Sales of new cars will increase this year before the car tax comes into effect in 2025, but a sharp decline is forecast next year, said foreign car importer Bassadone's manager Erkki Ots.
Ots, whose company imports Hyundai, Suzuki, Isuzu and KGM cars to Estonia, said new car sales may increase in the second half of 2024 before the tax comes into force.
"It means that in 2025, new car sales are going to plummet. The result will be as we once saw with the increase in alcohol excise – the taxes went to Latvia, the result is that in 2025 that car tax will certainly not be collected, because this calculation has been done in a very childish way, that the same number of cars will be sold. Of course, you don't sell the same amount, you sell less," said Ots.
The government says the tax will make it between 5 and 15 percent more expensive to buy and own a car than it is now. Otsa said this is why the tax does not meet Estonia's environmental goals, and the availability of cars will fall.
"People can't afford to buy anything, they keep driving their current car. Whoever wants to buy a hybrid car, swap a petrol car for an electric car – they can't afford it and they will keep on driving older and older cars," said Ots.
The Association of Estonian Car Dealers and Service Companies (AMTEL) said the Estonian car fleet is getting older, not newer, as is the purpose of the tax.
AMTEL Manager Meelis Telliskivi said: "In the used car market, people are starting to buy older cars because as the price goes down over the years, there is an age component. Because of this, there is a risk that the average age of cars in Estonia will increase after the tax comes into force."
Editor: Marko Tooming, Helen Wright