Car market recovering after pandemic

Cars (photo is illustrative).
Cars (photo is illustrative). Source: Ken Mürk/ERR

The car market in Estonia, which experienced a sharp fall during the coronavirus pandemic, is now slowly recovering and, according to banks, the number of new lease applications is now close to the level it was a year ago.

Last year's spring saw total values of €60 million in cars being leased monthly but in April this year, that number dropped to €20 million, ETV's daily affairs show "Aktuaalne kaamera" reported on Monday.

The number of leasing applications started increasing in May and Rein Karofeld, leasing manager of SEB Pank, said: "We sincerely believe that June will be equivalent to last year's. /.../ People have again developed the certainty and are visiting car showrooms."

Swedbank also confirmed that the number of leasing applications is reaching the levels it was a year ago.

Car dealers will feel the effects of these increases later, because there are currently no cars to sell. Factories stopped production at the height of the coronavirus and the waiting time for new vehicles is longer than normal.

Karofeld explained: "Leasing as a product is with a certain delay, most cars are delivered. The motivation and want to drive new cars doesn't show itself statistically until a couple months down the road. We might see sales numbers in two or three months."

Margus Nõmmik, board member of Amserv Auto, said: "We see June in the same vein, 55 percent of last year's market has disappeared. We predict that we will end June with around 1,700 cars sold. Last June, the number was 3,500, so around half the market has disappeared."

Marje Josing, director of the Estonian Institute of Economic Research (Eesti Konjunktuuriinstituut), said that while the leasing market is improving, consumer confidence is still not at the level it was before the pandemic.

Josing said: "A light at the end of the tunnel can be seen and if there is no new wave in the fall, Estonian economy along with the car market, will recover."

Leasing is a popular way of getting to "own" a newer or more luxury-branded car.


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Editor: Kristjan Kallaste, Andrew Whyte

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