Global automakers expect a boost in sales in plug-in hybrid cars in the Netherlands will end next year as their government reduces a tax break for company car drivers, Auto Europe reported on Sunday.
The tax break has helped to make the Netherlands Europe’s biggest market for plug-ins, with 12,237 such vehicles sold last year in the country, according to market analysts JATO Dynamics.
Automakers have been scrambling to launch plug-ins in the Netherlands to benefit from their popularity but executives say sales will fall after the government next year cuts tax incentives.
“There will probably be a big drop,” Christiaan Krouwel, product manager for Volvo Cars Netherlands, told Automotive News Europe at the auto show here last month. “We will likely go back to regular volumes.”
Government incentives mean that company car drivers pay less of a percentage of the vehicle’s value when the cost of the car’s benefit to the driver is calculated for tax purposes.
The average car attracts tax of 25 percent whereas plug-in hybrids that have CO2 emissions below 50 grams per km fall into a 7 percent band, rising to 14 percent for cars with emissions below 82g/km.
The generosity of the incentives mean the highest-band tax earner could save 6,000 to 7,000 euros ($6,600 to $7,700) a year.
Company car leasing accounted for 33 percent of cars sold in the Netherlands in 2014, compared to 36 percent for private sales, according to figures from makers’ association RAI Vereniging. Cars registered by automakers themselves accounted for 17 percent.
Next year the government will change the system to bring the higher-band plug-in cars to 21 percent, with the more frugal plug-ins jumping to 14 percent.
Sales Rush
Drivers are rushing to take advantage of the final year at the current level of incentives, said Rene de Heij, BMW Netherlands product marketing manager.
BMW has started selling a plug-in version of the X5 large SUV in the country. “This year there's a huge interest. We will sell all we can get,” de Heij said.
The Netherlands is the only European market where Ford Motor sells a plug-in hybrid version of the C-Max minivan. The country is the biggest market for Europe’s best-selling plug-in, the Mitsubishi Outlander, with the Netherlands accounting for 7,699 of the 19,855 units sold last year in the region, according to the company.
The Dutch government is reducing incentives because many plug-in owners are not using the electric drive but are just running their cars on gasoline or diesel, BMW’s de Heij said.
The reduction of incentives for plug-in hybrids is set to boost sales of electric cars, which keep their low company car tax percentage of 4 percent. “Full-electric vehicles will keep growing.
Sales will be much closer to plug-ins,” Jordi Vila, managing director of Nissan Netherlands, told journalists at the Amsterdam show in late April.
In the first quarter EV sales were 1,017 in the Netherlands compared with 4,726 for plug-in hybrids.
The top-selling plug-in in the quarter was the Volkswagen Golf GTE with sales of 1,584 followed by the Mitsubishi Outlander with 1,227 sales. The best-selling EV was the Tesla Model S with 407 units sold. The Nissan Leaf was second with 240 sales.
Sales of Hybrid's in Iran
When comparing European proactive policy to Iran, the Iranian government, along with the Customs Office can use the Dutch example as basis to boost EV and hybrid sales. So far, only one foreign car has been given 100 percent tax exemption -- the Lexus CT200h.
The Financial Tribune covered the specific change in law back in January, with the Lexus being priced locally at $66,000 at the time, suggesting dealers were continuing to add 100 percent markup to the price of the vehicle.
Back in March President Hassan Rouhani inaugurated two new hybrid cars produced by Iran Khodro. The two plug-in hybrid cars, based on the regular IKCO Runna, were unveiled and the president, in a symbolic gesture, drove the car for a short distance.
Other smaller local manufacturers have also begun to build hybrid and electric vehicles. Fars news agency in January reported that carmaker Diar Khodro unveiled the country's first domestically manufactured electric car, named Sabrina.
The report said Diar Khodro had begun a trial production of the Sabrina EV and expected large-scale manufacturing to begin in the next Iranian calendar year, starting March 20, 2016. It plans to manufacture 42,500 units a year.
