Latvia’s Automotive Industry: Lowest New Car Sales in the Baltic States

Latvia has been selling the fewest new cars in the Baltic States for several years in a row, representatives of the Finnish bank “OP Bank” informed the LETA agency, referring to the research conducted by the bank’s analysts on the development of the automotive industry in Europe and the world.

Last year, 16,743 new passenger cars were registered in Latvia, while in Lithuania – 25,538 cars, or about one and a half times more. On the other hand, in Estonia, despite having the smallest population among the Baltic countries, 21,571 new passenger cars were registered last year.

On the other hand, in terms of the development trend, Latvia has been the only one among the Baltic States with an increase in the volume of new car sales (+16.7%), while the volumes fell in Lithuania (-18.8%) and Estonia (-3.4%).

The study was conducted in the period from 2018 to 2022, and it shows that in certain months, even four times more new cars were sold in Lithuania than in Latvia. For example, in September 2020, 4,682 new passenger cars were registered in Lithuania, and 1,229 in Latvia. Representatives of “OP Bank” note that a large part of the newly registered cars of individual brands in Lithuania were re-exported until the middle of 2021.

The most popular brand among new cars sold in Latvia in 2022 was “Toyota” – 17.9% of all new cars were products of this brand, leaving “Volkswagen” with 13.4% and “Škoda” with 11.3% sold in second place a car. “Toyota” was the most popular choice for new cars also in Lithuania, Estonia and Finland.

In total, 9.3 million new passenger cars were sold in the European Union in 2022, and this is the lowest volume since 1993. In 2022, 4.6% fewer cars were sold in Europe than in 2021, however, the automotive industry showed a trend of growth in the second half of the year, as more cars were sold in each month of the year than in the same month a year ago.

“OP Bank” analysts point out that the total passenger car fleet in Europe continues to age – if in 2017 the average age of passenger cars was 10.5 years, then in 2021 it will be 12 years.

Cars with diesel engines are the most popular in Latvia, Lithuania, Ireland, as well as in Spain and Portugal – in these countries there are more than half of diesel cars. On the other hand, in Greece, the Netherlands and Cyprus, cars with gasoline engines are very popular, there are more than 75% of such cars. On the other hand, electric cars have gained the greatest popularity in Norway, where 16.2% of cars are electric cars, and another 4.9% are cars with hybrid engines.

The representatives of “OP Bank” add that according to the data of the Road Safety Directorate at the beginning of 2023, 65.8% of the cars registered in Latvia have diesel engines, while the proportion of electric cars still does not exceed 0.5%. The average age of a passenger car in Latvia is 15 years.

In general, 66.2 million new cars were registered in the world in 2022, and this amount has actually not changed compared to 2021. In North America, the volume of new car registrations decreased by 8.7%, but this is fully compensated by the increase in demand for new cars in India by 23.1% and in China by 7.6%. The automotive industry experienced the biggest drop in 2020, facing a global shortage of semiconductor materials, when the volume of vehicles produced fell by almost a fifth.

The bank’s analysts point out that the sharpest drop in car production volumes last year was observed in both countries involved in the war – the Russian car industry suffered a decrease of 67%, and the Ukrainian one – by 80%.

Highlighting the latest trends, the analysts of “OP Bank” indicate that in 2023 a positive development can be observed in the car trade in the European Union – in the period from January to August, an increase of 17.9% was observed in the car trade volumes compared to the corresponding period of the previous year. In all months, the results showed an increase compared to the corresponding month in 2022.

However, the trading results are still more than 20% behind the pre-pandemic levels, i.e. 2019.

A growing trend in Europe as a whole has also been observed for the demand for electric engine-type cars, which in August 2023 made up 20% of the registered cars, ranking third. The highest demand is still for gasoline engine (38.7%) and hybrid drive (24%) cars.

At the Baltic level, positive development has been observed so far in 2023 as well. The fastest increase in the volume of new car sales was observed in Latvia by 18.6% compared to the corresponding period of 2022. On the other hand, an increase of 9.4% was observed in Estonia and 4.5% in Lithuania.

“OP Corporate Bank plc” branch in Latvia has been working since 2012. “OP Corporate Bank plc” is the central bank of the Finnish financial services company “OP Financial Group”.

2023-10-06 05:18:43
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