The Tax Opportunities for LED Lighting in Car Dealerships


In the deathwatch of the restructuring of the U.S. auto industry, the U.S. car bazaar is now bedeviled by seven aloft circumscribed car companies: General Motors, Ford, Chrysler/Fiat, Toyota, Lexus, Hyundai, and Honda. In particular, as the U.S. brands recover, anniversary is re-imaging itself as activity able by active down all car models’ ammunition burning and accumulation their amount of dealerships. In the adventure to abate operating costs these dealers are advance in accessories that bout their brand’s ammunition adeptness efforts.

To get an abstraction of the affectionate of ammunition adeptness efforts U.S. auto brands are making, accede Ford’s new EcoBoost engine. According to Ford, the EcoBoost engine combines avant-garde absolute bang technology and turbo-charging with a gasoline engine. The end aftereffect is an engine that can bear up to 20 % bigger ammunition economy, 15 % lower CO2 emissions, and bigger active achievement if compared to beyond displacement engines.

Car dealers are absorbed in both activity able calm lighting and activity able alfresco lot lighting. They are added actual adequate with LED lighting technology because they accept witnessed it boilerplate into auto headlight and taillight applications. LED’s are now mainstreaming into banker showrooms and alfresco lots.

The Section 179D EPAct Tax Opportunities

Pursuant to Activity Policy Act (EPAct) Section 179D, car dealerships authoritative condoning energy-reducing investments in their new or absolute locations can access actual tax deductions of up to $1.80 per aboveboard foot.

If the architecture activity doesn’t authorize for the best EPAct $1.80 per aboveboard bottom actual tax deduction, there are tax deductions of up to $0.60 per aboveboard bottom for anniversary of the three aloft architecture subsystems: lighting, HVAC (heating, ventilating, and air conditioning), and the architecture envelope. The architecture envelope is every account on the building’s exoteric ambit that touches the alfresco apple including roof, walls, insulation, doors, windows and foundation.

Unique 2011 Opportunity: Enhanced Benefit Tax Abrasion

Outdoor lot lighting is commonly acceptable for MACRS depreciation, but architecture owners who install LED lighting systems afterwards September 8, 2010 through December 31, 2011 can yield 100% abrasion tax benefit immediately. Even if architecture owners absence this 2011 window, they can adore a 50% tax abrasion benefit on accessories placed in account from January 1, 2011 through December 31, 2012.

Outdoor Lot Lighting

Outdoor lot lighting is lighting that illuminates alone the agriculture or architecture exoteric (but not parking areas or walkways) as able-bodied as plant-grow lights, but which does not chronicle to the operation or aliment of the building. Alfresco lot lighting systems are usually pole-mounted or freestanding and serve to brighten sidewalks, parking or amusement areas.

For the aboriginal time in U.S. Tax History, based on the benefit abrasion allowances declared above, 100% of the amount of an alfresco lighting activity can be expensed for tax purposes.

Dealer Adeptness Restructuring at Ford, General Motors and Chrysler

With the absolute amount of U.S. dealerships falling from added than 30,000 to about 18,000, if sales volumes balance anniversary dealership will by analogue accept to be a abundant beyond adeptness able of acknowledging college sales and account volumes. There is an all-embracing abatement in U.S. car sales over the endure decade and a bead in the amount of car dealerships aback 1970.

When activity able tax incentives were aboriginal allowable in 2005, adopted car dealers were financially able and focused on assertive the bazaar for small, able cars, which meant that it was primarily the adopted brands that were authoritative activity able lighting upgrades to their dealership locations and demography advantage of the EPAct tax savings. For instance, Emich Volkswagen of Denver has installed LED lighting throughout its new and acclimated car dealership. The LED retrofit activity bargain Emich VW’s lighting activity use by about 80% and the dealership will acquire a acknowledgment on its investment in about 18 months based on activity accumulation from its LED lighting and attention rebates offered by Xcel Activity and the City and County of Denver.

Because of their restructuring and the bazaar appeal for added able cars aback 2008, American car brands accept followed their adopted counterparts’ lead.

Federal Lighting Bans

Dealerships that accept not upgraded lighting in the accomplished 5 or added years generally accept inefficient T-12 or metal halide lighting whose assembly or access is now banned by the federal government. Therefore, eventually or afterwards these dealers will be affected to advancement to added able lighting like T-5 and T-8 fluorescents, or the new awful able LED lighting.

LED’s are up to four times added activity able than acceptable beaming bulbs, which agency that their adeptness to drive down activity operating costs is twofold: activity accumulation and their accompanying tax savings.


Ford has shuttered its abiding Mercury brand. Accordingly, it has autonomous to consolidate assertive Ford and Lincoln dealerships about the country. Some alone accumulated Lincoln-Mercury dealers accomplished beneath gross sales aggregate than Ford alone or accumulated Ford-Lincoln dealerships. While there are abounding factors that afflicted Ford’s accommodation to cut aback on the Mercury brand, what is important is the aftereffect a bargain amount of brands will accept on Ford’s dealership action traveling forward.

Fewer brands in its portfolio, accumulated with its convalescent banking situation, will acquiesce the automaker to focus not alone on artefact quality, but aswell on amount reductions beyond the board. Ford’s advancing anniversary operating accumulation of about $8 billion would be its best assuming aback a $10.2 billion accumulation in 2000, if U.S. industry auto sales were 33 percent higher. Earning college profits at a lower sales aggregate has been one of the keys to the company’s action aback Chief Executive Alan Mulally accustomed in October 2006. Indications are that that some of the appropriate architecture upgrades will ambit from $300,000 to $1,500,000 per dealership. Some dealers are arresting at these figures, which may aftereffect in added closures unless dealers are acceptant to the activity and tax accumulation that appear with added able lighting equipment. Advance to continued activity activity LED lighting is a way to abate advancing operating and aliment costs.

General Motors

The better dealership adeptness abridgement has been at General Motors, which has slimmed itself down to 4 brands, namely Cadillac, Chevy, Buick and GM afterwards auctioning Oldsmobile, Pontiac, Saab, Saturn and Hummer. GM has launched the better and a lot of boundless re-imaging plan of the calm car dealers. They beatific inspectors to assay all of their dealerships’ accessories attributes, including appearance, area and all-embracing quality. Abounding dealerships that were advantageous abundant to not be concluded are now answerable to accomplish aloft adeptness upgrades.


Chrysler has alloyed with Fiat, giving Fiat a aloft U.S. administration arrangement for its added fuel-efficient artefact line. Recently appear banker abstracts adumbrated that the boilerplate Chrysler dealer’s pre-tax balance fell to $150,000 during the bread-and-butter downturn. This agency that a $15,000 abridgement in adeptness activity operating costs equates to a 10% access in pre-tax earnings.

Dealers can amalgamate activity able LED lighting with activity able HVAC in both the conditioned (air conditioned) and non-conditioned portions of the accessories for $1.20 per aboveboard bottom EPAct tax deductions.


The anew configured U.S. auto industry is acceptable added and added centered on ammunition efficiency, both for cars and the dealership facilities. By advance calm and alfresco lot lighting to LED’s, dealerships accept the befalling to decidedly abate their activity costs while acumen abundant tax savings.