Nearly two-thirds of cars registered last year were second-hand, which has now become by far the most popular choice of car for Maltese motorists, The Sunday Times has learnt.

However, the change in vehicle-buying habits are causing new car dealerships to consider shedding staff as they complain about the disparity created by the cheaper registration tax on second-hand cars.

Figures seen by this newspaper show that only 5,522 new cars were registered last year, just over 35 per cent of the total cars registered.

Second-hand cars accounted for nearly 10,500 of the 16,000 vehicles imported.

Association of Car Importers Malta (ACIM) secretary William Shaw confirmed that the association had written to Prime Minister Lawrence Gonzi and Finance Minister Tonio Fenech expressing “deep concern” over the figures which, he said, confirmed what car importers had experienced in 2009 and 2010.

Statistics show that car sales plummeted to an average of 300 a month from an average of 650 to 700 a month in 2008, before the new registration tax regime kicked in for second-hand cars.

Figures show that the 65-35 new-old ratio in 2008 switched to a 35-65 ratio in favour of second-hand cars in 2009 and 2010.

Mr Shaw said car importers wanted the government to create a level playing field after the introduction of the revamped car registration tax in January 2009.

As a result of this new regime, second-hand cars imported from both within and outside the EU became much cheaper to register compared with brand new cars.

The problem with the new regime, he said, was that it was based on the UK model, the difference being that the British model levies VAT but no registration tax.

The changes to the registration tax regime came about as a result of pressure, including from the EU, that Malta was charging consumers VAT twice – 18 per cent of the vehicle purchase price, including registration tax, on which they would have already paid VAT.

Even though most of the major importers now sell second-hand imported cars themselves, Mr Shaw said it was a pity that many Maltese preferred buying used cars from abroad as opposed to brand new cars.

“For some it’s a question of budget, but many Maltese are under the impression that buying second-hand cars is a bargain. It’s a pity because you don’t really know what you’re buying when you buy from abroad,” Mr Shaw said.

He also said that under the current tax regime on second-hand cars, the government was collecting far less revenue from registration tax.

Furthermore, certain extras, such as electric adjustable seats and steering wheels, electric sunroofs and TFT screens installed in the headrests were already installed in the second-hand cars, but would be subject to VAT if added in Malta.

He also lamented that many individuals were making profit by driving cars from the UK without registering themselves as businessmen and without paying any form of tax on the profit they were making.

Asked whether car importers were considering downsizing their staff if the situation remained unchanged, Mr Shaw said: “Importers employ 700 people, so it’s 700 families we are talking about.

“There is not much that importers can do about the situation, and then it boils down to a business concern.

“Overheads increase, and something’s got to give.”

The registration figures for last year show that the largest number of new cars was purchased in December, when 538 cars were registered. This is probably due to the scrappage scheme introduced by the government in November, which is partly financed by the car importers.

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