The automotive industry has been undergoing significant changes, with demand patterns shifting in response to various factors. Recent press releases from the Autoalan Tiedotuskeskus and Autolle.com highlight contrasting trends in the market. While new car registrations have shown a positive growth trajectory, particularly in the used car segment, the once soaring demand for electric vehicles (EVs) seems to be facing challenges. This article delves into the details of these press releases to understand the reasons behind the shift in the auto market dynamics.
New Car Registrations and Used Car Sales
According to the Autoalan Tiedotuskeskus, new car registrations in July saw a remarkable 16.2% increase compared to the same period last year, with a total of 6,397 new passenger cars registered. This growth can be attributed to the backlog of orders due to component shortages. Despite the positive numbers in July, the outlook for the near future remains bleak, as the high order backlog is expected to subside, and new orders have declined by about 50% compared to the usual volumes.
On the other hand, Autolle.com reports a significant surge in used car sales in Finland during July. Over 31,000 used cars were sold through dealers, indicating a 16% increase compared to the previous year. Notably, hybrid cars emerged as the most popular choice, with their sales rising by almost 50% from the previous July. This trend aligns with a broader interest in more fuel-efficient and eco-friendly options.
Stalling Electric Vehicle Adoption
Despite initial enthusiasm for electric vehicles in Finland, Autoalan Tiedotuskeskus notes that the pace of EV adoption has slowed down. In July, only 26.6% of newly registered passenger cars were electric vehicles, down from the approximately one-third share seen in the first half of the year. The decrease in EV adoption is attributed to the fact that the initial surge in demand was largely driven by orders placed for electric cars in 2021 and 2022, as customers anticipated the end of subsidies and incentives.
To elaborate on this point, Tero Kallio, CEO of Autotuojat ja -teollisuus ry, highlights that the demand for electric vehicles skyrocketed last year due to surging gasoline and diesel prices, which prompted consumers to seek more economical alternatives. However, the subsequent decline in electricity prices did not lead to a revival of electric vehicle demand, primarily due to the ongoing economic recession and the European Central Bank's tight monetary policy.
Moreover, the end of government subsidies for EV purchases at the beginning of the year further impacted the demand, coinciding with a period of economic downturn. Tero Lausala, CEO of Autoalan Keskusliitto, emphasizes the need for renewed government support and incentives for electric vehicles during the current period to encourage their adoption and promote sustainable mobility.
Hybrids Lead the Way
While the adoption of pure electric vehicles has faced obstacles, hybrid vehicles are gaining popularity in the Finnish market. In July, hybrids accounted for 25.5% of new car registrations, retaining their position as the leading choice among consumers. The availability of more affordable and low-mileage used hybrid cars has contributed to their appeal, especially in the price range of €30,000 to €40,000.
Leading Hybrid Car Brands and Models
According to Autolle.com's data, Toyota, Volvo, and BMW are the top three brands dominating the used hybrid car market in Finland. Among the models, Toyota Corolla, Volkswagen Passat, and Volvo XC60 hold the highest market share.
Toyota's presence at the top of the hybrid car sales chart is attributed to its reputation for reliability and fuel efficiency. The popularity of the Volkswagen Passat and Volvo XC60 can be attributed to their status as plug-in hybrid options, imported in large numbers from neighboring Sweden due to favorable taxation and exchange rates.
The Finnish automotive market is experiencing a shift in demand patterns, with used car sales thriving and electric vehicle adoption showing signs of plateauing. While economic conditions and policy decisions have impacted new car registrations and electric vehicle demand, the popularity of hybrid cars remains strong. The industry's future growth and sustainability will likely rely on a balanced approach that promotes both electric and hybrid vehicles, supported by a conducive economic environment and strategic incentives. As the market evolves, stakeholders will need to adapt and innovate to cater to the changing preferences of consumers and address the challenges posed by global market dynamics.