The introduction of a new taxation regime and the global economic crisis has significantly pushed down the cost of new cars in Malta, a new EU report reveals.
However, compared with the EU average, car prices in Malta remain on the high side, although the discrepancy is much lower compared with 2008.
According to the report, the cost of cars in Malta has dropped by more than nine per cent in the past two years, with the most significant drop registered in 2009. This drop is believed to be the result of the introduction of a new car registration tax regime which introduced a taxation mechanism based on environment-friendly indicators, particularly on engine capacity and emissions.
An exercise conducted by The Sunday Times comparing the prices of various cars sold in Malta in the past two years according to car price tables published by the European Commission shows that consumers are getting a much better deal.
For example, the price of a Peugeot 308 on January 1, 2010, fell more than €8,500 in two years, while the price of a BMW 320d was down by more than €5,000 in 24 months.
Although the report shows that the recession has pushed down prices across all the member states, Malta's decrease is still much higher than the rest of the EU.
While in the last two years, prices in the eurozone fell by -2.1 per cent, in Malta they were down by -9.2 per cent, the highest drop in the 16-member eurozone, except for Slovenia and Slovakia.
"We think that the real change in Malta is mainly attributed to the new taxation regime and not to the recession. However, prices in 2009 also came down through cuts by major manufacturers in order to boost their sales," a Commission official told The Sunday Times.
According to EU sources, one other reason why Malta's car prices were significantly discounted is attributed to the high importation of second hand cars, particularly from the UK.
"This also had a significant impact on the Maltese market where car agents realised they couldn't keep charging exorbitant prices and losing clients," the sources said.
According to the latest EU report, the best deal currently in Malta is a Peugeot 308, which is actually sold at EU average price. All the other new cars sold in Malta are priced at a higher level than the EU average.
For example, buying a Volkswagen Touran in Malta will cost 47 per cent more than the EU average, while a BMW 320d costs 30 per cent more.
On a general EU level, the Commission's report shows that car prices for consumers fell in 24 out of the 27 member states in 2009. In the Netherlands they were stable whereas they increased in the UK and Sweden.