Monthly registrations of used cars originating from the European Union have almost quadrupled since January, according to figures provided by the Malta Transport Authority.
In January, when the new registration tax regime came into force, 256 second-hand cars were registered with the ADT. Registrations surged to 821 by April, after reaching 456 in February and 750 in March.
Registrations of EU and non-EU new cars peaked at 801 in January, but dipped to 474 in February. In March and April, registrations totalled 702 and 700.
Meanwhile, the Finance Ministry is analysing a report submitted by the Association of Car Importers which proposes the introduction of an eco-incentive or “scrappage” scheme, a ministry spokesman told The Times Business.
In the report, car importers illustrate how a scheme modelled on similar initiatives implemented in 12 EU member states – the latest launched in the UK last Monday with some hiccups – would see Malta’s roads occupied by a cleaner, younger fleet. The average lifespan of a car in Malta is 15 years, the highest across the EU.
The scheme would ostensibly boost new car sales while ridding Malta of polluting cars in view of steep emission reduction targets set by the EU. Local agents say both they and the manufacturers they represent would support the scheme financially.
A ministry spokesman said the authorities were “open to the car importers’ concerns” in the new market conditions which has seen a flood of second-hand bargain imports from the continent, most notably from the UK where a weakened currency has made car purchases more attractive.
The spokesman said the ministry has “worked in tandem” with car importers who had input in decision-making. He pointed out, however, that new car sales had not dropped. Rather, he pointed out, it was brand choice that had been affected.
According to data released by the National Office of Statistics last month, there was a 26 per cent increase of new cars on the road in the first quarter of this year compared to January to March 2008. Used vehicles on the road increased by 46 per cent from 1,028 in the first quarter last year to 1,864 this year. In three months, 4,264 vehicles were registered compared to 3,276 between January and March last year, an average rise of 300 cars a month.
The influx of second-hand car imports has also distorted the local used car market, significantly fuelling depreciation.
Asked how it was calculating the depreciation on cars when policies were up for renewal, a leading insurance company told The Times Business that clients were advised to insure cars at the current market value and it was up to clients to inform the insurer of their estimate of value.
“We do however assist clients by letting them know the estimated market value shown in the Malta Insurance Association’s Vehicle Values Guide, which is also available on the association’s website,” the company said.
“We also inform our clients that they can provide us with an annual professional valuation of their car if they require the value to be on an ‘agreed value’ basis.”
Although it was too early to gauge the full impact on motor insurance business, the insurance company said there were indications that the reduced value of cars was “having a negative impact on our premium levels”.
Premiums for bargain second-hand luxury imports also posed problems as repair costs have remained the same. The company said it was “monitoring the impact with a view to seeking a solution which can be implemented in the medium to long term.”