ECONOMY

Private vehicles live longer on the roads of Greece

Greece’s fleet of private cars is aging, with an average age exceeding 11 years, as compared with the European Union average of 6.3 years. This is despite the huge increase in sales in recent years, totaling 1.5 trillion drachmas. The main reason is that old cars are withdrawn from circulation very slowly. A recent study by the Foundation for Economic and Industrial Research (IOBE) reveals that for every 200 new cars entering circulation only one is withdrawn. In the rest of the European Union, by contrast, for every 100 new cars introduced, 64 are withdrawn or sold in eastern Europe. In northern European countries the ratio is even higher, at 10 to 8. In 2000, 57.2 percent of cars in Greece (about 1,800,000) had an age of 10 years or less, while 17.1 percent (548,700) were older than 20 years. The environmental effects of the high age of cars are considerable, as 40.7 percent (1,300,000) have no catalytic converters and emit 20 percent more atmospheric pollutants. The problem is more serious in Athens which is home to more than half of private cars in Greece. The 1,700,000 cars on the roads of the capital have an average age of 11.6. Of these, 42 percent (726,000) are of conventional technology and 310,000 of them are older than 20 years. The cars older than 15 years, which represent 31 percent of the total, account for 52 percent of carbon monoxide emissions and for 40 percent of nitrogen oxides. It is claimed that among other factors, the application of a restricted inner ring around the city center which cars can only enter on alternate days has contributed to this situation. Meanwhile, the government has committed itself to reducing atmospheric pollution by 25 percent by 2004, the year of the Olympic Games. The impressive growth of car sales in the last six years has been helped by the deregulation of consumer credit. Greece now has a total of 4.3 million vehicles of all types on its roads, compared to just 1.2 million in 1980. Vehicle sales in 2000 are estimated to have approached 1.5 trillion drachmas, up approximately 21 percent from 1999. However, initial market indications this year are not favorable. Sales of private cars and taxis in the first four months fell 8.1 percent and, according to the projections of the Foundation for Economic and Industrial Research (IOBE), growth rates will recede to levels lower than those of 2000, on a par with average annual sales of 250,000. Falling sales may partly be explained in terms of the higher average in recent years, when prices came down considerably. Despite taxation on cars being the second heaviest in the European Union after Denmark, car prices in Greece have become increasingly accessible in recent years and are now ranked lower than in nine other EU countries for cars up to 1,600 cc. The IOBE study stresses that this feature is unlikely to change in the near future, but in the longer term the tax burden on bigger cars should be lightened. The entry of new enterprises in the car dealership sector is not considered likely, given that almost all car makers are already represented in Greece and the big dealers have established nationwide sale networks. However, the number of direct representatives in Greece of car makers is projected to increase in the near future as a result of legislative changes being promoted by the EU for distribution networks. Such directly represented groups through wholly-owned subsidiaries already include Mercedes Benz, Toyota and Fiat. A significant field of competition between dealers is the quality of services during and after sale, which aims to cultivate a permanent relationship with the client. Dealers are now implementing modernization plans for installations at ever speedier rates, with a view to making after-sales-service the focal point of their businesses.