AMSTERDAM -- Automakers expect a sales boom in plug-in hybrid cars in the Netherlands will end next year as the government reduces a tax break for company car drivers.
The tax break has helped to make the country 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 a lot less 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.
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.
Volvo sells the V60 midsize station wagon as a plug-in diesel hybrid and has started marketing the XC90 T8 plug-in SUV. Volvo’s Krouwel said that 90 percent of all XC90 orders in the Netherlands are for the plug-in.
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 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.
Other European countries are reviewing or ending generous incentives for low-emission vehicles.
Norway will reconsider incentives this month. A fifth of all new cars sold so far this year in the country were electric.
In the UK, grants for ultra-low emission cars are expected to run out by the end of the year. The government pledged incentives for plug-in cars to run from 2011 to 2017, or when 50,000 cars were registered with the benefit of incentives. Plug-in registrations are fast approaching the target. Up to April, 28,512 cars had been registered with more than 7,500 of the registrations in the first quarter of this year.