Looming car tax felt in new vehicle sales
Sales of new cars were down 14 percent on year from January to July this year. Experts give economic uncertainty and the car tax as reasons.
New car sales were down 13.8 percent over the first seven months of the year compared to 2023. The slump has been smaller for commercial vehicles, coming to just 0.6 percent.
Andrei Jevtušenko, head of sales for Volkswagen dealer Möller Auto in Mustamäe, said that slow sales reflect the general situation in the economy.
According to the salesman, price advance has been considerable and people are putting off major purchases. "People lack confidence. Recent years have brought a lot of uncertainty, with all major events and past crises factoring in," he said.
Kaarel Tamm, head of sales for Tartu-based Škoda dealer Aasta Auto, said that sales have picked up in Southern Estonia. "It seems that people have realized there will be a car tax and are looking to swap out their cars before it lands."
Tamm clarified that while there is general price advance, orders that might be associated with the looming vehicle tax are nose up.
"I believe the vehicles market will live well this year," Tamm said, adding that Aasta Auto Tartu's results for this year have been on par with 2023.
But Jevtušenko said that Möller Auto is unlikely to repeat last year's result.
Both said it is difficult to forecast how Estonia's car tax (which will include both a one-off registration fee and an annual component and will probably enter into force from next year – ed.) might affect the market.
"It will deliver a blow, while it's hard to say how deep the decline will be," Jevtušenko remarked. He added that while corporate clients are unlikely to replace their fleets with newer vehicles that are cheaper to tax, private customers will probably hold on to used vehicles for longer and will only consider buying a new car when it becomes a necessity.
Sales of electric and hybrid vehicles up
At the same time, sales of electric and hybrid vehicles have grown. EV sales have grown by slightly more than 1 percent in the first seven months on year.
Hybrid vehicles are the most popular and made up 51 percent of all new car sales in July, with hybrid sales up 8 percent year over year.
Kaarel Tamm said that one reason people consider hybrids is that they'll be cheaper to own once the vehicle tax lands, with Jevtušenko adding that hybrids also help to save on fuel bills.
What makes are the most popular in Estonia?
Skoda was the most popular make in July for the second consecutive month and remains the best-selling brand for the first seven months. Kaarel Tamm said that its most popular models are the Octavia and Kodiaq.
Toyota holds second place, followed by Volkswagen. Jevtušenko said that new Volkswagen models that arrived in spring, including the Tiguan, Passat and the facelifted Golf, have helped the brand hold on to third place.
Peugeot, Ford and Citroen have sold the most commercial vehicles, with Scania and Volvo dominating truck sales.
--
Follow ERR News on Facebook and Twitter and never miss an update!
Editor: Marcus Turovski