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Incentives push by fleet association

BUSINESS managers and accountants will enjoy substantial savings in fleet management costs if an industry submission to the Federal Government is endorsed.

The Australasian Fleet Managers Association has called on the Government to increase incentives for businesses to buy new vehicles.

The submission to the Productivity Commission, which is investigating the competitiveness of car manufacturing in Australia, was designed to increase the manufacture and sales of fleet vehicles by manufacturers.

While tariffs and subsidies play a role, the association is advocating that buyers be rewarded directly. It maintains that this is a more effective mechanism than providing industry subsidies or tariffs.

This change in focus should also benefit businesses, which are straddled with increasing fleet costs.

“While a fleet is a major investment for an organisation it will never be anything other than a depreciating asset losing half of its value in the first three years,” the submission says.

“The pressure on the automotive industry and company vehicle tradition has been intense, with many organisations already beginning to question the wisdom of continuing to supply a company vehicle.”

The association is calling for government incentives to make purchasing new vehicles and di-

vesting older models more attractive.

“The only remaining question is how will government actions or intervention influence the outcomes and will it be positive or negative for local manufacturing and the company vehicle,” the submission says.

“The message is clear. Over the last four years the system for the supply of the company vehicle is under strain. The time has come for positive intervention, one that stimulates rather than dampens demand.”

The association is pushing for a reduction in taxes on company vehicles.

Fringe benefits tax receives particular attention from the association as it forms a “whole-of-life cost” for the operation of fleet vehicles.

“This cost is not only reflected in the level of tax, but also in the ad-ministrative cost of compliance,” the association statement says.

The Government should also consider reducing the effective life period to three years, which is the preferred passenger vehicle retention period, it says.

“While the commission’s focus may well be local vehicle manufacturing and supply, the association contends that this is only half of the issue,” the association says.

“The demand side, rather than the supply side, we would see as being more critical to the continuing prosperity of Australian manufacturers.”

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