Dealers could be faced with additional tax costs if their dealerships are not energy efficient due to new Government legislation changes to the CRC – formerly the Carbon Reduction Commitment – energy efficiency scheme.
The scheme was originally structured to return a substantial portion of a dealer’s CRC payment, but
now businesses will effectively be taxed up to 10% of their combined energy bills in a bid to cut carbon emissions.
Nick Katz, Colliers International senior sustainability adviser, said: “The Government has been wrestling with the commitment to reduce carbon consumption against a background of post-recession uncertainty and beleaguered manufacturing/retailing.
“The changes will have a significant impact on the automotive industry with manufacturers, dealerships, bodyshops, aftersales and fast-fit businesses now potentially having additional costs to worry about.
“Given the age and design of the buildings combined with significant electricity consumption, the industry makes a ripe sector to look at in terms of these sustainability issues and potential cost savings.”
Katz said the changes should be looked at as an opportunity for dealers.
He said: “A savvy dealer can look at this legislation as the ideal opportunity for “greening up” their properties, making them more efficient, reducing energy bills, mitigating tax liability and increasing profitability as a result.
“It also has a real impact on the value of a brand and is especially relevant to those working with brands who value sustainability like Volkswagen, Audi and Toyota for example.”
Sites where energy costs are high mean greater exposure to CRC costs as well as operating costs.
Katz said: “Those dealers who address these issues proactively will find their businesses more efficient and properties more attractive in the market when vacant.”
Changes to CRC explained
Who is affected? Manufacturers, dealerships, bodyshops, aftersales and fast-fit businesses who have energy bills across their combined UK operations in excess of £500,000 (based on 2008 consumption).
Why does CRC exist? To enable the UK to hit binding EU emissions agreements; as a revenue generator for the UK Government; to proliferate energy efficiency and renewable technologies to the built environment; to encourage responsible behaviour from and co-operation between landlord and tenant.
Why should dealers care? The CRC is an additional cost to any business with an energy bill of £500,000 or more. Public CRC performance league tables were released in November 8, 2011 and all participants can now see where they rank. Automotive sub-league tables will be created so that auto businesses can more easily reference their competition.
How much is it going to cost? The larger the energy bill, the larger the cost of participation in the CRC. Considering the size of automotive sector participants, costs will typically range from £100,000-£300,000 per year.