Norwegian car dealers are experiencing hectic days following the government's announced VAT increase. Many consumers want to secure a car before New Year to save 50,000 kroner.
The budget hasn't been formally approved yet. Little evidence suggests the proposal will change.
To avoid the extra VAT, a new electric car must be physically delivered, cleared through customs, and registered in Norway before New Year's fireworks light up the sky.
Thomas Iversen, a lawyer and department head at the Consumer Council, warns buyers face double risk. Most contracts contain clauses allowing sellers to add fees that emerge between ordering and delivery. Standard industry contracts place this risk on consumers.
Can car buyers cancel if the car doesn't arrive before New Year? No, not without financial consequences. Cancellation fees typically range from 3% to 6% of the purchase price. A 500,000 kroner car could cost up to 30,000 kroner to cancel.
Stig Morten Nilsen, managing director of the Norwegian Car Industry Federation, doubts buyers will unintentionally face tax issues. Norwegian car dealers will do everything possible to deliver as many cars as possible before year-end. Dealers act honestly toward customers and don't promise what they cannot deliver.
Iversen offers advice to current car shoppers. The safest option is buying a car already in stock. This guarantees delivery before New Year. For cars requiring production, get a delivery guarantee from the seller before New Year. Include contract terms allowing free cancellation if delivery occurs later.
Nilsen considers the Consumer Council's warnings somewhat hypothetical. Car dealers won't guarantee delivery if they cannot ensure it. This situation isn't particularly special for the industry. Standard contracts have been used by hundreds of thousands of car buyers over time without creating problems.
He attributes the chaos to authorities' hasty decision to change VAT regulations.
Finance Ministry figures show making VAT implementation more gradual would cost the state billions. Several industry organizations have requested this approach.
The government's budget proposal changes the VAT threshold from 500,000 to 300,000 kroner from New Year. This will make the average car sold in Norway 50,000 kroner more expensive. Reducing the threshold to 400,000 kroner would increase VAT on an average car by 25,000 kroner.
Changing the threshold this way would cost 2.2 billion kroner in 2026 according to the Finance Ministry.
Most electric cars will become much more expensive going forward due to increased fees. The average car sold in Norway costs 550,000 kroner. In just over a year, it will become 125,000 kroner more expensive if the government's proposal stands.
Implementing VAT from the first krone will first receive formal treatment in the 2027 state budget.
Three out of four cars imported to Norway arrive by sea through Drammen port. This will definitely be a record year. The previous record was 122,000 cars, and this year will likely exceed 135,000 cars according to port director Arne Fosen.
Activity has increased following the government's announced tax hike. The port expects hectic activity until Christmas. The calendar is filling up with more ship arrivals and fuller car carriers. The port hasn't refused anyone yet and uses available quay facilities to accommodate all wanting to dock in Drammen.
The previous sales record for Norwegian passenger cars occurred after a similar situation when the government announced VAT on electric cars in the Hurdal declaration late in 2021. Electric car VAT first appeared in the 2023 state budget.
Car import through Drammen port is heading toward a new record. Three of four cars imported to Norway arrive by sea at this port.
The government's tax policy creates clear winners and losers, with consumers caught between wanting cheaper electric vehicles and dealers managing supply chain realities. The timing creates unnecessary pressure on both buyers and the automotive industry during the holiday season.