According to the Estonian Vehicle Dealers and Services Association (AMTEL), new passenger car sales fell by about 40 percent in the first half of the year compared to the same period last year. Most of this decline occurred in the first quarter, and sales have since begun to recover.

"One could say the market has somewhat stabilized, and perhaps the worst of the downturn is behind us. If we look at the first three months of the year, when the Estonian car market was practically nonexistent, 400 to 500 cars per month, then June already saw 1,500 cars sold, which shows clear signs of improvement. But compared to last year, the gap is still large," said Margus Nõmmik, board member of Amserv Auto.

More than 70 percent of the cars sold are hybrid vehicles, which benefit from a significantly lower registration fee. The decline in the used car segment has been smaller.

"At the moment, we are about 30 percent behind last year's market. The lag mainly formed at the beginning of the year, as January, February, and March were extremely weak months for used cars. But the recovery has been much faster there. In fact, we can say that we have not seen a significant drop in the value of the cars being purchased. Right now, the average used car we are selling costs around €28,000," said Nõmmik.

He said the seller of a used car often covers the registration fee.

Rivo Mätas, head of orders at Mobile Autokeskus, a used car importer, confirmed that prices on the secondary market have not fallen and that sales are gradually recovering.

"Compared to the same quarter last year, sales are about 25 percent lower, but the last quarter showed a definite positive trend. A large portion of the vehicles are hybrids or fully electric, as their registration fees are significantly lower than those for internal combustion engine vehicles," he said.

However, following the VAT increase in July, the same car now costs nearly 20 percent more in Estonia than in Germany, Mätas said.

Auto Bassadone reports that the VAT increase has led to a decline in sales in July compared to June.

"We do not expect any improvement in car sales before the end of the year. We believe we'll reach 2023 levels sometime next year, but there has been stabilization in both new and used car sales. July will definitely be more difficult compared to June, which was before the VAT hike. Used cars have clearly been the more active segment this year up until June," said Andrus Süld, head of Auto Bassadone's Rocca dealership.

Süld said used car prices have held steady. Prices have fallen slightly for vehicles with higher registration fees.

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