The recent car sales data from Norway presents an intriguing picture. January of this year saw the lowest number of new car registrations in the country since 1962, with just 1,860 new cars recorded. This marks a significant decline compared to the 41,441 cars sold in December 2022, of which 39,497 were registered that same month. The sudden drop in sales can be attributed to the end of generous electric vehicle (EV) subsidies announced by the government in December 2022.
Since 2010, car sales in Norway have been steadily increasing, reaching 200,840 cars sold in 2021. However, the discontinuation of EV subsidies has resulted in a major slowdown in the market. Previously, EVs in Norway were exempt from VAT and purchase or import tax, but that is no longer the case. Now, only the first NOK500,000 of the price of an EV is exempt from VAT, with a new purchase tax based on the car’s weight and regular road tax also applied. Additionally, EVs are no longer able to use free toll roads and are required to pay 70% of the usual fee, and free ferry access and bus lanes are restricted. Furthermore, car tax reduction for company vehicles has decreased from 50% to 20%.
See also: Hyundai in Norway only sells electric cars from January 2023
Despite these changes, there are still some benefits for EV buyers in Norway. Leased EVs are exempt from 25% VAT, and those living in apartment buildings have the legal right to an EV charging point. All new cars in public services must also be emissions-free, and by 2025, this requirement will extend to all buses.
In January 2022, 7,957 cars were sold in Norway, while only 1,860 were sold in the same month this year. Out of those, 1,419 were plug-in vehicles, with 1,237 being battery EVs. The end of subsidies has certainly caused a downturn in the market, and it remains to be seen how the market will recover and what new trends will emerge. The car sales numbers in February and March will be closely watched, but it is unlikely that buyers will go on a long-term strike against the government. In the end, the need for new cars and orders from fleet operators will continue, although the impact of the drop in sales will be felt for some time.
Overall, the sudden decrease in car sales in Norway presents a unique situation that will be interesting to follow. The market will need time to recover from the 10-fold decrease in sales compared to the normal level.
