After the pandemic and the crisis caused by the war in Ukraine, the new car market has recovered. Moreover, there is now even an oversupply of new cars. At the same time, sales are falling. What are the reasons and how is this reflected in prices? Experts told the LSM portal about this. Last fall, the media reported that the new car market had returned to steady growth. For example, Moller auto sales data in the Baltic countries showed that almost a third more new cars were sold last year than the year before. The new car market returned to pre-crisis levels, and Toyota, Škoda, Volkswagen and Dacia topped the sales TOP. What is the situation now, a year later? According to the head of the Hyundai brand, car dealer Skandi motors Ugis Dermanis, "the general trend is that we have successfully gotten out of the deficit. Now there are a lot of cars, we can even talk about an oversupply." "Along with this, healthy competition has returned, as well as good and interesting offers from traders. However, the overall situation compared to last year remains negative – this year, 13% fewer new cars were purchased than a year ago. This means there is still room to grow," says Dermanis. A representative of Skandi Motors describes the current market trends as "moderate caution." The reasons for this are the uncertainty in our region due to the war started by Russia in Ukraine, and the fact that interest rates have increased in banks. Aivars Rudi, a member of the board of the Latvian Association of Credit Borrowers, is even more strict: banks are remaining overly cautious. "Nothing has improved, the situation is still very, very dangerous, and this applies to virtually all sectors of lending – both housing loans and new cars," he says. "Of course, the second factor why lending is very sluggish is the situation with Euribor – loans are still very expensive, so residents themselves are very careful about whether to take them or not. But on the part of banks, there is still great caution – we do not see any improvements there, we do not see them starting to work more actively. Quite the opposite – they are increasingly narrowing their options." The Association of Credit Borrowers was originally created to support borrowers who found themselves in a difficult situation. Now, answering the question of whether borrowers themselves have become more solvent, Aivars Rudi says that "part of the population is solvent, and new cars are no longer just a luxury item, but often a necessity." "In addition, given the planned new regulations, people are increasingly considering the possibility of buying a new car, not a used one," he says. Andris Kulbergs, President of the Automobile Association and Saeima deputy, representative of the "United List", notes that the new car market will continue to fall by about 12%. And this picture will be observed for all models. The price drop was not a surprise, because the previous year was a recovery from the pandemic crisis, or the so-called boom, and now the situation is slowed down by high leasing interest rates. "In turn, as for electric cars, here we see a 35% drop in sales compared to last year. Everyone who wanted them bought them, and the next in line are ordinary users, and for them the offer is zero – competition among cheap electric cars is weak, since the starting price is very high," the expert explains. Secondly, the wait-and-see situation in the new electric car market is due to the fact that the state promises, but regularly postpones the start of support programs, so buyers are waiting for it to start. An overabundance of new cars and a decline in the market do not lead to lower prices. According to the Association, prices are neither rising nor falling, but discounts have increased significantly, so there is a fight for buyers through discounts.
