The Italian government has reintroduced incentives for the purchase of bicycles and e-bikes with less restrictive rules than a previous program that expired at the end of last year. The new scheme is proving to be so successful that it could run out of funds by June, according to industry sources.
In June 2007, the Italian government launched incentives worth a total €15 million for the purchase of bicycles, e-bikes and more environmentally friendly motorbikes in exchange of the scrapping of old motorbikes. But the program was considered too complex, especially for bicycle retailers, and not all funds were used. The environment minister, Stefania Prestigiacomo, agreed on Dec. 23 with the trade associations ANCMA (representing manufacturers of bicycles and motorbikes) and CEI CIVES (representing producers of electrical vehicles) to employ the unused funds for a new incentive package.
On April 20, the ministry released a decree reintroducing the incentives along with a list of models that can benefit from the state aid. The overall package amounts to €8.75 million and no longer requires the scrapping of an old motorbike for the purchase of a bicycle or e-bike. The government is offering a contribution worth 30 percent of the labeled price of a bicycle or e-bike, up to a maximum of €700. The government also renewed incentives for motorbikes but then the applicant still has to scrap a motorbike to obtain them.
The new incentives have been available since April 22. But as of close of business on April 29, €572,075, or nearly 7 percent of the funds, had already been used up, indicating that the current scheme could run its course by early June. Bicycles and e-bikes claimed the lion’s share of the incentives with applications totaling €572,075 for over 2,800 units, half of which sold in Northern Italy.
At the current pace, the incentives could boost bicycle sales by about 40,000 units and give the industry some breathing space after a fall in demand last year. ANCMA estimates that bicycle sales fell to 1.6-1.7 million units in Italy in 2008 from 1.99 million units in 2007.
The months of June and May are a significant period for the industry in Italy and are believed to represent over 28 percent of annual sales. The level of requests for incentives is regularly updated at www.incentivimotocicli.it.
The list of authorized brands surprisingly omits some large producers such as the Italian group Masciaghi and Décathlon, and high-profile brands such as Cinelli, Guerciotti, Cannondale, Specialized and Scott. The list is available at www.minambiente.it.
Industry sources explained that some producers and distributors were skeptical about the impact of the incentives and did not register with the ministry. A number of brands are expected to be added to the list in the coming days and some mass retailers like Auchan are also expected to apply, along with Décathlon.
Even though the incentives are available for all distribution channels, they are believed to be easier to manage for specialist retailers, which have lower volumes than mass merchants. Specialist retailers also have higher margins than general retailers, which could actually end up losing money on bicycle sales due to the cost of handling and managing the paperwork for incentives (more on the Italian bicycle industry and market in a major report on Italy due to come out soon).
Meanwhile, the European Two-Wheelers Retailers Association (Etra) and the associations for bike and bike components manufacturers, Colibi and Coliped, are pushing for friendlier taxation on all bicycle products and services in the European Union.
In March, the European Union agreed to continue authorizing reduced VAT on a number of labor-intensive services, including bicycle repairs. The associations approved the renewal but are also asking for tax incentives to boost the use of bicycles for urban transport.
They are also prompting their members to lobby for reduced VAT on bicycle repairs in countries that have not applied the measure. So far, only the Benelux countries, Poland and Greece have trimmed VAT on bicycle repairs.
