchased. There is no alternative to this. And yes, some of the companies can use a cargo bike or a cargo bike due to the requirements “Switch to an electrically powered alternative – but that’s the minority,” says Heise.

And it happened as it had to before a massive tax increase: Due to the transition period (with a signed purchase contract until the end of May and guaranteed delivery by October 31, 2021, commercial vehicles can still be registered without NoVA) the vehicle trade is currently being overrun - and is struggling to meet demand. Heise: "In some cases, dealers, importers or trading companies are recording more than 500 percent more customer interest compared to the same period last year. The majority of the resulting sales are, of course, advance purchases - companies are now replacing or purchasing vehicles that they had actually planned to purchase in the next few months and years - because they want to save a few thousand per vehicle." 

That's why the major vehicle trading companies are currently securing all available commercial vehicle quotas in Europe and are shipping all available vans, flatbeds, etc. to Austria. Heise: "What is possible is being brought together because this is the only way to accommodate early purchases. This particularly affects medium-sized and large vans, such as the Fiat Ducato, the Mercedes Sprinter or the VW Transporter. But other basic vehicles for special bodies are also difficult to obtain, we hear from the industry." And soon it will probably say: sold out. And this means that NoVA is essentially being forced on a (large) portion of companies. And the commercial vehicle trade? After the peak phase in the second half of 2021, it will slip into a depression - and will probably not climb out of it so quickly.

It can be assumed that the majority of SMEs in Austria have not yet registered the effects of the NoVA introduction. Heise: "The general distraction caused by worries due to the corona pandemic and its direct economic consequences for one's own company is currently too great. This in turn is a blessing in disguise for the well-organized larger companies in the country, many of which have installed their own fleet managers and who have been aware of the implications of NoVA for months. Anyone who also has regular customer status with a trusted dealer has been able to place even larger orders. Of course only if Corona has not yet touched their war chest." 

10 flatbeds = 176,300 euros additional costs

Exceptions confirm the rule, as Heise explains: "We know from practice that even large construction companies with several hundred vehicles face a procurement problem. For example, anyone who wanted to buy ten flatbeds in the spring was often told weeks ago that delivery would not be possible before the deadline."

A small calculation example: An Iveco Daily flatbed truck will be almost 11,500 euros more expensive due to NoVA from July 1, 2021; for 10 vehicles, the additional burden for the company adds up to 115,000 euros. And as we know, the end of the flagpole has not yet been reached. In 2024, the NoVA will cost 17,630 euros per platform, which is 176 euros for 10 vehicles.Add up to 300 euros. Heise: “No SME pays this out of petty cash, it affects the substance!” 

The load on vans with sheet metal is much smaller - and the same goes for pickups. Heise: "Yes, some people had a V8 pickup as a small truck in the loophole - but overall there are only a few individuals and their actions were more lifestyle-oriented. It will hit the EPUers in the transport sector really hard. The typical Amazon parcel delivery person ends up in double misery because of the NoVA - and that's where livelihoods are at stake. Many in the industry are already living from hand to mouth and it is hard to imagine that those affected will now find themselves a new one In fact, it becomes even more difficult for them with every year of the automated NoVA increase, also because the L3H3 vans with a lot of loading volume that is needed for the high number of packages that have to be delivered every day are even more affected by the NoVA than the average commercial vehicle.

The majority will use vehicles for longer

These entrepreneurs - and many who were currently unable to buy due to liquidity or delivery bottlenecks - will drive their old vans for as long as possible. Heise: “Many freelance parcel service providers will then probably go bankrupt due to engine or gearbox damage.”

Since its founding, the Austrian Fleet Association has been committed to reducing CO2 emissions in operational mobility through information events, know-how transfer and communication of optimization potential. Heise: "Decarbonization is important and right - but given the prospects, we cannot see any benefit for the environment or the economy from the introduction of NoVA for commercial vehicles. On the contrary: we believe that as vehicles are used for longer, CO2 emissions will stagnate at current levels and not decrease - at the same time, it will drive many companies to the brink of ruin, especially those that are dependent on their vehicles, are paid precariously or do not pass on the additional costs to customers due to tough competition We believe that none of this can be in the interest of a modern government.”

It is clear: "Many entrepreneurs are ready to switch to an electric vehicle for personal, ecological reasons. But in many cases they cannot because the current offering - especially in the commercial vehicle sector - does not meet their needs. As long as this is not the case, the NoVA is a mean attack on the economy and companies that will pass on the additional costs to customers and thus make the lives of all citizens more expensive."