Survey: 54% of Latvians are concerned that car industry lacks new and used cars

54% of Latvians are concerned that car industry currently lacks not only new, but also used cars, according to the results of survey* conducted by the car dealer “Moller Auto”.
 

In the survey, it was concluded that 13% are very concerned about the availability of cars, while 41% are partially concerned. Respondents aged 18–29 are more concerned (61%), moreover in Kurzeme and Latgale it is more apparent than elsewhere in Latvia.

Experts of “Moller Auto” say that the car industry is in an atypical situation where the demand for new cars is higher than the offer that has caused certain nervousness not only in the industry, but also in consumers, making them consider several global factors when purchase of a car is planned now or in close future.

Izīda Gerkena, “Moller Auto” Group Executive Director in the Baltics, continues: “First, I would like to emphasise that there is sufficient number of new and used cars in Latvia, however, we cannot ignore several factors that impact the logistics chains and production. All new cars are equipped with micro-chips, and it is the lack of these micro-chips that has slowed down production of new cars all over the world and there are several market players that are still fighting for consistent supply of critical components. Moreover, war crisis has ceased operations of several factories in Eastern Europe and caused even more rapid increase of already expensive raw materials. Therefore, people have to take into consideration that they might wait for a new car with specially selected components for even a year, however, in the segment of used cars, there are not so many used cars that have been used for a short term or 1–3 years, because the current owners not always can get a brand new car in the expected period. ”

Ms Gerkena emphasised that the deficit of new cars has caused a downfall in the market of cars used for a short term. Compared to 2018, this year there are considerably small number of cars that have been used for 1 year and are in the market repeatedly, i.e., only 2% of the sold ones. However, cars that have been used for 3 years make up only 16% out of the sold number (in comparison, in 2018, it was 37%). It means that the car owners choose to continue driving the same car instead of placing the car in the market, because they are not sure about the possibility to buy a new car.

When characterising development of car industry in the coming years, the data obtained by the industry research company “S&P Global Mobility” show that during this and next year, the amount of cars produced in Europe will decrease by approximately 9% that is by approximately 1 million cars.

Based on the survey results, majority of the general public or 81% of Latvians would not buy a used car due to too high price. However, other factors that would cause them not to buy a used car include, for example, too limited offer that was marked by almost every fifth respondent.

Ms Gerkena says that changes in the segment of new cars as a domino effect can be seen in the segment of used cars, because their prices are the same as the prices for a new car some time ago. “Without doubt, the reasons why people do not want to buy a used car, whose price a few years ago was the same as that of a new car, are understandable. Market trends show that prices of used cars are by 15–20% higher, compared to 2020, and currently there are no indications that this increase might stop,” said Ms Gerkena.

She also said that the general price increase makes people rethink their long-term purchases, therefore more and more people choose to buy a car with a view to future — electric or hybrid car. “We observe increase in the sales of these segments that is facilitated not only by a transition to greener environment but also increasing fuel and natural gas prices. This is shown in the data: in the first six months of 2022, the demand for new electric cars has increased by 85%, but the demand for cars with internal combustion engine has decreased by 9%,” said Ms Gerkena.

* Survey was conducted by “Moller Auto” in cooperation with research agency “Norstat Latvija”. It was conducted in June 2022, and more than 1,000 economically active people aged 18 to 74 participated.

“Moller Auto” Group operates in all three Baltic States, representing car brands “Volkswagen” and “Audi” in Latvia. “Moller Auto” Group in the Baltics includes nine companies, their total unaudited turnover in 2021 in the Baltics was EUR 267 million, and unaudited profit before taxes was EUR 9 million.

Published on 28 July 2022.