Greece Used Car Prices – “Registration” Tax Paradox
If you have been looking at used cars in Greece or looking into importing a used car into Greece you’ll see that both methods are crazily expensive. Let’s look at why the Greek government makes used cars so expensive and how they achieve the exact opposite of what they want to achieve.
The Logic – “Registration” Tax
Used cars in Greece are expensive because they are in short supply and because it’s expensive to import cars into Greece (because the Greek government charges a horrendously high “registration” tax).
The first problem, the short supply is entirely caused by the second problem, the sky high registration fees (tax).
The Greek government is aware that the registration tax is exorbitant but they say it needs to be this way.
Their logic is as follows.
“We need to make the importation of used cars into Greece massively expensive because if it was cheap Greece would become the dumping ground for crap and/or old used cars from throughout Europe.” – Paraphrasing
Does This “Logic” Make Sense?
Looking at the situation as it stands now with the registration tax.
Has it achieved the goal the government was trying to achieve?
Are the cars in Greece of equivalent standard or better, than the cars you see in other countries in Europe?
The answer to this question is 100% percent no.
Greece has the oldest car fleet in Europe. Not nearly the oldest, thee oldest. The average age of a car in Greece is 17 years.
Yet at the same time, the values of the used cars in Greece are the highest in Europe.
Is there be a connection between the stratospheric prices of used cars in Greece and the fact that the average age of cars in Greece are the oldest in Europe?
Yes, there is a connection and it is a direct connection.
- As I touched on above, used cars are expensive because supply is low.
- If old cars are expensive it makes them economical to repair. To give an example. A new engine costs 1000 Euro to buy and fit. If a twenty year old Citroen Saxo costs 3000 Euro, you won’t think twice about repairing the car (the situation in Greece). If on the other hand the car is worth 500 Euro, you may think it would be better to put that money towards buying a newer car (the situation in all other countries in Europe).
- And if old cars are economical to repair they will be used for longer.
It is a vicious circle. Placing a barrier on the import of used cars into Greece guarantees Greece will be home to the most expensive, oldest and worst condition vehicle fleet in Europe.
Going back to reasoning of the government.
The Greek government does not want to have the oldest, most beat up vehicle fleet in Europe.
Does placing barriers to import newer cars from the rest of Europe help?
Of course it doesn’t
The Greek government policy of restricting the import of used cars from Europe, increases the age of the average car in Greece above all those countries which do not place such restrictions on the import of used cars.
In Short – Greece Used Cars
The government’s policy on used car imports is creating precisely situation they claim they want to avoid.
