Car market takes a trashing with Greece’s collapse

By Helena Smith  /  The Guardian, ATHENS

Sun, Aug 25, 2013 - Page 14

It is easy to see why Angeliki Karitsa shut up shop this month and announced she would not be back until next month.

As marketing manager at Greece’s sole outlet selling Ferraris — the super car for the super rich — Karitsa has experienced some recent frustration: She has not sold a vehicle for almost two years.

“In early 2012, we sold a 458 Spider, but nothing since,” she said, within hours of beginning her monthlong summer break. “And, no, we don’t keep stock. We bring in cars on order.”

Karitsa is perhaps the loneliest saleswoman in Greece. In a country ravaged by six straight years of recession and record unemployment, car sales have taken a thrashing, with even shipowners and other plutocrats uncharacteristically reluctant to be seen parading their wealth.

The collapse of the car market has become emblematic of hardship, as Greeks endure some of the most biting austerity measures enforced in modern times.

Nearly four years into the nation’s debt crisis, new vehicles registered with the transport ministry up to last month this year dropped by an unprecedented 80 percent from the same seven months in 2008, according to the Association of Motor Vehicle Importers Representatives.

During those months in 2008, more than 187,000 passenger cars were registered (12 of them Ferraris, and more than 300 of them Porsches). That compares with the total for this year of just under 37,000 — none of them a Ferrari, although there were half a dozen Porsches.

“Over the past decades average passenger car registrations for only the first six months of the year have been more than 125,000,” association general manger Dimitris Patsios said.

With GDP down by more than 20 percent since 2008 — the single biggest drop in an advanced Western economy since the Great Depression of the 1930s — it was “more than apparent ... that luxury car sales have long since collapsed,” he said.

In the 1980s, cars became the ultimate status symbol for Greece’s middle class, who had long been prevented from enjoying them by exorbitant levies.

In the easy years when banks ensured that newly minted euro credit was plentiful and cheap, most families had at least two.

Dealing with them since the crisis has not been easy — either for owners or officials. Transport ministry officials say nearly half of the 5.5 million cars in circulation — including about 700,000 vehicles owned by the state — have not been insured, or have failed to pass tests by the transport ministry in the past three years.

A growing number of Greeks, desperate to avoid increasingly expensive taxes and fuel costs — duties on high-end cars have risen dramatically since the country received its first rescue funds from the EU and the IMF — have sought to offload their luxury cars by exporting them.

“Total exports, for all kinds of cars, have [risen] from 3,035 cars in 2010 to 22,053 in 2012,” Patsios said, adding that runaway duties on super cars had effectively “eliminated demand” for them.

The vast majority of vehicles are believed to have ended up in neighboring Albania, a buyer’s delight for second-hand and stolen cars, and Georgia.

“Those who thought they were rich and bought Porsche Cayennes for 60,000 euros [US$80,300] are now selling them for around 16,000 euros through middlemen to countries like Georgia,” said Christos Savvides, a self-confessed lover of cars who turned to driving a cab when his electronics job ended with the crisis.

“They’ve discovered that they’re just too expensive to run. Not even the banks want to repossess cars because they can no longer afford the space to keep them,” he said.

Patsios vehemently rejects the idea that before the crisis, the Greeks outdid other eurozone nations in their zeal for luxury cars. Instead, he says Greece’s impoverished road network and limited public transport system ensured that Athens and Thessaloniki, its two major cities, suffered from major traffic congestion, which “perhaps” gave the impression there were more luxury cars than there really were.

“Luxury car sales were never at high levels in Greece and always below the European average,” he said.

However, stories of tax-dodging Greeks buying top-of-the-range cars, often with EU subsidies, are also legendary.

Shortly after the debt crisis erupted in Athens in late 2009, policy circles were abuzz with rumors that the town of Larissa (population 250,000) in the agricultural region of Thessaly had more Porsche Cayennes per capita than any city in any other EU country.

Herakles Polemarchakis, a former prime ministerial adviser and economics lecturer at Warwick University, England, went so far as to say there were more German-made Porsche Cayennes in Greece than individuals who declared and paid taxes on an annual income of more than 50,000 euros.

When challenged, the professor watered down the claim, but insisted that the “per capita number of Cayennes in Larissa was twice that of Cayennes in the OECD countries,” referring to the Organisation of Economic Co-operation and Development.

“It was an open secret that Larissa was the king of Porsche Cayennes,” Savvides said.

Back at the Ferrari dealership, Karitsa refuses to be drawn on who snapped up the 458 Spider.

Speculation, however, is still rife that the buyer was a Briton eager to bypass much longer waiting lists in the UK — Ferrari’s biggest market in Europe.

Karitsa was willing to say only that in Greece customers were usually kept waiting “not more than three months.”