19 - 25 April 2001

Negative mood hits car sales

by David Kelleher

The current negative mood among investors and the business community is being reflected in the sales of motor cars as well.
Figures obtained by The Malta Business Weekly show that registration of new cars has dropped dramatically over the past three months compared to last year.
For the first three months, a total of 1,933 were registered compared to 3,248 cars registered in 2000, a drop of 40.49 per cent. Industry sources told The Malta Business Weekly that the outcome over the coming months does not look promising although they are hoping that the motor fair being held at the Trade Fair grounds in Naxxar this weekend will help sales.
“The situation is not to our liking,” one car importer said. “The numbers are considerably down on last year and such a slump in sales does not augur well for the rest of the year. We would be foolish to believe that last year’s levels could be matched,” he added.
The figures can be broken down as follows:
In January 2000, 827 cars; January 2001, 647.
In February 2000, 1,054; February 2001, 620.
In March 2000, 1,367; March 2001, 666.
Provisional figures for April indicate registrations at around 600 vehicles compared to 985 during the same month last year. The figures are also inclusive of Light Commercial Vehicles (LCVs).
Asked to comment on the possible reasons behind the 40 per cent decrease in car sales, the importer said people were living beyond their means – a statement that has become commonly used over the past few weeks – and this was having a toll on their lifestyle.
“People have been spending, spending and spending. Now they are feeling the pinch and are forced to hold back. There is not enough cash in hand and so they have to start saving again. People are having second thoughts about changing or buying a car,” the importer said.
Other industry players had a similar story to tell and most put the blame on the government and its efforts to cut public expenditure – not by getting its house in order but by introducing new taxes on the middle and upper class worker.
“Further burdens on the middle class in the form of taxes have not helped the local car market. Taxation on fringe benefits and the government’s tightening of car leasing rules are possibly two reasons why there has been a drop in car sales over the past three months,” one industry expert told The Malta Business Weekly.
“The holiday is over and it is beginning to show. Before the economy makes a turnaround the market will remain pessimistic,” he added.