Fleet management in Portugal
As the cost of doing business soars, 2023 looks set to be a difficult year for fleets across the globe, with Portugal proving no exception.
Despite the economy growing by almost seven per cent in 2022 – a 35-year high – a steep decline in output is expected this year, with inflation at its highest point in three decades.
These fragile economic conditions may explain the current lack of government investment and support for the Portuguese fleet industry. They are also likely to exacerbate the challenges facing fleet managers, while creating new obstacles that must be overcome.
Furthermore, fleet managers, it seems, are worried about what the year will bring for their workforce. A recent study found that almost a third of decisionmakers are concerned about the impact of a looming global recession on their drivers – the second highest in Europe.
Against this backdrop, we delve deeper into the Portuguese fleet market and shine a spotlight on a range of issues, from the lack of EV charge points to protracted vehicle lead times.
An uncertain time
Portuguese fleets have had to make some tough contract choices of late, with many having to consider alternative lease terms in response to the volatile market.
A number of factors, including the semiconductor shortage and the war in Ukraine, has led to significant supply chain disruption, which in turn has resulted in longer lead times and contributed to an increase in leasing and rental rates. The monthly rental costs in Portugal have been found to have increased by 10 to 12 per cent, on average.
The various funding options each bring advantages and disadvantages. A short-term lease, for example, may offer swift access to new fleet vehicles, but at a higher cost.
Many Portuguese fleets are opting for lease extensions, with many contracts being extended by up to 72 months. This move, however, can risk increasing service, maintenance and repair (SMR) costs, fleet downtime and business productivity.
As is the case across most of Europe, electric vehicles are gaining popularity in Portugal, but remains in its infancy. The Portuguese Automobile Association (ACAP) reported a 34 per cent growth in the electric vehicle market in 2022, with pure electric, plug-in and hybrid cars accounting for 21% of total car registrations.
The Portuguese government has established the National Plan for the Promotion of Electric Mobility (PNEM), with the goal of promoting electric vehicle usage. This has been executed through various initiatives, such as financial incentives for EV purchases, improved charging infrastructure, electric mobility R&D, and public education and awareness programs.
Individuals and organisations alike can benefit from financial incentives. Van fleets, for example, can apply for a €6,000 grant to purchase or lease an eLCV, while individuals can receive between €4,000 and €6,000 for investments in electric cars or vans.
Pure electric vehicles (BEVs) with a value under €62,500, along with hybrid plug-in vehicles under €50,000, can also receive a full VAT deduction. Additionally, BEVs are exempt from road and vehicle tax.
Companies that also use electric vehicles (EVs) are eligible for a corporate tax deduction and may receive either a complete exemption from autonomous corporate income tax for battery electric vehicles (BEVs) or a reduced rate for plug-in hybrid electric vehicles (PHEVs).
Despite these incentives, EV adoption is currently being restricted by high upfront procurement costs and limited charging infrastructure in many areas.
The increasing demand for EVs is seeing charge point installations now starting to gather pace, notably in urban areas.
Although progress is being made, Portugal is still lagging behind other European countries however, according to industry association ChargeUp Europe. As things stand, Portugal has only 40 public charge points per 100,000 residents, compared to 600 in the Netherlands and 399 in Luxembourg. This number will need to grow significantly before the EU’s planned ban on internal combustion engines in 2035.
The government acknowledges the challenge and is offering operators a €1.5 million grant if they invest in public rapid charge points.
MOBI.E, the company responsible for the management of the national electric mobility network in Portugal, expects 20,000 charge points to be in use by 2025 – but is still a long way to go.
A spotlight on mobility
According to Fleet Europe research, Portugal lags behind its European counterparts in terms of its corporate mobility initiatives. In a comparative analysis of corporate mobility across European markets, Portugal ranked near the bottom, having been judged on key factors such as corporate strategies and the availability of alternative mobility providers.
A number of shared mobility schemes do exist across the country however, and the market appears to be growing. E-bikes, e-scooters and e-mopeds are now available in some cities, while the number of users of shared vehicles is forecast to reach 8.7 million by 2027.
To encourage the use of public transport, the government has also implemented mobility legislation. Both employers and employees are exempt from paying social security contributions and income tax on monthly public transport passes.