New regulation brings in more cars from America

  • 2006-01-11
  • By Kairi Kurm
TALLINN - A new regulation that may come into effect in February will enable car importers to bring in models from the U.S. market that are already rolling off European assembly lines. This, in turn, could bring down current prices of luxurious cars by about 10 percent, though the downside is that discipline on the car market may deteriorate since U.S. car manufacturers' guarantees may not always apply in Estonia.

Priit Vene, director of the road and railways department at the Ministry of Economic Affairs and Communications, said the regulation aims to broaden the choice of cars available to Estonian consumers.

According to a regulation currently on the books since March 2004, imports of cars from the United States were banned if the same models 's the so-called "same family" cars 's were also manufactured in Europe. Other types, however, could be imported.

Car dealers who do not hold exclusive rights are happy about the new regulation. For Autonova, one such dealership, the regulation will allow the company to import more American cars to Estonia. The company already has a number of such cars in a Finnish warehouse on their way to Russia.

"A customer can choose between a car with a full guarantee from Europe or a less expensive car from America. The imports would not be massive in my opinion. The market is small and dealers have to hold their every customer," said Harry Reimers of Autonova, which offers a one-year guarantee on cars imported from the United States.

Not everyone is thrilled about the change. Jaak Uudla, chairman of the board of the Union of Estonian Car Sales and Service Enterprises, is against the new amendment.

"It does not make any sense and is not in the interest of consumers," said Uudla. "Cars imported from America, China or India might not fit in Nordic countries. There are no guarantees. Repair work opportunities are questionable. European car parts and details might not fit in U.S. cars. Cars used in Africa and China might not have the heating system required in our cold climate."

Uudla said that, because of the aforementioned risks, it was the policy of car manufacturers to sell cars in certain regions only.

Currently the same restrictions apply in Lithuania, while Latvians can still import any U.S. car if it passes the test.

"It is not a catastrophe. We are not talking about this in a fear of losing a market," Uudla stressed. "As a customer, I would prefer to buy a car from a representation that offers guarantees."

Cars imported from the U.S.A. will have to be tested in Finland or Belgium for a certificate of conformity, since such tests are not done in Estonia. This costs some 1,500 's 2,000 euros. The car importer will have to pay the 10 percent EU duty, and then 1,000 euros for transportation and another 1,500 euros for a noise test. These tests will have to be made regardless of whether such American cars have previously been registered in Estonia or not.

For this reason, Uudla says, "I do not think [imports of cars from the United States] will be massive."

Jurgen Vester, chairman of the council of Premium Motors Grupp, which is a sole distributor of Hummer jeeps in Estonia, is optimistic. He knows that there are 30 cars waiting in a warehouse for the ban to be lifted.

"We have a free market economy, and things have to be free," said Vester. "The European regulations set standards on pollution and noise. Cars from Arab countries have a high CO2 emission and may not, of course, be imported. If Germany can import Mercedes, Porsches and BMWs manufactured in America, why can't we?"

Vester predicted that the new regulation would halt the sales of cars manufactured in Germany, since these are more expensive than ones produced in America.

As a result, the sole distributor of Porsche cars may suffer, he said.

Andrus Lint, manager of Baltijas Sporta Auto Eesti, which is a German company distributing Porsche cars in the Baltic states, said that they might lose quite a significant number of customers.

"I doubt someone wants to deal with sports cars, but there might be interest in importing a parcel of Porsche Cayenne jeeps," said Lint. "If the manufacturer of Porsches does not defend the Estonian market, then a question arises - why should we buy from a European manufacturer for a higher price?"

Baltijas Sporta Auto Eesti, unlike others, cannot buy Porsches from the U.S. market.

In America, cars are cheaper and the market is big. The difference in prices is about 25 percent, Lint said.

"Official companies have exclusive distribution rights. They have invested here, and they have contracts. It does not look good if intermediaries will deteriorate the market. The manufacturer may step in between here. The American distributor cannot sell Porsches in Estonia, where we have the sole rights. It is also not beneficial for the government. Dealers' business might not have always been official and by the books. They could import new cars as used cars," said Lint.