Latvian used car market 'normalized' in 2023

After increased demand for used cars and a resultant rise in prices during the pandemic, the market stabilized in the second half of last year, according to a release from car loan company Inbank Latvia.

According to the company, the average loan amount issued in 2023 for the purchase of a used car was 7,500 euros, which is 12% more than the year before. The average loan term last year was  5 years and 4 months, while the average monthly payment was around 160 euros.

"The shortage of cars caused by the Covid-19 pandemic created a big jump in the used car market – both demand and prices grew. The year 2023 was a period of post-pandemic normalization in the used car market and was much calmer. According to the data of car registrations, in the segment of private individuals there was even a drop of 7.2% in the number of first-time registrations of used cars compared to a year ago. The most popular used car brands last year were BMW, Volvo, Volkswagen and Audi," said Andris Kulbergs, president of the Latvian Auto Association.     

Matīss Mežaks, head of one of the largest sellers of used cars in the Baltic States, BRC Autocentrs, confirmed the stabilization of the market: "In the second half of 2023, the used car market returned to normal. The supply of cars was sufficient, and it was no longer necessary to wait a year or more for a new vehicle, so the used car market normalized. If the chosen car was not available on the local market, we could deliver it relatively quickly from another European country."      

According to the information gathered by BRC Autocentrs, last year there was no significant increase in prices. "If at the beginning of the year the prices were still set in stone, or even increasing, then in the second half of the year they stabilized," said Mežaks. He explains that the price is influenced by both demand and many other parameters – mileage, specification, brand and more – but it should be taken into account that the value of nearly all used cars drops by approximately 15% per year. 

According to Inbank Latvia data, demand for car loans in Latvia is seasonal. In the warmest  months of the year, almost half as many car loans again are issued as at the very beginning and end of the year. The seasonality is also confirmed by the data of the Auto Association – last year, the most cars were registered for private individuals in the spring and summer months. March was the most active period, when 3,151 used cars were registered for private individuals, compared to January with 2,341 registered vehicles. 

Last year approximately two-thirds of car loans were issued by Inbank to men and one third to women.  The majority (72%) of car loan borrowers are between the ages of 26 and 55. In 34% of cases, car loans are taken by customers with an average monthly income of 800 to 1,200 euros, and 23% are to people with an income of 1,200 to 1,600 euros per month. 

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