New car sales plummet in December as VAT rules change

Photo: Caro / Scanpix

The sudden fall in the number of new cars sold in Estonia in December can be attributed to the changes in rules regarding value-added-tax (VAT) that stepped into force on Dec. 1, the car dealers and service companies association AMTEL said.

New car sales fell to 985 units in December after 2,049 units sold in October and 1,953 in November.

After the two months leading to December that were successful in terms of new car sales obviously as a result of the changes to VAT rules effective from Dec. 1, in December new car sales returned to their usual level, AMTEL said. In December 985 new cars were sold, compared with 992 in december 2013.

In December also the relationship between the number of new cars and used cars registered in Estonia for the first time changed. The share of new cars rose to 48 percent of all first-time registrations in Estonia in November, then dropping to 35 percent in December. The latter ratio is on a par with December 2013. AMTEL said that if a trend like this continues and the share of new cars stays below 40 percent the government's hopes as regards VAT inflow may suffer a setback.

Altogether 20,861 new passenger cars were sold in Estonia during 2014, 7 percent more than the year before. The increase was in line with the AMTEL projection which forecast a rise of 6-8 percent. Forecasts by AMTEL members suggest that new car sales in 2015 will grow by 3-6 percent year over year.

In December sales, Toyota maintained its leader's position with 129 new cars sold, followed by Renault with 102 and Nissan and Skoda with 91 units each.

In a breakdown by model, Nissan Qashqai topped the list with 62 units, followed by Skoda Octavia with 56 and Renault Megane and Renault Captur with 47 units each.  

Sales of utility vehicles in December grew somewhat in comparison with December 2013 to 263 units. In year-to-year comparison sales of new utility vehicles grew 3 percent. In December the best selling brand in the utility vehicle category was Peugeot with 43 units, Citroen being in second place with 40 units and Renault third with 27. The truck segment was topped by Scania with 12 units sold, followed by MAN with 11 and Mercedes-Benz with 8 units.

«While new car sales in 2014 were in line with the forecast, of utility vehicles fewer were sold than desired and expected. This directly reflects the state of the economy here and around us -- an effect of the economic problems of Finland, Sweden and Russia,» AMTEL manager Arno Sillat said.