ORIX New Zealand feedback submission on the Government’s Clean Car Discount Proposal

ORIX New Zealand Limited is a leasing and finance provider that has been leasing vehicles to NZ businesses for over 30 years. We have extensive experience in analysing businesses’ requirements to create fit for purpose solutions to their transportation needs. This has included advising businesses on how EVs could fit into their fleet and lower their fleets’ emissions outputs.

The following submission refers only to the Clean Car Discount as the Clean Car Standard is not an area where we are as experienced.

The biggest concern we see with the Clean Car Discount is the effect it will have on businesses that require load carrying tool of trade vehicles and do not have a viable EV or other low emission alternative to the vehicles they currently use. Examples of this would include tradespeople who need to carry tools and supplies to various jobs, businesses in the construction sector that need to transport pieces of equipment etc.  These activities cannot be practically carried out in small-medium passenger EVs such as Nissan Leafs or Teslas.

Currently there are 16 pure EV vehicle models available in NZ (NZ New), of which 14 are passenger vehicles only. There are no EV Utes available.  The lack of practical alternatives means that businesses that require light commercial vehicles will be penalised by the Clean Car Discount Proposal as there will be no rebate-earning suitable vehicles.

For Small to Medium Enterprise (SME) businesses these additional penalties added on their tool of trade vehicles, combined with the recent fuel tax increases, will lead to a hike in operational costs that can’t be recovered easily. In many cases these businesses are sole traders who work hard and have no ability to spread costs against other revenue streams.

The New Zealand business landscape is significantly different to overseas models that this proposal is based on. Small businesses make up 97% of all enterprises in New Zealand (according to the Ministry of Business, Innovation and Employment 2018*) and they are the ones that will be significantly affected by the penalties the Clean Car Discount would impose. 

Our suggestion is to delay the implementation of the scheme on light commercial vehicles (LCV’s) until there are viable EV alternatives available. Alternatively, GST registered businesses could be excluded from the penalty structure until a range of viable low emission vehicles are available. As stated in the Clean Car Discount Proposal, 26 percent of vehicles entering the NZ fleet are purchased by businesses. Making businesses exempt from the penalties imposed on LCV’s until there are viable options would have a limited impact on the overall scheme. Allowing businesses to still access the discount available in this scheme will allow businesses to experience and implement the infrastructure needed when the LCV alternatives come to market, allowing for faster uptake and acceptance.

While ORIX appreciates the Government’s efforts, it seems the Government has failed to adequately consider the impact on businesses and hasn’t considered other alternatives that could yield a better result for all parties.

Another suggestion we would like to make - although not touched upon in the Clean Car Discount Proposal - would be to review the fringe benefit tax (FBT) placed on EV’s. The current FBT regime assesses the private benefit of a company provided vehicle at the rate of 20% of the vehicle’s cost price (this is Cost Price Method most commonly used by employers). When applied to EVs, which are currently around double the purchase price of an equivalent ICE vehicle, this creates a further disincentive to the uptake of EVs. ORIX recommends that the Government considers temporarily applying a lower (than 20%) rate for the calculation of FBT on EVs, until cost prices of EVs reduce. This should actually be fiscally neutral if the same dollar value of FBT is paid on vehicles whether ICE or EV.

With extensive experience in providing alternative funding options for business vehicles in NZ we welcome any further questions and would be happy to participate in further discussions on the Governments initiatives in this area.

 

* Ministry of Business, Innovation and Employment New Zealand’s Support for Small Business – May 2018 https://www.business.govt.nz/assets/Uploads/Documents/Small-business-booklet.pdf

RUC Price Increase – 1 July 2019

The NZ Transport Agency has announced that starting 1 July 2019, there will be a rate increase on RUC (Road User Charges) rates by approximately 5.5% on all RUC applicable vehicles.

The rate increase is part of the Governments policy statement on land transport 2018.  This is the second of three planned increases to RUC rates, the third increase will happen in 2020.

Heavy RUC licences bought before the 1 July 2019 are required to be re purchased within one month of the rate increase under section 86 of the Road Users Charges Act 2012. This means all Heavy RUC licences (only for heavy vehicles) bought before 1 July 2019 will now expire on 1 August 2019.

Those affected by the Heavy RUC licence changes must purchase a new RUC licence before 1 August 2019, starting from their current hubodometer reading. They must buy enough RUC to take them past their current RUC licence end distance. They call this an overlap licence.

ORIX NZ can assist our clients in purchasing the overlap licence, please contact your dedicated Account Manager on 0800 106 749 with a list of all registrations required.

30 Years of Warm Welcome

Last week the welcoming face of ORIX New Zealand celebrated 30 years with the business. In honour of Catherine’s long service, we asked her what it was that’s kept her here all these years.

“If you had asked me 30 years ago if I’d still be here today, I would have laughed off the idea as being absurd! 

But 30 years on, ORIX has maintained the wonderful unique culture and great work ethic that I fell in love with at the start, with the added bonus of sharing my genuine love of cars and meeting some of my closest friends!

ORIX NZ is a successful, fun business and I feel there have been enough changes around me not to make any major changes myself – why try to fix something that isn’t broken! 

I’ve watched the comings and goings of people (including some ‘goodies’ coming back!)  and 30 years on we have an impressive number of long-timers mixed with lots of new blood, that has proven to be a great mix.

It hasn’t always been without its tough times.  We have lost some special people and while it hits us hard, the way we pull together is amazing! 

We are a close knit team that looks out for each other and that has never changed. 

I have always been and still am today, proud to be a part of the ORIX family.” 

Catherine Paul – Office Administration Manager, ORIX New Zealand

Thank you for all your years with ORIX NZ Catherine, you embody the quality values we strive for as a business and have provided a high level of service for us all to strive towards. We hope to have you for 30 years more!

Toll Road Price Increase

From the 1st of March 2019, the prices for the Tauranga and Northern Gateway toll roads will increase. The NZTA announced this increase as being in line with inflation. The following will be affected:

Northern Gateway Toll Road: Light Vehicles (car/motorcycle) – Will rise from $2.30 to $2.40 Heavy (bus/truck) – Will rise from $4.70 to $4.80

Tauranga Eastern Link Toll Road: Light Vehicles (car/motorcycle) – Will rise from $2.00 to $2.10 Heavy (bus/truck) – Will rise from $5.00 to $5.20

Takitimu Drive Toll Road: Light Vehicles (car/motorcycle) – Will rise from $1.80 to $1.90 Heavy (bus/truck) – Will rise from $4.80 to $5.00

 For those with a Toll account, the new charges will happen automatically and there is no need to do anything.

Pre-purchased trips prior to the 1 March 2019 update will still be valid and recognised as a fully paid trip with no top up needed.

This increase only affects the toll charges, service and transaction fees have not changed.

For more information please visit: tollroad@nzta.govt.nz.  

Information sourced from NZTA.govt.nz

Reflection on the 2018 Market

For the 5th year in a row New Zealand’s new car registrations hit an all-time high in 2018. All in all, 161,770 new vehicles were registered for our roads, an increase of 1,646 vehicles over 2017. To put that in perspective, it’s almost twice as many vehicles as the 84,640 that were registered in 2011 when we were dealing with the global financial crisis.

Toyota was New Zealand’s preferred brand, followed by Ford, Holden, Mitsubishi and Mazda respectively rounding out the top five manufacturers. Toyota made up 20% of all registrations with 32,360, despite their change to Toyota Driveaway Price (TDP) on the first of April.

Ford Ranger was the top selling vehicle for 2018. HiLux was second to Ranger then followed by Corolla, RAV4 and Triton rounding out the top five. So the New Zealand love affair for Utes continues. Interestingly only one SUV has made the top five considering SUV’s overall market share of sales matched that of LCV’s (Light Commercial Vehicles). The reason behind this could be that virtually all manufacturers now have an SUV to offer the market whereas LCV manufacturers are more limited.

The top news story of 2018 was the stink bugs causing all sorts of issues. This meant some ships had to return to their original ports to be fumigated causing considerable delivery delays. Unfortunately, this is still an ongoing issue with industry and government working to find a suitable solution.

Toyota’s change to TDP pricing caused lots of talk in the market. Toyota still came out on top with more sales than their peers, selling more cars than they did in 2017, however rentals made up a large proportion of their total sales.

More new EV models launched to our market in 2018 with the first EV Van from LDV making an appearance. Total EV sales were around 2,150 or 1.3% of the total NZ market. Most manufacturers tell us that they will have an EV in the NZ market within the next 3 years. Range continues to improve with the Hyundai Kona getting around 400km per charge, however pricing is still not comparable with internal combustion engines even when you add fuel savings. ORIX’s new programme ORIX NZ EVi should help businesses in overcoming these issues.

The prediction for 2019 is that we will see a softening in the market, which leads to questions around where we will see the market end up; will Toyota remain in top position? Will we see a continued reliance on rental registrations? Will the LCV love affair end? ORIX NZ intends to be at the forefront of the industry in advice, opinion and new initiatives.