Car sales expected to plummet

  • 2009-01-07
  • By Adam Mullett

PANIC BUTTON: The market for new cars is expected to drop by a whopping 40 percent next year, after end of the year sales nosedived.

VILNIUS - Market analysts have predicted that car sales could continue to drop by up to 40 percent in 2009 after new year-on-year figures from December 2008 showed a 41 percent dip.
After a bright start, 2008 showed signs of a slowdown compared to 2007 with 25,190 new cars registered in Lithuania, down 2 percent from 25,710 registrations, data from the Autotyrimai research company showed.
A rapid market growth in the first half of 2008 was followed by an even faster decline in the second half, hence the negative result for the full year, Autotyrimai said.

In December alone, new car registrations slumped by 41 percent year-on-year to 1,256, based on preliminary data released by the market research company.
Based on the recent findings, the company's analysts this year anticipate a decline of between 30 to 40 percent in the country's new car market, depending on the situation.
Volkswagen representatives said they would be countering the effects of the slowdown with significant discounts on various models.

"It will depend on whether we have the car in stock or if it has to be ordered. It is not clear yet, but we could offer discounts of 20,000 litas (5,800 euros) on the Touareg," Neringa Zukauskaite, Marketing Manager for Moller Auto, a Volkswagen dealership, told The Baltic Times.
She predicted that the discounting would last all year and would be across the board.
"The economy has slowed down. Both companies and individuals now have more daily expenses and less income. The conditions of bank loans are more difficult. The future is unclear. Thus they [dealers] lower the prices and sacrifice some of their profits to compensate for the buyer those financial obstacles they have to meet today."

Based on data from DataCenter, the number of new cars registered for personal use rose by 3 percent last year to 22,180, while the number of cars for commercial use fell by 28 percent to 2,972 units.
Volkswagen held the number-one position in the new car market in 2008, with 3,323 cars registered. Toyota was in second place with 2,429 cars and Skoda was third with 1,961 vehicles.
On top of the economic crisis squeezing Lithuanian motorists, the government has this year introduced a car tax for individuals.

CAR TAX
The new car tax will be between 150-200 litas per year for individual car owners. The announcement of the tax prompted an angry response and protest from citizens, but Prime Minister Andrius Kubilius insisted that the tax pales compared to corporate vehicle taxes, which are 150 litas per month.
Zukauskaite thinks the tax won't have any affect on her company's sales.
"The car tax will not have a huge influence on car sales or car usage in general. Most of the cars are used for practical reasons and that will not change. We would predict that people will just calculate car tax into the inevitable expenses of car usage 's as insurance, for example," she said.

About 100 automobiles surrounded the Lithuanian parliament building in central Vilnius on Jan. 5, driving in circles and honking horns in protest of the new tax.
"The action proceeded calmly without major violations of the traffic rules," Marius Putrimas, chief of the Vilnius Road Patrol Unit, told BNS.
He said a few drivers were warned to put on their seatbelts and not to talk on their mobile phones while driving.

The authorities said that the column of protesting automobiles with alarm signals moved slowly but did not impede traffic.
Analogous actions in protest of the government's taxing plans were staged in six more cities across Lithuania.
Corporate automobiles will be levied with a monthly tax of 150 litas starting January 2009. The contribution is expected to add up to 300 million litas to the state budget.