Tomislav Miletić: The scenario of further price increases for gasoline and diesel is very likely

Preparations for the most exciting economic day of this year, the traditional Lider event Day of Great Plans, which will be held on September 18 in Zagreb, are in full swing. The importance of such a gathering for the leaders of the domestic economy is growing as the challenges they face unfortunately still abound. Although inflation, which resulted in a sharp rise in material prices, has been somewhat contained, and central banks are announcing cheaper capital, this does not mean that the macroeconomic environment offers ‘smooth sailing’. The manufacturing industry is still recovering from supply chain disruptions, and geopolitical risks in the world that threaten to destabilize entire regions are even more pronounced than a year ago. Moreover, the labor shortage is no longer acute but a chronic problem for the economy.

In this context, Lider’s Day of Great Plans will certainly, as every year, provide interesting insights into the current economic situation and forecasts and predictions for the next year from the perspective of the leaders of the most important domestic companies. Among them will be Tomislav Miletić, general director of P Automobil Import and C Automobil Import.

Sales of new cars last year increased by almost 30 percent year-on-year, but this year there is a noticeable slowdown. However, this data should be viewed from a broader perspective. Although the sales of new cars remain dynamic, we are not recording the same growth rates as last year, emphasizes Miletić.

Close to pre-pandemic figures

– In the first five months of this year, the market for passenger cars grew by a total of 16 percent, while the market for light commercial vehicles grew much faster, even 39 percent more than in the same period last year. When we add these two categories, we arrive at a total growth of 18 percent. Such lower growth rates are not necessarily an indicator of slowing sales, as we should not lose sight of the fact that the previous year, 2023, was preceded by a still post-pandemic disrupted 2022. If the same or similar, even lower growth rate is maintained in the second half of this year, there is a good chance that the sales of new cars will reach or even surpass the pre-pandemic, very good year of 2019 – assesses Miletić.

As for next year, numerous unknowns affect forecasts, and uncertainties affect the outcome, believes Miletić.

– Geopolitical tensions and the global economic situation will cascade affect gross domestic product, inflation, and interest rates, and then the readiness and ability of the state to influence the sales of new cars through the tax framework. In this regard, I believe that certain improvements should be made regarding the special tax for motor vehicles, as well as the taxation of older vehicles. At the same time, the system, as well as the amount of incentives for vehicles with low carbon dioxide emissions, needs to evolve as this year has shown that there is quite a large space for growth in this area. And finally, we should not overlook the supply, considering that next year stricter CAFE (Corporate Average Fuel Economy) standards will come into force, which further reduce the set emissions. The scenario in which manufacturers, fearing high penalties, will seek ways to further encourage the sales of electric cars is very likely, as is the scenario of further price increases for thermal models. Regardless of the previously mentioned factors, we expect a continued positive impact from the National Recovery and Resilience Plan, which will certainly ‘catch’ the demand for all goods, including cars – believes Miletić.

The car market in Croatia is also indirectly influenced by tourism. Primarily through the purchase of cars by rent-a-car agencies. Tomislav Miletić points out that, according to some estimates, rent-a-car agencies are responsible for as much as a quarter of new passenger car sales.

– Such a large share can be a driving force, but in the case of turbulence and brakes on sales growth. As in other southern European countries, where tourism has a large share in the economy, it is certain that in Croatia, rent-a-car will continue to be a major generator of demand for new vehicles – believes Miletić.

Disincentivizing tax system

The domestic market is also characterized by a large number of imported used cars. For example, last year, Croatia registered as many as 78,852 used cars for the first time, which is a quarter more than the previous year. Moreover, last year we approached the record number of imported used vehicles from the pre-pandemic year of 2019, when as many as 84,404 cars were registered for the first time in our market. Tomislav Miletić explains that the market for used passenger vehicles is growing for several reasons.

– First, the fact that our purchasing power is weaker than in Western European countries, so older used vehicles are ‘flowing’ into our market. Second, our tax system does not discriminate against the import of used vehicles compared to new ones; rather, it encourages the retention of older used vehicles on the road, indirectly affecting traffic safety and increased carbon dioxide emissions. Third, in a situation where the supply of new cars will be even more focused on electric and plug-in hybrid vehicles, which are significantly more expensive than conventional thermal vehicles, there is a possibility that some buyers will stick to more affordable used thermal vehicles from imports from the rest of the EU. Therefore, depending on the development of the economic situation, the taxation of car sales, and trends in the sales of new vehicles, we can expect further growth in the import of used vehicles – believes Miletić.

In the last 14 years, the Day of Great Plans has become a hallmark of Lider’s conferences. It has gathered around 5,300 participants and 270 speakers, mostly industry leaders, macroeconomic experts, and leaders from political and public life. The conference has gained the status of a political-economic ‘must be’ event. This year, it will confirm its status with a program and selection of speakers, mostly leaders from various industries in Croatia, world macroeconomists, representatives of the public sector, and state institutions. From them, we will learn firsthand what awaits the entrepreneurial scene and the Croatian economy as a whole in 2025, how they are coping with existing challenges and preparing for upcoming ones, and what their forecasts and predictions are for the next year.

Do not miss the opportunity to network with the most successful entrepreneurs, register in time to participate in the 16th Day of Great Plans, which will be held on September 18 in the Crystal Hall of the Westin Hotel in Zagreb.