SHARE
COPY LINK

ECONOMY

Why now is a good time to buy a car in Switzerland

Switzerland's automobile sector has been stagnating during the Covid-19 crisis and now it appears is the right time to pick up a bargain.

Why now is a good time to buy a car in Switzerland
Many cars in Switzerland remain unsold. Photo by INA FASSBENDER / AFP

The law of economics dictates that when the supply of goods is high and the demand is low, the prices will drop. This is currently the case with cars in Switzerland.

In times of crisis, as evidenced by the Covid-19 pandemic, people are uncertain about the future and reluctant to spend their money on luxury items like new automobiles.

In fact, “the coronavirus has caused consumer sentiment in Switzerland to hit a historic low”, according to a report by the state Secretariat for Economic Affairs (SECO). 

READ MORE: UPDATE: Coronavirus-hit Swiss economy shrinks 2.6 percent in first quarter 

The Swiss automobile market has also been impacted by this downward trend, resulting in substantial decrease in sales.

According to Swiss association of car importers, Auto Suisse, “economic uncertainties translate into weak demand”. 

“In the past month only 13,890 new passenger cars have been registered in Switzerland, which is 50.5 percent less than a year ago”, the association added.

So if you are planning to purchase a new car, now is the time to do it.

“After the period of confinement, stocks are saturated”, Dino Graf, communications manager of the Amag group, Swiss importers of VW, Audi, Skoda, Seat, and Porsche, told Le Matin newspaper.

“As our manufacturers have reduced their production in recent months, and the new vehicles have not yet arrived in Switzerland, the warehouses are full”, he added.

For instance, Le Matin calculated that by using the discount offered by car dealers on the vehicles they have in stock — the so-called ‘stock premium’— a customer could save 6,000 francs on a new Peugeot 308.

And leasing is available at 0 percent for certain automobiles— making the purchase of a new car even less costly. 

However, Le Matin predicted that the discounts will likely not last long and “prices will go up at the end of the year”, as the economy slowly recovers.

All the information about costs associated with car ownership in Switzerland can be found here

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

ECONOMY

Riksbank deputy ‘open to reconsidering raising rates in April’

Martin Flodén, the deputy governor of Sweden's Riksbank, has questioned whether the central bank needs to bring in further rate rises in April, following bank runs on two niche banks in the US and a crisis of confidence at Credit Suisse.

Riksbank deputy 'open to reconsidering raising rates in April'

Uncertainty in the financial market following bank runs in the US and a crisis at Swiss bank Credit Suisse could have changed the playing field, he told TT in an interview. 

“It affects which level the key interest rates need to be in order to have a contractive effect,” he said, referring to the recent days of financial market turbulence. “We can’t just look at key interest rates by themselves. It’s the key interest rate in combination with all of these developments which determines how tight financial policy will be.”

He said it was not yet obvious what decision should be taken. 

“It’s clear that monetary policy needs to stay tight, but what level of interest is that? We need to assess all of the current developments there.” 

‘Could go in different directions’

In theory, there could be such a serious financial crisis, with such a severe effect on lending and banks’ financing costs, that the central bank would be forced to adopt supportive measures, even lowering the key rate.

Flodén doesn’t think Sweden is in that situation, although he thinks there’s a possibility it could happen.

“It’s not something I can see happening right now, at least, although this could go in different directions.” 

He added that he doesn’t see any reason for any “special concern”, toning down the risk that a crisis for two smaller niche banks in the US and at Credit Suisse could affect the Swedish financial system.

“Of course, it could lead to some stress, but there aren’t actually any particular signs in Sweden, which are worrying me,” he said. 

Flodén is one of six members of the Riksbank executive board, led by Riksbank chief Erik Thedéen, responsible for making a decision on whether interest rates will go up again at the end of April.

The Riksbank has indicated that a rate hike of between 0.25 and 0.5 percent from the current 3 percent rate could be necessary.

Flodén described the most recent inflation statistics for February, where inflation unexpectedly rose to 12 percent, as “not good at all”. So-called KPIF inflation, where the effect of mortgage rates is removed, rose from 9.3 percent to 8.7 percent in January. The Riksbank’s goal is 2 percent.

“It’s clear that inflation is still far too high and that monetary policy needs to be focussed on combatting inflation,” he said, adding that inflation statistics for March will be released before the central bank is due to make a decision on whether to raise rates or not in April.

SHOW COMMENTS