Germany’s environment minister, Sigmar Gabriel, is considering new legislation that will mean that SUVs and off-road vehicles can no longer qualify as company cars for tax purposes.
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Consumers in Germany have been holding off buying new cars in anticipation of new CO2 related taxes. These are being debated at present, as are other measures designed to reduce greenhouse gas emissions from vehicles driven in the country, such as bans on driving in city centres.
But company car purchases have so far been unaffected and are holding up at last year’s levels.
However, the influential Green party is calling for tougher measures still. It wants cars that qualify as company cars for tax purposes to emit less than 130g/km CO2. The European Commission is currently considering targets for all new cars sold in the European Union to average 130g/km CO2 emissions – but this would be an average, not an absolute limit.
As the debate rages in Germany, it is dealers that are suffering most. They are almost entirely dependent on consumer purchases. Many fleet sales bypass dealers and go directly to the OEM. German manufacturers’ output is being supported by strong export sales.
The new VDA president, Matthias Wissmann, has called for Gabriel to reach a decision on CO2 taxation so that the market can adjust accordingly. Despite an upturn in the German economy this year, the car market has been in decline. This is partly due to an increase in the rate of VAT introduced at the beginning of this year – and prompted car buyers to bring forward purchases into 2006 – but also because of uncertainty surrounding future CO2-based taxation.
In an interview with Automobilwoche, Wissmann called on the German government “to create a clear framework” for potential legislation so that consumers can regain their trust in the market. He said it doesn’t help market confidence for new proposals on CO2-related taxation to be voiced on a weekly basis.
Figures for the German car market in May are due to be released imminently, but early signs are not good. A study by the institute for economic research (Instituts fuer Wirtschhaftsforschung) recently found that 50% of German dealers surveyed said that May had been a bad month.
Furthermore, 56% do not expect any improvement next month, and 20% expect the market to worsen.
The German car market was down 9% in the first four months of this year. Sales to private customers were down 27%.
