OP Corporate Bank automotive industry study

In 2022, 16,743 new passenger cars were registered in Latvia, while in Lithuania – 25,538 cars, which is approximately one and a half times more than in Latvia. Estonia, with the smallest population in the Baltic states, registered 21,571 new passenger cars last year. In terms of the development trend, Latvia was the only Baltic country with an increase in new car sales (+16.7%), while Lithuania (-18.8%) and Estonia (-3.4%) saw a decline.

The study was conducted for the period from 2018 to 2022. It shows that in certain months, even four times more new cars were sold in Lithuania than in Latvia. For example, in September 2020, 4,682 new passenger cars were registered in Lithuania, compared to 1,229 in Latvia. It should also be noted that in Lithuania, in the period up to mid-2021, a large share of newly registered cars of certain car brands were re-exported.

In 2022, Toyota was the most popular brand among new cars sold in Latvia, accounting for 17.9% of all new cars sold, followed by Volkswagen with 13.4% and Škoda with 11.3%. Toyota was also the most popular choice in Lithuania, Estonia and Finland.

Overall, 9.3 million new passenger cars were sold in the EU in 2022, and this is the lowest volume since 1993. In 2022, 4.6% fewer cars were sold in Europe than in 2021, but the automotive industry showed an upward trend in the second half of the year, with more cars sold in each month compared to the same period a year ago. OP Bank analysts point out that the overall passenger car fleet in Europe continues to age: while the average age of a passenger car was 10.5 years in 2017, it is 12 years in 2021. 

Diesel cars are the most popular cars in Latvia, Lithuania, Ireland, Spain and Portugal, where more than half of cars have diesel engines. In Greece, the Netherlands and Cyprus, petrol cars are very popular, with more than 75% of cars having petrol engines. Electric cars are most popular in Norway, where 16.2% of cars are electric and another 4.9% are hybrids.

According to CSDD data, 65.8% of cars registered in Latvia at the beginning of 2023 have diesel engines, while the share of electric cars still does not exceed 0.5%. The average age of a car in Latvia is 15 years.

In total, 66.2 million new cars were registered worldwide in 2022, and this volume has not actually changed compared to 2021. In North America, the volume of new car registrations fell by 8.7%, but this is fully compensated by a 23.1% increase in demand for new cars in India and a 7.6% increase in China. The automotive industry experienced its biggest downturn in 2020, when it faced a global shortage of semiconductor materials, with vehicle production falling by almost a fifth. 

Analysts indicate that the sharpest drop in car production last year was in both countries involved in the war: The Russian automotive industry suffered a decrease of 67%, while the Ukrainian one – 80%.

Highlighting the latest trends, in 2023 a positive development can be observed in car sales in the European Union, with an increase of 17.9% in car sales between January and August compared to the same period of the previous year. It is also important to note that all months have shown an increase compared to the corresponding month in 2022. 

However, the trading results are still more than 20% behind the pre-pandemic levels, i.e., 2019. 

A growing trend in Europe as a whole has also been observed regarding the demand for electric engine-type cars, which in August 2023 made up 20% of the registered cars, ranking third. It should be noted that the highest demand remains for petrol (38.7%) and hybrid (24%) cars.

At the Baltic level, positive developments have also been observed so far in 2023. Latvia has seen the fastest growth in new car sales, up 18.6% compared to 2022. Estonia and Lithuania saw increases of 9.4% and 4.5% respectively.