Recently published statistics by the European Commission show that in 2010, car prices fell by 2.5% throughout the European Union. Consumers are starting to benefit from these long-term price changes following the withdrawal of specific competition rules that were in place for the sale of new cars and the introduction of the car tax reform in 2009
The car price report is part of the Commission’s monitoring of the motor vehicle sector. It outlines the list prices of 89 best-selling car models representing 26 brands throughout the EU. The report enables consumers to compare car prices across Europe and to take advantage of the opportunities of the EU’s Single Market.
Compared with the EU average, Maltese consumers can still expect to pay more for the same vehicle than they would pay had they been living in another EU member state. The European Commission has put forward a number of reasons as to why the average price of cars in Malta is higher than the EU average. The main factors that could be leading to higher rates are due mainly to transport costs that are more expensive because of the country’s insularity as well as lower profit margins due to the small size of the population on the Maltese islands. However, it could also be a consequence of higher than average mark-ups by Maltese agents involved in the business.
Moreover, the report shows that while the cost of cars in the EU fell by 2.5% this year when compared to 2010, Malta, Italy and Portugal were the only three members of the EU that registered an increase. In the case of Malta and Italy this was only a slight increase of 0.2%, while the increase in Portugal amounted to 2.6%.
Demand for passenger cars which, reflecting the cautious upturn of the overall EU economy as well as the impact of fleet renewal schemes in 13 EU member states, had picked up in the second half of 2009, dropped again in 2010. Following the end of the fleet renewal schemes in many member states, car registrations dropped by 5.5% in 2010.
According to the report, the decline in real prices this year was particularly marked in Slovakia (-17.4%), Bulgaria (-13.5%), Slovenia (-11.6%) and the Czech Republic (-9%). In Poland prices fell by 5.6%. In the larger markets, prices declined most notably in the UK (-3.7%) while Germany, Spain and France experienced more moderate price reductions (-1.9%, -1.6% and -0.9% respectively).
The vice-president of the European Commission responsible for Competition, Joaquín Almunia, said that “It is good to see that consumers in Europe are benefiting from competition in the markets for new car sales and continue to enjoy significantly falling prices in real terms ….The fact that price differentials between member states narrowed further is a positive indicator of cross-border competition”.
A new EU competition law framework for the car sector entered into force in June 2010. The main objective of the reform is to ensure more and better competition in the after sales markets, thus ensuring cheaper repairs and maintenance which represent a significant part of the costs of owning a car over its lifetime. The new rules make it easier to deal with practices such as failures to release technical information to independent garages or the misuse of warranties. Car manufacturers can, on the other hand, organise their sales networks as they see best, as the experience shows that there is fierce inter-brand competition.
Mauro Miceli is Executive
(EU Policy and Legislation), Meusac