Number of new car registrations soars after tax cuts

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Much as anticipated, Finnish new car registrations made a quantum leap upwards on the first working day of the year. A total of 2,429 new vehicles were registered on Wednesday alone, and the same pace continued on Thursday.
      By comparison, the number of passenger vehicles registered in the whole of January 2007 was 16,893.
     
The peak in the registrations was a consequence of the new car deliveries having been transferred from the end of last year to January 2008 in order that the buyers could benefit from the price reductions brought by the vehicle tax reform.
      From the beginning of the year the car tax has been 10 to 40 per cent, depending on the amount of carbon dioxide the model in question puts out, while previously the tax accounted for nearly a third of the retail price of a new car or an imported used car.
      The purpose of the car tax reform is to favour low-emission models. Another goal is to prevent an increase in the number of cars on the road, while the threshold to scrap old cars should be lowered.
      Pekka Puputti, the head of the Association of Automobile Importers in Finland, estimates that the list of the 30 best-selling models will undergo a significant change, as people will want to buy vehicles with low fuel consumption and yet having a sufficiently powerful engine. The change is bound to be encouraged by the new rises in fuel taxation.
      An enquiry among car dealers indicated that a distinct growth can also be seen in the demand for diesel vehicles. It is also possible that there will be a shortage of small diesel cars, as the demand for such new cars is increasing.
      According to some dealers, the estimated sales of new vehicles will reach a total of 161,000 over the current year.
     
Car dealers have also noticed that the money saved is frequently used to buy optional extras for their new car, such as "comfort packs" or leather upholstery or enhanced hi-fi systems.
      At least some of the dealers have promised that when trading in used cars for new models the average cash payment for new vehicles will also go down.
      At the beginning of the year, the petrol tax increased by five cents per litre and that of diesel by five and a half cents per litre.
      The current price-gap between a litre of 95-octane gasoline and a litre of diesel is actually narrower than it has been for some considerable time.
     
One group of vehicles likely to suffer from the changeover in tax calculation will be heavy consumers, generating more than 220 gm of carbon dioxide per kilometre (produced when a petrol-driven engine can get no better than 9.4 litres weighted average fuel consumption over 100 km, or 8.5l/100km for a diesel engine.
      Large gas-guzzling SUVs, for example, are certain to become more expensive under the new regime, and not just at the filling station, either.


Previously in HS International Edition:
  Emission-based car tax to bring down price of new vehicles next year (2.11.2007)

Links:
  Association of Automobile Importers in Finland

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