In Switzerland, cars are registered in the canton where the car owner resides, so most cars in a given canton bear the plates of that canton. However, there is a notable exception. Cars with plates from Appenzell-Innerrhoden (AI), Switzerland’s least populated canton, seem to pop up in large numbers everywhere. Why?
Most car owners are forced by law to register their car where they live and cannot choose a different canton for their car. Rental car companies on the other hand are allowed to shop around.
In 2014, RTS estimated that the number of cars registered in Appenzell-Innerrhoden exceeded the population by 10,000, with the canton registering an estimated two thirds of Switzerland’s rental vehicles.
Some believe rental car companies choose Appenzell-Innerrhoden (AI) because of differences in taxes and the cost of ensuring cars are roadworthy. But this is not the reason.
According to an RTS programme on the subject, the reason is more prosaic.
Administrators in Appenzell-Innerrhoden, which is Switzerland’s least populous canton1 with around 16,000 inhabitants, have decided to outshine other cantons on service and this is what primarily draws rental car companies to the canton for car registration. In Appenzell-Innerrhoden a new car can be registered online within a day, something prized by rental car companies that register thousands of vehicles every year.
There are some differences between what cantons charge to license a new vehicle. In 2014, the average cost across all cantons was CHF 51 and ranged from CHF 30 to CHF 95. At CHF 50, Appenzell-Innerrhoden was at the low end of the price range, however, it wasn’t the lowest and was among 19 other cantons charging under the average of CHF 51. For rental car companies, Appenzell-Innerrhoden’s speed and efficiency of service matter more than small price differences.
So why does the Appenzell-Innerrhoden car registry service strive to out compete other cantons to attract an oversized share of this administrative business?
The registry charges fees, money that supports jobs. In addition, the Appenzell-Innerrhoden registry makes a profit. According to analysis published in 2014, the registry brings in CHF 1.60 for every franc it spends. Geneva brings in roughly the same CHF 1.61 for every franc of cost. However, Geneva was charging CHF 95 to register a new car compared to CHF 50 in Appenzell-Innerrhoden. Appenzell-Innerrhoden’s efficiency allows it to generate high margins with relatively low prices.
Other cantons, like Geneva and Zurich, are not particularly bothered by the rental-car-registration competition from Appenzell-Innerrhoden because the road tax collected on rental cars is divided up and paid based on where rental car contracts are signed. So the cantons of Geneva and Zurich, with the largest airports and rental car fleets, still get the majority of this money, despite most rental cars being registered in Appenzell-Innerrhoden.
1Appenzell-Innerrhoden is technically a half canton that was born from the division of the whole canton of Appenzell along religious lines in 1597.