Changes in car tax bring down resale prices of used cars

Confusion reported in trade-in deals

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Changes in the taxation of cars has led to a cut in the resale value of used cars.
      At the beginning of the year, the car tax was staggered so as to favour models with lower emissions.
      Markus Halonen, head analyst at the price-monitoring company Grey-Hen, said on Wednesday that the prices of used cars fell by nearly nine per cent from January 2007 to January this year. The decline focused on the last two months of 2007.
      According to Grey-Hen's figures, prices of new cars declined by an average seven per cent because of the changes in taxation. The company collects information on completed sales at car dealerships and their used car sales.
      Markus Halonen concludes that the difference between the trade-in price of an old car brought in by a customer and that of the new car he or she buys declined somewhat in the one-year period.
     
When the change in the car tax was announced last year, prices fell, and many customers had to make due with very low trade-in rebates.
      Halonen believes that the reason for this was that many car dealers were afraid of a collapse in prices, and were trying to play safe. The prices stabilised in January this year.
     
One car owner told Helsingin Sanomat about his efforts to sell an Audi A-4, which he had registered in 2005, and which was driven 36,000 kilometres. When it was new the car had cost EUR 45,000.
      In Porvoo he was offered EUR 20,000, representing a depreciation in value of more than 50 per cent in just over two and a half years.
      In Raisio, near Turku, the offer was EUR 21,000 and in Seinäjoki, he was offered EUR 23,000.
      "A friend of mine has ties with a dealership in Helsinki, where they promised EUR 25,000. I took the offer and traded the Audi in for a Jeep Patriot."
     
Lawyer Katja Syrjänen of the Automobile and Touring Club of Finland says that her organisation has learned of a number of cases in which contracts have been violated.
      The disputes involve situations in which a car deal has been made before the changes in the car tax law were announced, and in which delivery of the vehicle had been agreed to take place in 2008.
      One typical bone of contention involves trade-in situations in which the prices of both the new car and the one that is traded in should go down by the same percentage. For instance, if the price of a new car goes down from EUR 30,000 to EUR 27,000 - by ten per cent - the trade-in value of the old car should also go down by ten per cent - that is, from EUR 10,000 to EUR 9,000.
      However, in some cases, dealers have reduced the price they pay for a trade-in by the same number of euros - not the percentage - as the discount in the price of the new car. In the above example, the value of the trade-in would go down by EUR 3,000 and not EUR 1,000.
      Syrjänen says that most disputes of that nature were settled once the Automobile and Touring Club of Finland contacted the dealership.


Previously in HS International Edition:
  Emission-based car tax to bring down price of new vehicles next year (2.11.2007)
  Number of new car registrations soars after tax cuts (4.1.2008)

Helsingin Sanomat