bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 25.06.2018 | Name days: Maiga, Milija

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

KPV LV: someone is trying to ruin our party’s reputation

An attempt is being made to ruin KPV LV’s reputation, said Saeima deputy Artuss Kaimiņš at a press conference organized on Monday, 25 June, in relation to last week’s events, when Corruption Prevention and Combating Bureau detained Kaimiņš, Atis Zakatistovs and businessman Viesturs Tamužs.

Potential investors want ABLV Bank’s owned bank in Luxembourg

Several potential investors have voiced their interest in purchasing liquidated ABLV Bank’s owned ABLV Bank Luxembourg, says the bank’s liquidator Arvīds Kostomārovs.

Saeima deputy not called in to CPCB for repeated interrogation yet; avoids comments

Saeima deputy Askolds Kļaviņš has not yet been invited to come over to Corruption Prevention and Combating Bureau for a repeated interrogation. The politician said he may pick a lawyer to represent him only once he receives an invitation from CPCB.

EU introduces sanctions against Myanmar security officials for Rohingya crackdown

The European Union, acting relation to what sees as systemic human rights violations against the Rohingya people in the South-East Asian country of Myanmar, will introduce sanctions on seven security officials of the South-East Asian country.

Evidence in criminal case at risk in ABLV Bank’s self-liquidation process

Sergei Magnitsky’s former employer, Hermitage Capital Management, sent a request to Latvia’s law enforcement authorities on 21 June 2018, asking them investigate money laundering in ABLV Bank.

Average school exam scores in Estonia too low for University of Tartu

Pupils at Estonian secondary schools have taken their state examinations this summer and their average results show that the average potential student would not qualify for the University of Tartu, the highest ranking higher education institution in the Baltics and Eastern Europe.

NCP member turns to corruption watchdog over Lembergs daughter’s offshore network

Member of the New Conservative Party and former worker of Corruption Prevention and Combating Bureau Juris Jurašs has submitted a request to the bureau, asking for an investigation of materials published by journalists about offshore network of the daughter of the suspended Ventspils Mayor Aivars Lembergs’, according to an announcement on social media.

Estonia experiences safe Midsummer festival as «bonfire guards» registered for first time

Estonian traditional Midsummer festival of Jaanipäev has been a weekend of active work to the the Estonian Rescue Board, which introduced the voluntary registration of bonfire guards this year.

Italy sees risk to Schengen area as it seeks EU-wide responsibility for migrant arrivals

The European Union's area of border-free travel could be in trouble if no solution is agreed to the problem of cross-Mediterranean migration has stated Italy's Prime Minister Giuseppe Conte. At the informal meeting of 16 EU leaders in Brussels, Italy's new Prime Minister Giuseppe Conte called for shared EU responsibility for rescued migrants and penalties for countries refusing to accept quotas.

Police see no criminal violations in association’s words about «weapons unused at the right time»

Latvia’s Security Police say they found no signs of criminal violations in a statement released by Tēvijas sargi association regarding «a great purge» in Latvia and «weapons that went unused at the right time».

Erdoğan claims victory in Turkey's presidential election

The long-time leader of Turkey Recep Tayyip Erdoğan has received of over a half of votes in the first round of a presidential election to receive a new five-year term in power.

Weather to become summer-like again in Latvia this week

The beginning of the week will remain rainy in Latvia. However, as the anticyclone becomes stronger, precipitation will back off and air temperature will start gradually increasing. Weather will change again at the end of the week, as reported by Latvia’s State Environment, Geology and Meteorology Centre.

Week in Lithuania. Parliament makes first step towards disclosing ex-KGB agents

The Seimas of Lithuania on Thursday, June 21, backed an initiative by the opposition Electoral Action of Poles in Lithuania – Christian Families Alliance to disclose now classified information on former agents of the Soviet KGB who voluntarily admitted their collaboration.

BNN summary of the week: CPCB visit to Saeima; ministers survive no-confidence votes; DTV case ends with mild penalties

BNN offers a summary of this week’s topical news in a variety of categories: Ruling; Future; Trust; Measures; Calendar.

SRS uncovers numerous violations more than half of inspected companies

State Revenue Service’s Tax Control Office performed a total of 305 thematic inspections of employers in Latvia in Q1 2018. Authorities recorded violations in 171 inspections, according to information from SRS.

Third level pension plan deposit volumes reach new record value

Residents’ interest for pension savings remains high. The volume of deposits made to private pension funds in the first three months of 2018 has reached a new historic peak: a total of EUR 16.5 million has been paid to 3rd level pension accounts, which is 11.6% more when compared to the same period of 2017, as reported by Finance and Capital Market Commission.

Petrol station network in Latvia caught performing fraudulent activities with diesel fuel

State Revenue Service’s Tax and Customs Police have uncovered and put an end to a fraudulent scheme with diesel fuel performed by some network of petrol stations in Latvia, as confirmed by the service.

Kaimiņš: I believe CPCB is performing a political order

In the evening of Thursday, 21 June, Corruption Prevention and Combating Bureau released three people previously detained as part of a criminal process regarding possible illegal funding of KPV LV party – Saeima deputy Artuss Kaimiņš, his colleague Atis Zakatistovs, and businessman Viesturs Tamužs.

Latvia’s parliament conceptually supports new sanction regulations

On Thursday, 21 June, Saeima supported in the final reading amendments to the Law on International Sanctions and National Sanctions of the Republic of Latvia that are meant to improve sanction regime regulations to ensure efficient application of national and international sanctions, as reported by Saeima press-service.

Storm in Tallinn floods streets, cuts Croatia-Argentina match short on TV

A rain storm has hit northern Estonia on Thursday, flooding some streets in the capital Tallinn, damaged buildings and badly affected the broadcast of an interesting World Cup game.

American banks tested for financial stress show positive results

The U.S. has performed banking stress tests and found that the 35 largest banks operating in the country have enough funds on hand to sail safely through a severe financial crisis.

Saeima fires judge for coming to work in a drunken state

On Thursday, 21 June, Latvia’s parliament supported the proposal to dismiss Rezekne Court judge Arvis Garais from his post. 71 deputies voted in favour, no one abstained and no one voted against.

UK to have three requirements to EU citizens willing to remain in UK

For citizens of the European Union willing to continue living in the UK after the country leaves the bloc, they will have to submit applications and answer three key questions over the internet, according to the country's interior minister.

Weather in Latvia to be rainy and cool during Ligo; next week’s weather to be dry and hot

Weather at the end of the week in Latvia will be dictated by a cyclone. Because of that, there will be instances of rain on Ligo. Weather is expected to improve next week, however, according to Latvia’s State Environment, Geology and Meteorology Centre.

Lithuania’s blood plasma corruption scandal extends to Latvia

The former head of Lithuania‘s National Blood Centre, suspected of corruption and involvement in unlicenced activity, received more bad news this week from Latvia, where investigators of the Lithuanian Special Investigation Service had questioned the Latvian Health minister, Anda Čakša.

Most read

Most commented