Malta sees car prices fall by 9.4% in 2009

See Commission report here

Malta experienced one of the highest falls in car prices, a 9.4% decrease, in 2009 – the year it introduced new carbon emission taxes on vehicles and scrapped the old registration tax system.

The European Commission’s latest report on car prices shows that prices fell slightly, in real terms, in the EU in 2009 and also converged within the EU's single market. At the same time prices for repair and maintenance services as well as spare parts continued to rise well above inflation.

According to Joaquín Almunia, Commissinoer in charge of competition policy, said the relatively stable car prices owed much to the incentives to buy new cars put in place in many countries to mitigate the impact of the economic recession. "At the same time, I am dismayed to see that the price for repairs and spare parts continued to rise during the economic recession. This shows that bringing more competition in the after-sales market was the right choice and should pave the way for more efficient services to the benefit of European consumers.”

The EU price index for cars (reflecting nominal prices paid by consumers, including rebates, VAT and registration taxes) increased by 1.1%, against a 1.7% rise in overall consumer prices, translating into a fall in real car prices of 0.6%.

The fall in real prices was particularly marked in Slovenia (-13.4%), Lithuania (‑11.1%), Slovakia (-11.0%) Romania (-10.1%), the Czech Republic (-9.4%), Malta (-9.2%) and Bulgaria (-9.1%). The fact that most new Member States were harder hit by the recession than the EU as a whole in 2009 may have contributed to these price decreases.

Real car prices for consumers expressed in the respective currencies fell in 24 out of 27 Member States in 2009 (Table 1). In the Netherlands they were stable whereas they increased in the UK (+7.7%) and Sweden (+2.7%). However, it should be recalled that car buyers in the latter two countries benefited from an extraordinary fall in prices (of ‑9.7% and -5.0% respectively) in 2008, so overall they are still better off today compared to the beginning of 2008. In the UK, the movement in prices also reflects the end of the temporary decrease in VAT, in January 2010.

By contrast, prices for repairs and maintenance as well as spare parts continued to rise well above inflation (+1.5% and 0.7% respectively in real terms).