Cyprus car dealers are coming to terms that the market is frozen, with no prospect of rebooting until the end of the year, as vehicle sales plummet due to a hold up in deliveries.
According to the Statistical Service (CyStat), 2,326 saloon cars were registered in Cyprus in July, marking a decrease of 14.2% from 2,712 the previous year.
New vehicle registrations fell by 6.8% to 1,108 from 1,189 last year. In June, they had decreased by 6.5%.
Used car sales in July saw a 20% decrease, with registrations falling to 1,218 from 1,523. Conversely, June saw a 12.8% increase.
Local car dealers are worried as a trend is building, threatening to freeze demand.
In the first seven months, passenger car registrations fell by 3.3% to 16,427, compared to 16,979 last year.
Of the total passenger saloon cars, 7,240 or 44.1% were new, and 9,187 or 55.9% were used cars.
Purchases of rental cars saw an 86.2% spike to 2,878.
In 2021, car sales fell to their lowest level since 2015, registering a decline for the third year in a row.
The reduction in 2021 was 12.8% from 18.4% in 2020.
The Cyprus Association of Car Importers attributes the drop in sales to a delivery problem from manufacturers, which is slowing the market, despite a vibrant interest.
The industry is having trouble delivering to customers due to supply chain shocks.
In comments to the Financial Mirror, the Treasurer of the Association and Toyota importer, Dickran Ouzounian, said that despite sales of new vehicles rising 5% from the previous month, car dealers are reticent.
“It is certainly positive to see sales go up, proof of what we have been seeing at our showrooms.
“There is vivid interest from potential buyers for new cars, despite the increase in the cost of living and energy,” said Ouzounian.
However, as he explained, car importers find themselves unable to meet demand due to supply chain bottlenecks and the lack of raw materials, namely semi-conductors.
“It’s certainly great to see our showrooms full in the holiday month of August, especially after the two years of COVID and lockdowns.
“Unfortunately, the lack of semiconductors and holdups in the delivery chain has left us no choice but to sit back and wait for the crisis to end.”
He said car dealers are not concerned over people losing interest when they are told of long waiting lists; rather, they are more worried over the worsening cost of living.
“Our fear is that the cost of living and energy crisis will be crushing households, which will have to put their dream of buying a new vehicle on hold indefinitely.”
Higher interest rates
Ouzounian added that the increase in interest rates introduced by the Central Bank to combat hiking inflation might also have a toll on future sales.
At the moment, the average interest rate on car loans is 6%, up from 4.5% just a month ago.
Toyota’s importer said the problems are crippling the industry when it was turning towards greener cars, boosting government efforts to go electric.
A Transport Ministry’s incentive scheme of €8 mln, covered just 360 applications for brand new electric cars and 320 used ones, and a limited number for other categories, such as taxis and for people with disabilities.
Ouzounian said the first cars covered by the scheme are expected to be delivered at the end of the year or even early 2023.
Until July, new hybrids totalled 2,636, up from 1,778 in 2021. Used hybrids were 1,075 compared to 776 last year.
New electric cars amounted to 377 and used electric cars 66. In the first seven months of 2021, new electric cars were 181, and used cars were just 26.
According to Cystat, Cypriots prefer HYUNDAI, MG and NISSAN when it comes to new electric cars.
While in the used electric car category, NISSAN and TESLA are high in preference.
Regarding preferences for new hybrids, TOYOTA, HYUNDAI, and AUDI stand out.
For used hybrids, the first choices are TOYOTA, HONDA and NISSAN.