April 16, 2020 – The rent-a-car industry in Croatia generates as much as 90 percent of its revenue from tourism, and the entire sector has come to a halt because of the coronavirus crisis.
HRTurizam reports that the annual income of rent-a-car businesses in Croatia is estimated at approximately 150,000,000 euro incl. VAT – most of the foreign exchange paid directly from tourists and agents from abroad.
Rent-a-car coordination HUP, therefore, proposes the adoption of urgent additional support measures for the sector, to ensure the retention of employees and the maintenance of rent-a-car companies until the business normalizes.
The following four emergency measures are required to preserve the rental car industry:
– The leasing moratorium should be agreed for a realistically viable period of 18 months through changes to the moratorium and repayment schedules of all those affected by the crisis
– Suspending airport lease payments during commercial flight suspension and percentage reductions after passenger traffic commence (2019/20)
– Extending vehicle registration from 1 to 3 months when the vehicles are out of operation and extending the period within which a new vehicle must be registered
– Suspending payment of RTV fee
It is of utmost importance in the financial assistance package to present to the Croatian Government the real illiquidity of tourism in the first part of the year and the positive cash flow where the possible surplus (profit) is realized only at the end of summer, so it is important to plan all the delays (credit, leasing and other) with a minimum grace period until September 2021 as the other options are not realistic, points out Mladen Petreski, President of the rent-a-car coordination HUP and adds:
“We welcome the April package of Government measures that have brought major shifts and assistance to the economy. We expect that significant relief in the area of parafiscal levies will be made soon. As vehicles are our primary means of work, all vehicle-related charges need to be dropped in our industry. That is why we hope that the proposal to postpone the obligation to register new vehicles and to extend the validity of registrations for as long as the vehicles were out of service will be considered soon. Although rentals were included in the Government’s moratorium and restructuring measures, rental companies are currently granted a 3-month delay, which is not enough for our companies. It is imperative to provide a moratorium of at least 18 months for the duration of the suspended income and low liquidity period.”
Otherwise, it is good to know that rent-a-car companies order about 15-18 thousand new vehicles annually, with a total cost of approximately 250,000,000 euro, which includes large amounts of VAT and PPMV paid, as well as vehicle registration. Car rentals are one of the most important business segments for leasing companies and insurers, and in the last ten years, the rent-a-car industry is responsible for 30-45% of all newly registered vehicles in Croatia, which is again very important for functioning importers, distribution, transportation, service and repairs.
“The consequences of this crisis will be much deeper and far-reaching than anyone could have expected. It is difficult to predict the start of tourism businesses, so it is necessary to plan a new set of measures as soon as possible so that the tourism-dependent sector can preserve jobs and wait for 2021,” Petreski concludes.
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