At Inbank, the number of car loan and lease applications has increased by 8% in the first seven months of this year. The number of contracts signed during this period has risen by 17% compared to the same time last year.
“Despite the uncertainties regarding the car tax in the first half of the year, the growth in contract numbers may indicate that people are making decisions faster than usual, as only a few months remain until the tax takes effect. The increase in contracts may also suggest a stabilization of the interest rate environment. However, the average financing amount for cars has remained unchanged at around €9,300,” said Evelin Rahkema, Head of Loan Sales at Inbank.
SUVs and Škodas remain popular
Regarding the most popular car brands, Rahkema noted that there haven’t been significant changes ahead of the car tax. According to Inbank data, BMWs, Audis, Volkswagens, and Škodas remain the most sought-after among used cars. Škoda, known for its good price-to-quality ratio, is also gaining market share in full-service rentals, with the Škoda Kodiaq becoming one of the most popular models. Andrus Valma, CEO of full-service rental company Mobire Group, noted that Estonians are particularly interested in SUVs, which periodically make up a third to half of the cars rented through full-service leasing.
Although Mobire has seen a 27% increase in full-service rental inquiries over the past year, Valma senses that people feel uncertain in the current economic climate, with many postponing car-related decisions.
Private individuals are increasingly considering rentals
“On one hand, purchase confidence is low due to the fragile economic situation, rising interest rates, and prices, but on the other hand, it’s clear that people aren’t ready to give up driving altogether and are looking for the most flexible alternatives,” said Valma. As a result, the proportion of private individuals in the full-service rental market has significantly increased. While private individuals made up 26% of Mobire’s clients in the first eight months of last year, this year, the figure has risen to 38%. Both Rahkema and Valma believe that the first half of 2025 will be quiet in terms of car transactions, as people considering a car change will try to complete it within this calendar year to avoid the vehicle registration tax, which takes effect on January 1. For those who delay their car loan application and transaction until next year, Rahkema offers the option to include the registration fee arising from a change of ownership in the loan amount.
The future brings new winds to the car market
Mobire's CEO predicts some confusion in the car market next year. "For example, in the used car market, there will be vehicles for sale where the tax has already been paid and those where it hasn’t yet," said Valma. He added that selling cars with high weight and CO2 emissions, which are subject to heavy taxes, will become difficult, and sellers will start looking for buyers on foreign markets. However, Valma sees a positive trend toward more sustainable cars in the market, with an increase in sales of low-emission models, plug-in hybrids, and electric cars expected in 2025. In the bigger picture, Valma predicts a decline in the importance of car ownership in Estonia in the coming years, as people seek more flexibility and prefer convenience solutions over dealing with routine issues. “Although today, most new vehicles in Europe and Estonia are still bought for ownership, and car ownership remains a status symbol for Estonians, forecasts suggest that by 2030, subscription-based services will account for 21% of new vehicle registrations among private individuals,” said Mobire's CEO.
