The loss of purchasing power of citizens is expected to continue this year, so it is important to reduce transport costs. According to the Latvian Auto Association, the prices of the most in-demand models of used cars increased by 35-40%. New cars are also getting more expensive. A survey conducted by the leasing company Citadele Leasing in October shows how the public is preparing to cut transport costs due to price rises and inflation.
"Various kinds of small damage they will attempt to fix themselves, as will the purchase of a winter set of tyres and also the KASKO insurance policy - these are examples of things that citizens intend to postpone," said Citadele Leasing Chief Executive Pēteris Plaudis.
"I would like to mention here winter tyres - that must be the most worrying signal, because safety is in the first place, and it is clear that both for oneself and the safety of other road users, I think it should certainly not be postponed."
The president of the auto association, Andris Kulbergs, believes that demand in the car sector now exceeds supply and is affected by both the war in Ukraine and the problems with car supplies.
"This is related to the geopolitical situation, the logistics are severed [..]. Therefore, these market changes are quite serious - people cannot get a new car, they are then looking for a low-used or used car, and this has again created this next wave in which prices have risen quite significantly because these cars are not available in Latvia and are not available in Europe," said Kulbergs.
"Plus Ukraine, with the Russian invasion, has created a huge demand for cars, because Ukrainians need to move and they are looking for cheap vehicles in our nearby markets, which in turn has led to rapid sales. About 150,000 cars from the Baltic, the Polish market, have flooded into Ukraine. All of this has put a lot of pressure on prices, so we see a significant drop in the used car market in recent months. If there is a 14% rise in the market for new cars, then used car market had a drop of 29% in recent months."
Short-term and long-term car rental provider Sixt is starting this autumn to offer a new service: the possibility of subscribing to a new or a couple of year-old car for a fixed fee. The head of “Sixt” in Latvia Arnis Jaudzems said that people's habits are changing.
"At the moment, each fifth new car that is registered in Latvia is one of the rental services – whether it is a long-term rental service or a short-term rental service, or whether it is a shared car. Every fifth new car entering Latvia is leaving for such car rentals. This means that people really need to use this service. In order to avoid these problems at present, both with car deliveries and rising prices, costs and so on, a car subscription service is available, which includes all costs, including tyres, maintenance, insurance, and so on. If something changes in life, then even if this need ends, the use of a car can be stopped without penalty."
The change in car usage habits is also acknowledged by Andris Kulbergs, president of the Auto Association.
"Three or four years back, big automakers preached that sharing services were not possible in metropolises below three million inhabitants, because otherwise, it doesn't pay off. Now we see that there is not one [service] in Riga, but already four, five providers and competition is only increasing. That means the potential is great," said Kulbergs.