Source: Ia Ara Aotearoa Transporting New Zealand
Transporting New Zealand says the government’s headline policy announcement in the May budget, Investment Boost, has seen a modest lift in heavy commercial vehicle sales, but that further incentives are required to get more productive and efficient trucks on the road.
Investment Boost is a tax incentive designed to encourage businesses to invest in productive assets like machinery, tools and equipment. It enables businesses to deduct 20 percent of a new asset’s value from that year’s taxable income, on top of normal depreciation, which reduces tax liability and so increases cashflow and in turn productivity.
A business survey conducted by Talbot Mills Research for Kiwibank in late June had 37 percent of businesses saying the Investment Boost will encourage new investment. A concurrent poll conducted by Dynata for MYOB of small and medium enterprises found that half intended to make an asset purchase in the next six months, with 31 percent planning to buy a light vehicle (car, ute or van).
But when it comes to heavy commercial vehicles, there’s only been a modest upswing in sales since the May announcement, with September sales of 402 units the second-highest for the year, but down on the same months in 2024 and 2023, while overall new truck sales are down 31% this year compared to the same period in 2024.
Transporting New Zealand Chief Executive Dom Kalasih says that while it is too early to fully assess the impact of Investment Boost, tough economic conditions for road freight companies may require additional investment incentives, including full capital expensing for high-productivity and low emission heavy vehicles.
“Given the high cost of new heavy vehicles, and the long lead times for delivery, bringing forward purchase decisions is not easy,” Kalasih says.
An Ipsos survey of heavy vehicle fleet operators in July 2024 identified that new truck purchase decisions are triggered by the need to replace a truck, and tend to be made 12-24 months before the anticipated replacement time.
“Crucially though, the current state of the economy and lower freight volumes means businesses don’t have the confidence to add or replace vehicles sooner. The 20 percent Investment Boost asset value deduction simply may not be enough of a sweetener to accelerate investment in new trucks, until the economy picks up.”
“Transporting New Zealand is calling for full capital expensing of high productivity and low emission heavy vehicles – rather than Investment Boost’s 20 percent of the new asset’s value.”
Full capital expensing would enable operators to deduct around $800,000 from their taxable income for the purchase of one zero-emissions large 3-axle truck, or around $400,000 in the case of a diesel-powered high-productivity model, compared to $160,000 or $80,000 under Investment Boost.
“This would see newer, more efficient trucks delivering goods more cheaply, in fewer trips, and reducing fuel use and emissions. This will deliver savings for all businesses and consumers, and help achieve the growth and productivity gains the economy needs,” Kalasih added.
About Ia Ara Aotearoa Transporting New Zealand
Ia Ara Aotearoa Transporting New Zealand is the peak national membership association representing the road freight transport industry. Our members operate urban, rural and inter- regional commercial freight transport services throughout the country.
Road is the dominant freight mode in New Zealand, transporting 92.8% of the freight task on a tonnage basis, and 75.1% on a tonne-km basis. The road freight transport industry employs over 34,000 people across more than 4,700 businesses, with an annual turnover of $6 billion.
