| Telegraph.co.uk | - |
Cypriot consumers also chose to make their purchases in cash, rather than be tied to financing
or hire-purchase deals. Despite depreciating in value quite quickly,
cars are still a handy asset to own because they can be put to
productive use ...
The real sign that Greece's financial turmoil is getting worse
Greeks are pulling their money out of banks... and spending it on cars
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Car sales are a good proxy for financial turmoil in a stricken country
3:05PM BST 12 May 2015
142 Comments
Here is a slightly surprising sign that
Greece is in the classic throes of a bank run: car sales jumped by 47pc
in April. It was the 20th consecutive month that car registrations of
new and used vehicles has risen.
People living in a country gripped by financial turmoil often worry
about the security of their money. If it's in a bank, it can be caught
up in capital controls or lost through insolvency. Better, then, to
spend it. And the purchase of choice is often a car.
This makes motor vehicle sales figures a decent proxy for financial turmoil (under some circumstances).
Ordinary Greeks, many of whom are not wealthy enough to hold bank
accounts outside of the country, are taking their money of the financial
system and spending it on "hard" assets.
In December, when snap elections were called in Greece, monthly car registrations soared by nearly 70pc. Since then, bank desposits have shrunk by nearly 15pc of their total value. Another €7bn left the country in April alone.
A similar phenomenon was observed during Russia's financial meltdown late last year. The rouble's crash resulted in many Russians scrambling to make "high-ticket" purchases - like cars.
Greeks are buying more cars as the crisis worsens
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Cypriot consumers also chose to make their purchases in cash, rather than be tied to financing or hire-purchase deals.
Despite depreciating in value quite quickly, cars are still a handy asset to own because they can be put to productive use - especially if the alternative is just stashing your money under a matress.
In a strange irony of Greece's woes, German industry is perversely one of the main beneficiaries of the country's banking collapse. Greek consumers, like many of their fellow Europeans, buy German cars more than any other brand.
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