Business

Car Prices Tumble, but Still Steep by Neighbors' Standards

By Zaw Win 25 May 2012

Car prices in Burma have tumbled since the Ministry of Commerce announced earlier this month that all citizens would be allowed to import vehicles made in 2007 or later, but are still far higher than in  neighboring countries, according to car traders in Rangoon.

“After the announcement of May 7, the prices of most cars, including the most popular models, fell by around 10 million kyat [around US $12,000],” said Aung Myin Moe, a car trader in Thingungyun Township.

The price of a 2002 Toyota Mark II, for instance, has dropped from 30 million kyat ($36,000) to 21 million kyat ($25,000), while a 2007 Toyota Mark X now sells for 40 million kyat ($48,000), down from 51 million kyat ($61,000), he said.

But with prices still high by international standards, sales remain sluggish. “Although the car prices have dived, sales have been slow as most buyers are waiting for further decreases,” said Aung Myin Moe.

Most dealers are optimistic, however, that Burma’s car market will expand substantially now that  vehicles are coming within reach of a larger segment of the population.

“People who could not afford to own a car before will now have a chance to buy, even if they are still quite expensive compared to other countries,” said Than Aung, a car trading agent in Rangoon’s Dagon Township.

This is the second time in less than a year that the government has opened up Burma’s car market. In September 2011, it announced that owners of 20-to-40-year-old vehicles could trade them in for newer models without an import license—a move that dramatically drove up the price of some old clunkers.

“As the owners of most of the older vehicles could not afford to buy new cars, they simply sold them to to businessmen and car sales centers. Eventually, as the number of vehicles eligible for the car substitution program decreased, their value went as high as 15 million kyat [$18,000],” said Than Aung.

According to a senior Ministry of Commerce official, a total of 51,322 units, including 46,871 saloons, 3,156 trucks and 1,295 buses, had been submitted to the Directorate of Road Transport under the substitution program until May18.

“Altogether, 42,448 import permits have been issued under the car-substitution scheme,” said Tun Aung Kyaw, the chief director of the Directorate of Road Transport at a workshop in Rangoon on May 21.

Speaking at the same workshop, Kyaw Soe, a senior official from the Ministry of Commerce, said that as of May 18, 5,118 units had been imported under the program to allow imports of cars made in 2007 or later.

The new program was actually introduced in November 2011, when only domestic export and import companies, tourism companies, seamen and oversea workers and diplomatic staff were eligible to apply for permission to import vehicles. On May 7, it was expanded to include other Burmese nationals.

“Now you can get a saloon made in 2007 or later with a 1,350 cc engine for around 10 million kyat including taxes,” said Moe Lwin, a car trader in Thamwe Township.

“After the announcement on May 7, import permits issued under the substitution program to import cars made between 1996 and 2006 were reduced to 8 million kyat [$9,580], with almost no buyers,” he added.

On May 7, Commerce Minister Win Myint said at a press conference in Naypyidaw that, due to high prices, only seven people in 1,000 have cars in Burma. The ministry therefore decided to allow the import of over 300,000 units, he said.

“The purpose of allowing every citizen with a foreign bank account to import a car is to increase the number of car owners in the country to a level comparable with neighboring countries,” said Win Myint, noting that 270 people in 1,000 have cars in Thailand, compared to 21 in 1,000 in Cambodia and Laos and 14 in 1,000 in Vietnam.

Although import license fees are no longer the barrier they once were to car ownership, prices remain high because of taxes imposed by the Ministry of Commerce and the Directorate of Road Transport, which range from 105 to 185 percent of the cost of the vehicle.

Car dealers in Burma say they don’t expect prices to come down to the same level as in the rest of Southeast Asia until car factories have been set up in the country or the Asean Free Trade Zone comes into effect.

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