Higher prices of used cars in Serbia?

Source: B92
Foto: Profimedia
Foto: Profimedia

If Germany changes its Law on Warranties, currently one of the hottest issues in the European economy could affect used cars arriving in Serbia from Germany to become 10 to 20 percent more expensive.

If we take into account that the price of used cars in Europe has already increased due to Covid and consequent drop in sales, another blow to local budgets, for those planning to import cars to Serbia is coming.

Due to the drop in new cars demand, the price of used cars in European countries began to rise in the middle of last year, Blic reported.

The price of used cars from that market has already increased 20 to 30 percent; on top of that, the offer is in short supply.

According to some car dealership owners, before the pandemic, some 4,000 to 5,000 vehicles were auctioned by European leasing companies on weekly basis, and now that number has been halved.

Also, prices have gone up, so cars that cost around 7,000 euros are now more than 1,500 euros more expensive.

On the other hand, Germany has recently announced changes to the Law on Warranties, which should be harmonized with the EU Directive on the sale of goods, which practically means an additional price increase.

Certain impact on the Serbian market is expected, importing significant numbers of used vehicles from Germany.

The German association of car dealers expects that the adoption of changes to the law would bring an increase in the prices of used cars by 10 to 20 percent and practically mark the end of the sale of older used vehicles.

Previously, warranties were valid for a period of six months, and the announced extension of the warranty validity, i.e., the effects in terms of costs will create an additional problem for sellers.

On the other hand, although this the decision is in favor of buyers of used vehicles because it should provide them with greater certainty that the vehicle they buy is in good shape or at least free of repair within a year should a breakdown occur, negative changes could occur in the long run, i.e., like the increase in the price of used cars.

The State Association of Independent Motor Vehicle Dealers (BVfK) therefore appealed to the German Federal Council in an attempt to prevent the adoption of the changes.

"The changes are unfavorable and unsustainable for the trade-in motor vehicles to a large extent," said the BVfK in a statement.

According to data obtained by the Serbian Association of Vehicles and Spare Parts Importers, the sale of new vehicles in our country make some 15 percent of the total sales, or so-called first registrations and the remaining part of as much as 85 percent goes to used vehicles.

At the same time, some 80 percent of used vehicles are older than 10 years. This means that on average, vehicles in Serbia are 17 years old which is also devastating statistics.

Eco taxes impact prices

As a reminder, once Serbia bans the import of used cars with Euro 3 engines, drivers in Serbia will have to pay at least 500 euros more for a car that costs around 3,000 euros today, and the cars older than 15 years will not be possible to import into our country.

In June last year, as many as three million vehicles with Euro 4 and Euro 5 diesel engines were parked on sites in Germany waiting for international buyers, because the new regulations prohibited these vehicles from entering the city center in many German cities.

During 2019, some 226,000 vehicles were exported from Germany to the markets in Eastern and Southeastern Europe, twice as many as in 2018.

Last year, the Covid pandemic slowed the influx of used vehicles, although the data show that in 2020, only 750 used vehicles less arrived in Serbia compared to 2019.

Buy a used car in Germany, and you can also get a VAT refund

Not so many people in Serbia know that if they buy a used car in Germany, they can get a value-added tax refund, set to 16 percent since the middle of 2020.

Namely, Germany has enabled companies that export used cars to non-EU countries to refund the VAT. This practically means that if you buy a vehicle with a price tag of 5,000 euros, you can get some 800 euros in tax refund.

In order to get the refund, the buyer must check whether the total price of the car he is buying, includes the tax. The seller's invoice must show VAT, i.e., itemized separately.

Used car importers in Serbia explain that VAT belongs to cars that were owned by a company. A buyer from Serbia can buy them directly from that company or at a car dealership.

In order to avoid abuse, the sellers in some cases ask that the car be registered in Serbia first and that the buyer then, along with other documentation, enclose a traffic license in order to get the VAT refunded.

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