New VAT reclaim rule in Hungary
It became easier to reclaim VAT from the leasing fee of corporate cars from January, said the Hungarian Leasing Association. Change in administration means ease and can have a positive impact on the car finance market. From 2019, in the case of open-end financial leasing or operational leasing, company cars do not need to keep track of business use in order to deduct half of the VAT of the car rents. If the lessee decides to continue using the former system, ie to provide a detailed documentation of actual business use, and they can deduct the sales tax on leasing or rentals over flat rate of 50%.
“The leasing market has long wanted to achieve a simplification of the VAT accounting for company cars that is now subject to VAT. As the change concerns uniformly regulated sales tax in the European Union, there was a need for an EU decision and approval. The steps to reduce administrative burdens have been supported by the Hungarian government and new rules have been introduced since January. Some details, such as the choice of VAT accounting for each car, or the transitional arrangements that are favorable to the lessee, are in line with as the preliminary opinion and suggestion of the Leasing Association.”
Further increase in leasing financing, which plays a significant role in sales, and can also boost the fleet financing.
Premium-category car sales in Hungary rise nearly 10%
Sales of premium-category passenger cars in Hungary rose 9.5% to 12,949 last year, with German brands dominating this market segment.
Of the 136,601 cars sold, 12,949 were premium categories. The Hungarian Automobile Importers Association (MGE) lists 20 brands in the premium segment, 72.5 percent of which is dominated by three brands – Mercedes, BMW and Audi – alternating in the first place.
In addition to leading brands, Volvo, Lexus are catching up with Infinity, Jaguar and Porsche in Hungary with around 150-200 units a year. The advancement of urban leisure cars (SUVs) is also a feature of the premium segment, said Tamás Hesz, MGE’s sales and marketing director.
Diesel sales have fallen somewhat over the last two years – the Audi head of Hungary has pointed out that this is unfortunately the case when clean EU6 d diesel engines have arrived on the market. The manufacturer sees diesel engines as justification for major SUV categories.
Sales of Mercedes, BMW and Audi brand vehicles accounted for 72.5% of all premium car sales.
Mercedes sales increased 25% to 4,018, Mercedes-Benz Hungária said. Mercedesʼ SUV sales were up 46%.
BMW sales increased 16.3% to 3,140. Audiʼs premium-category sales decreased by 19% to 2,229.
Sándor Mátrabérci, brand director at importer Porsche Hungaria, attributed the latter drop to the application of the worldwide harmonized light vehicles test procedure (WLTP) emissions test to all new car registrations from September: the process of homologation has been slow.
Volkswagen Financial Services acquire 60 percent stake in Europe’s largest fleet management company FleetLogistics
Volkswagen Financial Services (VWFS) has acquired a 60% stake in Fleet Logistics. The acquisition, subject to approval by the relevant authorities, is the result of a strategic partnership between VWFS, a financial subsidiary of the Volkswagen Group, and TÜV Süd, the inspection and certification specialists and (formerly) the sole shareholders of Fleet Logistics.
Bundle and develop
TÜV Süd will retain the remaining 40% of the company. Both shareholders have agreed not to disclose the purchase price, and to maintain the brand neutrality of Fleet Logistics. The aim of the partnership is to bundle and develop both companies’ mobility offers for fleet customers, creating a complete range of products and services that combine travel and fleet management. To that end, the fleet management services of both companies will be merged, and a brand-neutral international platform for travel and fleet management will be created. To create economies of scale, VWFS will transfer its subsidiary CarMobility to Fleet Logistics. Operating as an independent fleet management company in Germany since 2006, CarMobility has around 40,000 contracts on its books.
Strong international focus
“The strong international focus of Fleet Logistics complements our own global financial services activities,” says Lars Henner Santelmann, Chairman of the VWFS Management Board.
“This strategic partnership enables us to deliver significant added value to our fleet customers,” says Patrick Fruth, CEO Mobility Division TÜV SÜD.
Considering VWFS is a lease company itself, will you continue the Fleet Logistics business model, in which it operates as the middleman between lease companies and fleet customers via a multibidding concept? Malte Krause (VWFS Corporate Spokesman): “Yes, we will. The success of Fleet Logistics is based on the fact that it can offer its customers manufacturer-independent mobility services. This independence will continue to be an essential pillar for the future growth of Fleet Logistics.
“Once again, the independence of Fleet Logistics will remain an essential pillar for its growth. That will not change. Additionally, both shareholders are convinced that corporate mobility is changing: travel and fleet management are converging. Business trips and company cars are increasingly seen as two sides of the same coin. Many younger employees no longer want their own car. Instead, they want mobility budgets for all modes of transport. With this joint venture, VWFS and TÜV Süd want to tap precisely into this market potential.”
What will happen with to Fleet Logistics activities in markets where they operate a franchise model (such as Russia, Romania or Israel) and with 100% TÜV Süd people (e.g. Singapore, Brazil, Turkey)?
“FleetLogistics will continue to offer its customers all services where it makes local sense. The aim is to further expand and establish its leading role in Europe and worldwide as an independent provider of mobility services. So for the customer, nothing will change.”
Asian roads still not safe
When the World Health Organisation released its 2018 report on Road Safety, it showed that globally, 1.35 million people lost their lives in a traffic related accident. WHO’s report editor, trying to say something positive about this unacceptably high number, introduces the report by mentioning that “existing road safety efforts may have mitigated the situation from getting worse.”
Effectively, the number of motorized vehicles has increased and so has the global population; therefore the absolute number of deaths might have increased, but the death rate has remained stable. It could have been worse indeed.
No. 1 cause of child death
Amongst the 5 to 29 years old category, road traffic injuries are the main cause of death. Across categories, more people die as a result of traffic accidents than of HIV/AIDS or tuberculosis.
In addition, there’s a strong relationship between road traffic death and income levels; low-income countries have a death rate of 27.5 per 100,000 population, whereas high-income countries only have a 8.3 to 100,000 death ratio. In other words, young people in low income countries are the most frequent victims.
Many Asian countries are moving from low-income into middle-income, but unfortunately without improving road safety or infrastructure. Consequently, the death rate has increased in 60 out of the 95 (new) middle-class countries.
The worst regions
The global rate of road traffic death is 18.2 per 100,000 population. Africa (26.6) and South-East Asia (20.7) have the worst score, Europe (9.3) the best. Americas, Europe and Western Pacific have improved their rating since 2013; the opposite is true for Africa and South-East Asia.
In Africa, most of the victims are pedestrians and cyclists, whilst in South-East Asia most of them drive motorcycles or three-wheelers.
Another painful conclusion of the WHO report is the lack of basic legislation in many countries, prescribing seatbelts, helmets or penalising drunk driving. Similarly, many countries have no or insufficient laws in place to limit the speed on urban roads. Again, on legislative side, Africa and South-East Asia lag behind.
Road and Vehicle safety
The United Nations have made recommendations to its member-countries to mandate a series of 8 vehicle safety features, such as stability control and advance braking. Unfortunately, only the high-income countries have implemented such features but a total of 124 countries have applied none. In South-Asia and South-East Asia, only India is applying 1 recommendation, i.e. front and side impact protection standards.
As for road safety, 112 countries have some kind of design standards for speed management, 92 countries separate pedestrians and cyclists from motorized traffic and 132 countries provide for safe pedestrian crossings. These figures are based on regulation, rather than on true implementation. Vietnam, for instance, has an extensive set of safety measures, but a short walk in Ho Chi Minh shows that these are only implemented in the international parts of the city, close to expat condos and in streets with government buildings.
For the Fleet Manager
These depressing figures lead to an important conclusion for corporate fleets: it’s up to the Fleet Managers to take care of their employees’ safety. The Fleet Managers dealing with fleets in Asia, especially in South- and South-East Asia, need to address 3 topics:
• put in place a safety policy that goes beyond the country standards
• select vehicles with a higher safety standard than mandated by the country
• provide for driver training
In addition, next to the cars that the international Fleet Managers will see on their fleet reports, there will be a massive hidden amount of motorcycles either purchased by the local subsidiaries or owned by the employees. This, in combination with Asia’s young population and dangerous roads, means that the international Fleet Managers truly have an opportunity to make a difference.