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Current Trends & Demand
Leasing
Leasing- and subscription-based ownership models, instead of buying cars, is becoming increasingly popular. In Denmark, 42% of all vehicles were leased in 2017. More than half of the entire leasing market consists of commercial vehicles, and 25% of the private vehicles sold were part of a leasing agreement.
Electric Vehicles
The sale of electric vehicles in Denmark is not impressive. Denmark is ranked 14th in Europe, when comparing the share of new electric cars. It is however the ambition of the government to dramatically increase the sale of new electric and hybrid cars. While there were only 9000 electric cars on the Danish roads in 2018, the goal is to increase that number to 500,000 electric and hybrid cars in 2030 .
Aftermarket
Traditionally, the Danish fleet has been comprised of older and smaller cars due to a reluctance to buy new cars. This means that the Danish market has traditionally been well suited for aftermarket sales of spare parts and add-on solutions. Leasing- and subscription-based ownership models are however becoming increasingly popular, which puts pressure on the market for aftermarket products.
Digital Solutions
The Danes have embraced digitalization and are accustomed to using online tools. There is therefore demand for digital solutions that disrupt the traditional automotive market and industry. This includes digital solutions that makes it easier for consumers to:
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In Denmark there is an initial registration tax on passenger cars of 85 percent on the initial DKK 193,400 (USD 29,478) and 150 percent on the remaining price . There is an additional 25 percent VAT tax on the vehicles price (on top of registration tax). Additional taxes include the “Green tax” (miles/gallon of fuel) , “fuel tax” which comprises more than 50 % of the current fuel price and a “particle emissions tax”. Lower taxation levels apply to pickups, trucks and busses.
Danish gas prices are considered to be relatively high. In 2018 the average price of gas in Denmark was DKK 12.15 pr. liter (USD 1.9) which translates to approx. 7.8 USD pr. Gallon. With high gas prices, high taxes on cars and a relatively high progressive income tax, most Danes are reluctant to purchase new vehicles. Consequently, Danes own their cars for a relatively long period of time. The average car on the Danish roads has been in use for nine years and most cars will be used for around 16 years before being decommissioned. Leasing- and subscription-based ownership models are however becoming increasingly popular.
Barriers
market trends