The 2009 car tax reform pushed prices of new cars down significantly but Maltese consumers can still expect to pay more for the same vehicle than they would if they were living elsewhere in the EU.
A report published in Brussels yesterday shows that prices did fall substantially after the reform (see table).
For example, the price of a Peugeot 308 this year is €7,220 less than it was before the tax regime changed, while that of a BMW 320d fell by more than €6,700. To different degrees, the situation is similar across the main brands of cars sold in Malta.
However, despite the government raking in significantly less on the purchase of a “normal” medium-sized car, prices of brand new cars in Malta are still high when compared to the EU average.
According to the EU’s report, the brand of cars that is priced closest to the EU average in Malta is Peugeot – sold in Malta at 107 per cent of the EU average.
But not a single one of the car brands sold in Malta is priced lower than the EU average. On the contrary, the majority sold by Maltese agents and importers cost significantly more.
For instance, a Mercedes 220D in Malta is sold at 145 per cent of the European average, while a Seat Ibiza is 44 per cent more expensive here than it is in most other EU countries.
Similarly, a Volkswagen Polo costs a Maltese driver 32 per cent more than the EU’s average while a Renault Clio is priced at 116 per cent.
According to an EU official involved in the drafting of this report, car prices in Malta have gone through a big reform as a consequence of the new vehicle tax regime introduced in 2009.
“We have observed much lower prices for Maltese consumers from 2009 onwards and this is definitely a direct consequence of EU membership,” the official said.
“However the price of new cars in Malta is still high when compared to other member states. This may be a result of higher transport costs and a small market. However, it may be also a consequence of higher mark-ups than the average by Maltese agents,” the official said.
Moreover, the report shows that while the cost of cars in the EU fell by 2.5 per cent this year when compared to 2010, Malta, Italy and Portugal were the only three members of the EU that registered an increase.
In the case of Malta and Italy this was only a slight 0.2 per cent, while the increase in Portugal amounted to 2.6 per cent.
The EU said that the overall drop in car prices was a direct result of the economic crisis which continued to pile pressure on car manufacturers to lower their prices to boost sales. In Malta it seems that this strategy has not worked.
According to the report, the decline in real prices this year was particularly marked in Slovakia (-17.4 per cent), Bulgaria (-13.5 per cent), Slovenia (-11.6 per cent) and the Czech Republic (-9 per cent). In Poland they fell by 5.6 per cent.
Among the large markets, prices declined most notably in the UK (-3.7 per cent), while Germany, Spain and France experienced more moderate price reductions (-1.9 per cent, -1.6 per cent and -0.9 per cent respectively).
The report states that “the fall in real car prices across the EU continues a trend observed for more than a decade, which indicates that competition between car manufacturers on the market for new cars is working.”