Importers expect new car sales to lose steam

File - Brand new cars are seen parked at the Beirut port, Wednesday, Jan. 23, 2013. (The Daily Star/Hasan Shaaban)

BEIRUT: New car sales are forecast to decrease in 2014 as Lebanon’s deteriorating economic situation reduced the number of imported cars registered by 6 percent in the first 11 months of 2013, Association of Automobile Importers head Samir Homsi told The Daily Star Monday.

While total imports dropped, the number of new cars registered increased by 2 percent in the first 11 months of 2013 compared to the same period last year, according to figures released by the association. Compared to October 2013, new car registrations decreased by 4 percent in November.

The increase in new car sales is due to an aggressive promotional and advertising campaign but won’t be sustainable throughout 2014, association adviser Salim Saad said.

“This increase is insignificant in comparison with the huge efforts undertaken by the car importers to keep their companies alive in spite of the dramatic economical, political and safety situation prevailing in the country,” Homsi said.

The number of imported new and used cars registered dropped by 6.2 percent during the first 11 months of 2013 compared to the same period of 2012 and by 11 percent in November compared to the previous month.

The number of imported used cars registered up to November 2013 has dropped by 8.2 percent in comparison with the same period last year.

Saad warned that a government proposal to raise the value added tax on imported cars would deal a large blow to the sector.

“Ninety percent of the registered cars are small cars with reduced prices around $11,000. Any increase in VAT would deal a large blow to sales in this segment,” he said.

Saad argued that a decrease in small car sales would lead to reduced VAT revenues for the state.

“A VAT hike would equally hurt both the state’s Treasury and car dealers since luxury cars represent only 2 percent of the total of registered new cars,” he said.

The Lebanese car market has shifted over the past five years as consumers started looking for smaller cars due to higher fuel costs and lower purchasing power.

Korean automakers Kia and Hyundai have the strongest results this year, reporting 14,785 sold up to November 2013, almost 50 percent of the total new car sales.

To adapt to the ongoing downward shift in the market, some leading dealerships have acquired import licenses for Chinese brands. The shift has led to very strong competition between car importers, according to Saad.

“Profit margins have dropped and competition is fierce while the economic situation remains stagnant. If the government takes arbitrary decisions, the situation will become much worse,” he said.

A version of this article appeared in the print edition of The Daily Star on December 17, 2013, on page 5.




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