Analysis
16 Jan 16

Portugal: Fleet customers are leading clients

Diesel estate cars with Bluetooth, automatic airco and light-alloy wheels. Such is the typical car in the Portuguese fleet, which is increasingly penalized by corporate taxes.

 If a few years ago having a company car was synonymous with higher status, and therefore higher segments, these days, with the crisis that floored the country, reality has made companies reassess their criteria. There has been a lot of downsizing from segment D to C, but also in engine power. Following the example set by carmakers, fleet owners have come to want increasingly smaller engines.

Among companies, the driving factor behind the choice of vehicle is the rental price, which explains why the top 10 vehicles purchased by managers (which account for 40% of the rental total) include only one in the upper segment. But in addition, the purchase price is also important. In Portugal, companies pay vehicle taxes based on the purchase price. There are currently three tiers, one up to 25 thousand Euros, another up to 35 thousand, and a third above this value.

These criteria are used to calculate the taxes levied on companies for all vehicle use – and not just on the purchase price – including fuel, maintenance, tolls, etc. As such, companies are under pressure to adjust their purchases to these tax parameters. This has resulted in an increasingly pronounced repositioning in the first pricing tiers. Below 25 thousand Euros, this tax is just 10%, and between 25 and 35 thousand Euros, taxation is 27.5% on costs of use – whereas in the following tier this tax would be 35%.

Diesel is King


Another key factor in Portugal is the type of fuel. Due to fiscal incentives, companies basically only choose diesel engines. On the one hand, the tax on petroleum products makes the price of diesel oil considerably lower than that of petrol. On the other, certain tax incentives themselves favour diesel engines, given that for this fuel type, up to 50% can be deducted as an acceptable company expense.

When it comes to versions, Portugal is the land of estate cars. Among companies, car versions are practically non-existent. Some fleet managers go as far as to remove the car/estate car option from the selection offered to their employees.

For optional items, companies always demand Bluetooth compatibility and automatic air conditioning. In Portugal, manufacturers offer specific versions for fleets, and occasionally importers themselves create specific equipment lines for these clients.

The model most often sold to fleet managers is the Volkswagen Golf, followed by the Renault Mégane and then the SEAT Leon – all diesel estate cars. Historically, the first two have competed with each other for sales. The unprecedented appearance of the SEAT Leon is due to a great effort by the brand to reach into this market.

There are different figures indicating how much Portugal’s fleet market is worth. But none are conclusive, because there is no official organization providing such data in a structured manner. Government institutions themselves are unable to reach a consensus. The only way to arrive at these numbers is through VAT, but organizations don’t report sales using this element. Furthermore, any final result would also include the rent-a-car sector and brand demonstration fleets, which are quite significant in Portugal.

Data consolidated by FLEET MAGAZINE at the end of last year with the brands indicate that it is close to 52%, but the automobile industry association stated 47%. It can therefore be reasonably estimated as being worth roughly half of the market.

Typology is another factor. Due to a shortage of compiled figures, it is hard to say which vehicles are company favourites. And this preference is often contingent upon other factors. The Portuguese market is small and, as such, it is subject to the contingencies of international agreements.

The model preferred for fleets could suddenly be only one. Negotiations with large retail groups can also lead to a certain vehicle being preferred, and fleet managers’ bargaining position also determines their choice.

Vehicle sales to companies continue to keep pace with the rest of the automobile market. This year, sales are expected to keep growing. The trends observed thus far predict that many new clients are small and medium enterprises which have new vehicle consumption habits and new mobility habits in general.

Many of the major fleet owners have already renewed their fleets, but a continuation of this cycle is expected. In terms of consumption profile, no major changes are expected. The Portuguese government has introduced a tax incentive that strongly encourages ‘green’ vehicles, especially within companies, but this has not greatly affected the market.

 

Top 10 models in 2014

1

Volkswagen Golf

2

Renault Mégane

3

Renault Kangoo Express

4

SEAT Leon

5

Opel Corsa

6

Renault Clio

7

BMW 3 Series

8

Peugeot Partner

9

Volkswagen Polo

10

Nissan Qashqai

 

Hugo Jorge

 

Image: The most popular car fleet model in Portugal is the Volkswagen Golf in estate version and with diesel engine.