Carshop|The autumn tax increase also affects the car trade. How can you save hundreds at car dealerships?
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The value added tax on cars will rise from 24% to 25.5% in September.
The increase can raise the price of the car by hundreds of euros.
Chains and brands have not yet said what they plan to do to prices.
New buying a car is starting to get busy. Price increases are looming on the horizon, which may be a reason for the buyer of the exact euro not to sign the deed.
This week was told Punitive tariffs imposed by the EU, which are likely to increase the prices of electric cars manufactured in China.
In autumn, there will be a domestic increase for all new cars: the general value added tax (VAT) increase.
VAT, the consumption tax paid on many products and services, will rise from 24 percent to 25.5 percent at the beginning of September. Government decided on the matter in spring.
A tax is deducted from the new car, which can be a significant part of the expensive spending game. For example, popular SUV Tesla Model Y paid on Friday a good 46,000 euros including delivery costs, of which the tax is about 9,000 euros.
Big chains and brands have not yet said whether the 1.5 percentage point increase will be transferred directly to the price tag. For example, this is how Kesko K-Auto, which imports several brands, such as Volkswagen, and does not give price signals.
Price signaling refers to a situation where a company makes public information about its pricing intentions. However, Al’s rise is talking in the shops, says Kesko’s car sales branch manager Johanna Ali.
“A car is an expensive purchase, so the VAT increase is known. People are discussing it and weighing the options.”
If the tax were transferred directly to the prices, its effect would be a few hundreds of euros in a basic car. In special cars, the increase could be four figures.
“The total prices of cars are tens of thousands of euros, so if the change in value added tax were transferred to prices, the impact would be relatively small. But for many it is a matter of principle.”
Many new cars first end up as company cars, and the taxable value is determined at the time of ordering from the total taxable price. Therefore, company car drivers will also pay more from now on.
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“For many, it is a matter of principle.”
From the increase can be avoided if you get the car keys in your hands no later than the last day of August. This is a point that the automotive industry seems to be very eager to talk about. Alikin believes that this can speed up the trading done in the summer.
The background is that the first registrations of new cars were 14 percent behind last year at the beginning of the year. The decisions of the EU and the government may slow down car sales at the end of the year, so cars will be pushed to the public in the summer.
“We’re talking about a fast delivery car, i.e. one that is in the country, on its way to Finland or has just come off the factory line,” says Ali.
A couple of years ago, electric cars were plagued by a shortage of components. The ordered cars were waited for a year. Is there a risk that when ordering an electric car it will be delivered too late?
“Delivery times have shortened significantly, and the worst phase of the component shortage is behind us. Now the delivery time for a car ordered from the factory is a few months. I would say that the majority of car manufacturers and importers know how to predict the delivery time quite well.”
You should check the car’s schedule at the shops. Many different companies’ websites reveal whether you can get the car right away or not.
Another option is an advance invoice. The value added tax is determined at the time of payment, so the advance invoice locks the price. This is a less used method in normal trade, but times are special now.
Used ones in car sales, the tax does not speed up the pulse. There, in practice, the car dealership pays the tax only on its own profit margin.
However, used car prices can fluctuate, depending on how the EU’s punitive tariffs affect the price of new cars. Even though the tariffs imposed on China sound far away, two electric cars that are becoming popular for the Finnish market are manufactured there; Tesla’s Model 3 and Volvo’s EX30.
Tesla hinted on Thursday, that the price of the triple model will probably increase. It can also be reflected in the price of used ones.
If the loss of euros annoys you, you can think about it from the point of view that the EU’s actions should eradicate unfair competition and every tax euro goes to reviving the state’s shrinking coffers.