Used cars continue on slow decline in Romania
By Ulmis Horchidan, Chief Editor, Eurotax Romania
17 September 2019
In 2019 there continues to be more registrations of second-hand cars imported into Romania from various European Union countries than new car sales, with the main source of these imports being Germany. There were 293,507 used-car imports between January and August 2019, compared to 118,003 new car registrations. However, the overall trend is continuing downwards.
New cars gaining… slowly
During the first eight months of the year new-car registrations rose 13.6%, while year-on-year used-car sales declined 6%. We believe that if the economic climate remains stable, used-car imports will continue to lose ground while at the same time new cars should gain a higher percentage of market share. However, we don’t expect to see an equal market share of new and used cars in the near future. Imported used cars are still the mainstay of mobility in Romania.
Metrics wise, the Romanian car parc is one of the poorest performers in the EU. The average car parc age across the EU is 10.5 years, based on 2016 figures, and Romania has the second oldest parc, with an average of 16.2 years. Considering vehicle penetration, Romania is in last place with 362 vehicles per 1,000 inhabitants while the average EU value is 602 vehicles.
While there is clearly a growing need to satisfy mobility, Romania is in last place as far as vehicle infrastructure is concerned, i.e. highways and parking spaces.
Whereas private buyers of new cars are embracing petrol-powered cars and hybrids, buyers of used imports are oriented towards diesel cars because they equate diesel with economy. However, car purchasers are not taking into consideration the impact of annual mileage as well as the costs involved in running a four-seven-year-old diesel car. Furthermore, second-hand cars imported from other EU countries are having an impact on the local used-car market by increasing the depreciation pattern across almost all vehicle classes.
Efforts are being made to reduce vehicle impact on the environment with polluting cars being banned from the downtown area of Bucharest and drivers of Euro 3-compliant cars having to pay a tax to enter the capital from 3 January 2020, according to a proposal that is open for public debate. All cars registered outside Bucharest and the surrounding county of Ilfov will also have to pay to enter the city.
The weak Romanian economy is underpinning the country’s lack of vehicle infrastructure and the large share of used imports in the car parc, the majority of which are beyond their prime. Whichever indicator is used to analyse monetary power - be it GDP, PPP or another - Romania fares badly compared to almost all other EU countries.
Recent data published by ACEA shows that the market uptake of electrically-chargeable vehicles (ECVs) is directly correlated to a country’s standard of living. All EU member states with an ECV market share of less than 1% have a GDP per capita below €29,000. This includes many countries in Central and Eastern Europe, such as Romania - but also Greece, Italy and Spain.