Statement Regarding the Decision of the Government of the Republic of Serbia on Subsidizing the Purchase of Electric and Hybrid Vehicles in 2021

The Serbian Association of Vehicle and Parts Importers would like to draw the public's attention to the decision made by the Government of the Republic of Serbia to subsidize the purchase of electric and hybrid vehicles in 2021.

It is enough to mention some of the issues and figures that support the necessity of continuing subsidization to conclude that this Regulation is the right move. Firstly, it is necessary to continue this practice to encourage buyers who are willing to change their mindset and invest money in environmentally friendly vehicles.

Secondly, considering the currently alarming state of air pollution and the trends implemented by the European Union, there is a need to accelerate the adoption of a series of positive regulations in this area. Subsidizing purchases is just one of them.

Our country is at the bottom of Europe on this issue. This year, with the introduction of subsidized purchases, a significant first step was taken, drawing attention to this issue and boosting the sales of electric and hybrid vehicles. It is important to emphasize that in the vehicle sales in Serbia, hybrids account for only 4.4% (in Europe, this percentage is 12.4%), and only 0.15% are electric vehicles (in Europe, it is 9.9%).
The total sales of new passenger vehicles (including light commercial vehicles) this year will not exceed 27,000 vehicles. Up to November, there were 24.5% fewer new vehicles registered than in 2019. The sale of new vehicles in our country constitutes about 15% of total sales, i.e., first registrations. A staggering 85% of first registrations consist of used vehicles. Almost 80% of used vehicles are over 10 years old. This leads to the devastating statistic of the average age of the vehicle fleet in Serbia, which is 17 years. By this parameter, we are in the worst position in the region.

The European Union has set a long-term goal of reducing harmful gas emissions by 40% by 2030 compared to 1990. According to the European Commission's proposal from September this year, this goal was supposed to be raised to 55%. However, the European Parliament further raised this goal in October, voting for a 60% reduction by 2030 (compared to 1990). By 2050, complete carbon neutrality needs to be achieved, meaning reducing emissions to such a low level that whatever remains is naturally neutralized. For comparison, by 2019, CO2 emissions had been reduced by 24% (26% including the UK) compared to 1990, so more than half of the targeted reduction needs to be achieved in the next 10 years.

Current targeted average emissions of new cars in the EU are 95g/km, and to achieve the new goals, average emissions need to be reduced to below 50g/km. The only way to achieve this average is a massive increase in the share of environmentally friendly vehicles.

For example, in the first nine months of this year, electric vehicles had triple-digit sales growth in major European markets (France +132%, Germany +105%, UK +165%).

In that regard, all manufacturers are rapidly introducing such models, from mild to full and plug-in hybrids, fully electric vehicles, and fuel cell hybrids, i.e., hydrogen-powered.

In this sense, the mentioned Regulation has room for further improvement and the introduction of additional categories of environmentally friendly vehicles, such as mild hybrids and conventional vehicles with emissions below 100g/km CO2.

However, positive regulations can also relate to a series of regulations that would contribute to reducing pollution and incentives for the ecological industry. One of them is the regulation related to the eco-tax paid only by importers of new vehicles per ton of vehicles, while all imported used vehicles do not have to pay the eco-tax. It should not be forgotten that around 150 thousand used cars, mostly from the European Union, were imported into Serbia last year.

Additionally, an incentive vehicle registration system, such as in most EU countries, which involves lower taxes on vehicles with lower emissions and higher taxes on vehicles that are major pollutants, would contribute in several ways, primarily to reducing the age of the vehicle fleet. Moreover, it is necessary to expedite processes and procedures to operate as quickly as possible without delays and waiting, as is the case with subsidized purchases.
We must be aware of the situation and the impossibility of reaching EU goals and budgets, but it is crucial to monitor these trends because the changes are dramatic, and if we do not follow them, at least to some extent, we will find ourselves in a situation where it will be challenging to catch up.

At the same time, the problem with the age of the vehicle fleet will become more significant.

Belgrade, December 25, 2020.

Media Contact:

Aleksandra Graovac, General Secretary

Tel: +381602698720; Email: gensekuvoznici@gmail.com