bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Ceturtdiena 26.04.2018 | Name days: Rūsiņš, Sandris, Alīna

Authorized Automobile Dealers Association: Latvian car park - oldest in EU

FaceBook
Twitter
Draugiem
print
(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, Andris Kulbergs

President of Latvian Authorized Automobile Dealers Association Andris Kulbergs

New cars market and the industry in general saw the biggest drop in history. There is not a single other industry that shrank 90% in two crisis years, Andris Kulbergs, President of Latvian Authorized Automobile Dealers Association (LAADA) told in an interview to the news portal BNN.

 

He also stresses that Latvian car park is becoming the oldest in the European Union (EU), with the average age of a Latvian car that can pass a technical inspection accounting for 12.5 years. The average is 7 years in EU, 8.5 years in Estonia and as little as 2 years in Luxembourg.

What are the recent key events in your industry?

One of the most important trends is that there are more leasing deals in the total number of cars registered this year. Leasing companies financed 62% of the new car park in August, which brings us close to maximum hit in 2007 – 88%. It is a prerequisite for the new cars market to grow and the industry in general to show stability in future.

Another key event is joint fight voiced by car dealers who want that public institutions’ tenders on vehicles supply meet all the principles of fair competition. They want tax payers money being used as efficiently as possible.

Do you lack qualified workforce?

Yes, indeed. We lack skilled mechanics, especially electricians, car diagnosis specialists and professional auto body painters. Many qualified workers have emigrated to other EU member states to seek for better income. This leads to serious workforce shortages in car trade and repair industry. Because of these circumstances, there are also inadequate claims for higher remuneration, which simply cannot be compensated with price corrections due to the poor purchasing power.

What changes would you like to see in the Latvian legislation?

What matters the most for the industry is the dramatic disproportion among the Baltics in terms of transport taxes and duties. Certain positions differ as much as 24 times. Three-year taxes and duties account for LVL 550 in Latvia, LVL 161 in Estonia and LVL 40 in Lithuania, which is 14 times less. Upon registering a vehicle for the first time, a car owner in Latvia pays LVL 360 in taxes and duties. The sum totals LVL 125 in Estonia and LVL 15 in Lithuania, which is again 24 times less. This disproportion is having a negative impact on Latvian competitiveness on the Baltic scale and even among the leading Latvia-based companies. It is much cheaper to register a car in other Baltic states, so Latvian State Treasury misses out on significant funds.

I would also like to see a clear and strategic tax policy directed towards restoring the public car park, which is about to become the oldest in the EU. The average age of a Latvian car that can pass a technical inspection is 12.5 years. The average is 7 years in EU, 8.5 years in Estonia and as little as 2 years in Luxembourg.

How did the crisis affect the industry?

New cars market and the industry in general saw the biggest drop in history. There is not a single other industry that shrank 90% in two crisis years. The sector shrank 41% in 2008 and 81% in 2009.

Sales dropped down to 1997 levels during the crisis. Now we are back to 2003 sales. To reach 2007 peak levels, we still need some 7-10 years of economic development.

Car industry kept posting losses also in 2010. Certain stabilization and first profit came only with 2011. Due to the consolidation, both jobs and salaries were cut significantly.

Total losses of the sector hit record high in 2009 – more than any profit profit posted by all LAADA members taken together. Losses occurred because of sales below cars prime costs, so that there would be funds to settle accounts with banks. It was completely impossible to cut spending as fast as the market drop.

If comparing to 2007 performance, Latvian new cars market shrank nine times in two years of the crisis. Many car dealers and importers had created stocks based on an upward market outlook. Ninefold drop meant extreme steps to get rid of inadequately huge stocks in face of the purchasing power that has still remained. Selling these stocks meant 20-40% losses per car. The second year of the crisis, 2009, was an extreme survival test for car dealers.

The financial crisis practically eliminated the middle-class, which no longer could afford anything additional, not to mention a new car. Consequently, small cars segment fell dramatically, while Premium class sales did not drop that significantly, because the wealthy could still afford a new car.

What is your opinion on the government’s policy to boost the economic situation?

The most soaring issue in Latvia and car services in particular is the huge proportion of shadow economy, which hits as high as 90%. The leading insurers have switched to low-cost services, which are provided by companies that dodge taxes. So such businesses can ensure dumping prices what official dealers cannot.

There is no national-scale action directed towards fighting corruption and shadow economy, which is crippling the competition. Neither are public tenders oriented towards companies that are paying taxes decently. The state should ask for the State Revenue Service’s issued document to see that the particular company has paid taxes for at lest a period of three years. Unfortunately, it is exactly tax-dodging “schema” companies that win in public tenders.


Leave a reply

Danske Bank may announce its exit from Baltic States

Danske Bank Group’s office in Lithuania may announce on Thursday, 27 April, its plans to leave Lithuania and, possibly, the Baltic States, as BNS news agency’s Lithuanian branch was told by two sources.

«Oligarch talks» publication law put on hold; will fabricated «risks» impact UGF?

On Tuesday, 25 April, Saeima’s Legal Affairs Committee decided against putting up for a vote the legislative draft for the digitization and publication of the declassified portion of materials from the so-called oligarch talks criminal case.

OECD to perform independent audit of decisions made by Latvian supervisory services

Organisation for Economic Co-operation and Development plans to perform an independent audit of decisions made by the Finance Capital and Market Commission and Anti-money Laundering Service, as confirmed by Finance Minister Dana Reizniece-Ozola after a meeting of Finance Sector Development Council on 25 April.

Level of prices of agricultural products in Latvia grew 11.6% in 2017

The total price index of agricultural output in 2017 had increased by 11.6 %, which was mainly due to the rise in prices of livestock products of 25.8 %. The price index of crop products grew by 2.2 %.

51% of residents would not purchase goods production of which would pollute the environment

Environment-friendly lifestyle in Latvia, like elsewhere in the world, is becoming more popular every day. So-called green thinking also affects Latvian residents’ habits. 53% of Latvian residents prefer goods and services that help protect the environment, according to results of a study performed by AS Latvijas Zaļais punkts.

World Press Freedom index ranks Estonia highest among Baltic states

The French-based organisation Reporters Without Borders has published its 2018 World Press Freedom index, where Estonia has been ranked 12th and Latvia has been moved up by four positions to the 24th place.

Abu Meri: parliamentary investigative committee could help combat corruption in Riga City Council

«Nils Ušakovs’ policy in Riga is not only non-democratic but also allows for systematic corruption, which has become a tradition. If a week goes by with no scandal, it seems too long. Because of that, I consider forming a parliamentary investigative committee to study corruption in Riga City Council,» said Unity’s Saeima faction leader Hosams Abu Meri in an interview to BNN.

200 thousand Estonian e-mail passwords found leaked online

The global database of the illegally leaked passwords of tons of e-mail addresses contains passwords used by some 215 000 Estonian internet users.

Latvian EC Commissioner invites businesses to prepare for all Brexit scenarios

Businesses and supervisors should prepare for all possible Brexit scenarios, said Deputy Chairman of the European Commission on Financial Stability, Financial Services and Capital Market Union Valdis Dombrovskis participating in the ongoing finance forum City Week in the UK.

Latvia prepared to pay 4.8 million euros for participation in Expo 2020 in Dubai

Latvian government is prepared for participation in the international Expo 2020 in Dubai. Prime Minister Māris Kučinskis said after a meeting of the Cabinet of Ministers this Tuesday that it is planned to allocate EUR 4.8 million for this venture.

Spanish resort city to prohibit renting apartments to tourists

Palma, the Spanish resort city in the Mediterranean island of Majorca, has adopted a restriction that apartment will be not allowed to rent their apartments to travellers, becoming the first place in Spain to introduce such a ban.

Supreme Court of Justice views Kristovskis’ claim against Ventspils City Council

On 25 April, the Administrative Cases Department of the Supreme Court of Justice will be viewing two claims submitted by Ventspils City Council deputy Ģirts Valdis Kristovskis against the city council. «The fact that the case will be viewed verbally and that the defendants include Ventspils City Council, EPRDM and Association of Local Governments is considered unique and unprecedented in Latvia’s court practice,» says Kristovskis.

Messaging app Whatsapp not to be available to under-16s in EU

The smartphone messaging app Whatsapp plans to raise the minimum age limit to its European Union users from 13 to 16 years, as it is adjusting its rules of use to the upcoming EU data privacy regulations.

Saeima speaker in Tallinn: EU and NATO cooperation in defence should be enhanced

Close cooperation between European Union and NATO in defence is now more important than ever. This is especially true for cyber security and hybrid-thread prevention, said Latvian Saeima’s speaker Ināra Mūrniece during a meeting of EU member states parliaments in Tallinn on Tuesday, 24 April.

Ministry avoids going against supporting parties; Ventspils City Council’s violations reported to court

Environment Protection and Regional Development Ministry has no influence at all, and sometimes it seems it has no desire to exercise its rights and perform its duties. This situation most likely appeared because the institution is led by a minister who represents a specific political party.

Warfare in Ukraine escalates, soldiers wounded

In the Donbas War that continues for the fifth year in the Ukrainian regions of Luhansk and Donetsk, Russian hybrid forces have this week conducted a total of 44 attacks, wounding five soldiers, the Ukrainian military reports.

Demand for mortgage loans grew 53% in March

Increased demand for mortgage loans with state guarantees was observed in Latvia in March. Nearly every other loan application filed last month was intended for housing purchase using Altum guarantee. The largest amount of interest came from families with children, as reported by Citadele Bank.

Most businesses in Latvia still not ready for data protection regulation

The majority of businesses in Latvia are still not ready for EU General Data Protection Regulation, which is due to come to force on 25 May, says KPMG lawyer and certified data protection specialist Sanita Pētersone.

Finnish prisoners found radicalising towards Islamic and far-right extremism

In prisons in Southern Finland, a study of radicalisation of inmates has been conducted and has identified dozens of inmates, who are moving into either radical Islam or into far-right violent extremism.

Ušakovs invites colleagues from Russia to attend centenary festivities in Riga

Mayor of Riga Nils Ušakovs has invited mayors from 56 cities to attend festivities organized for Latvia’s centenary. This includes mayors of Moscow and St. Petersburg, as confirmed by Ušakovs’ press-secretary Laila Ivāna.

Estonian President sees no return from e-governance

Estonian President Kersti Kaljulaid has discussed with Christine Lagarde, the Managing Director of the International Monetary Fund, the Baltic country's experience in providing public e-services to the population.

Norway interested in developing cooperation with Latvia in tourism industry

«Latvia welcomes successful regional and economic cooperation with Norway. Our countries have common values and goals – developing Baltic and Nordic countries as a wealthy and secure European region,» said Latvia’s Economy Minister Arvils Ašeradens during his meeting with Norwegian State Secretary for Trade, Industry and Fisheries Roy Angelvik.

Finland not to continue its basic income scheme

The basic income scheme in Finland that has been tested in the Nordic country since 2017, will not be continued as the Finnish government has decided to look into other schemes for reforming the Finnish social security system

MEP: New Unity may be in the government with other parties that have similar goals

After Saeima elections, New Unity will cooperate with parties prepared to work with the association to accomplish specific goals, says leader of New Unity and member of the European Parliament Krišjānis Kariņš.

Canada experiences tragic attack on pedestrians in Toronto

In the Canadian city of Toronto, a driver has been driving onto pedestrians taking the lives of 10 people and injuring 15 more.

Most read

Most commented