Fleet News

Diesels storm into favour

FOR the first time ever, the number of diesel cars on Italian fleets outnumbers those which use petrol.

By the end of 1999, diesels accounted for 60% of the vehicles run by companies with more than 10 vehicles on their books (cars and light commercial vehicles up to 3.5 tonnes), while diesel sales accounted for 27% of the entire Italian market.

And the trend looks set to continue, with several leasing companies, including Hertz Lease and Dial, forecasting that 70% of their models will be diesel by the end of this year as fleet managers adopt diesels because of the increasingly prohibitive cost of petrol (2,075 Lire/1.1 a litre), rising average annual mileages and the arrival on the market of the latest generation common-rail and direct-injection diesel engines.

Currently, petrol taxes and VAT on sales of fuel amount to some 53.700 billion Lire (€28 billion) annually.

That equates to 49% of the government's revenue generated by goods and services in the automotive industry (including VAT on new-car sales and road tax) which, in turn, represents 18.6% of Italy's total tax revenue. Less than 25% of those funds generated are actually re-invested in improving road infrastructures compared to the European average of 35%, so there is increasing pressure on the government to reduce petrol taxes even further.

Another key trend is in the reduction of businesses outright-purchasing their company cars, and the commensurate increase in leasing and external fleet management. Sales to private companies are expected to decrease by some 6% over the coming year, while leasing continues to gather ground.

While fleet car sales are still dragging behind other European countries, with only 22% of new cars going to companies, there has been a veritable boom in interest in fleet management services in the past few years. The message is finally getting through that big is beautiful - smaller companies with a handful of cars can expect to get no more than a 13% discount from dealers, while the bigger leasing firms can obtain 30% with evident cash flow benefits for the end user.

  • Joanne Marshall is an experienced freelance journalist based in Milan, and contributes to Italian daily newspaper Corriere Della Sera. (April 2000)
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