Burma’s Clunkers Scrapped in Rush for ‘New’ Cars

By Elaine Kurtenbach 10 April 2014

RANGOON — Mike Shwe Hlaing has a lot full of used SUVs and a potentially huge market to sell them to if Burma manages to spread some of the affluence blooming in its biggest city to a poor and still mostly road-less countryside.

One of the quaintest of many anachronisms in Rangoon, a city of moldering colonial villas and gleaming golden pagodas, used to be the decades-old Toyotas, Chevys and other clunkers wheezing down its mostly empty roads, a visible sign of sanctions and economic isolation. Now, the streets have filled with a flood of newer used cars, mostly from Japan.

As Burma’s reform-minded leadership opens the economy after the former military rulers allowed elections in 2010, automakers are seeking pole positions in what might become one of the world’s fastest growing markets for new and used cars.

Burma has only 2.3 million registered vehicles, nearly 2 million of which are motorcycles that are popular in the countryside but banned in Rangoon. Most of the 300,000 registered cars are in Rangoon and a few other cities.

Mike Shwe Hlaing works at Big Boss Brothers Service Co., one of scores of companies that branched into auto sales after the government revised its regulations in 2011, allowing Burmese citizens to sell 40 year-old junkers and get import licenses for newer, mostly used cars.

Rangoon’s streets are lined with used car lots. But Toyota Motor Corp., General Motors Co., Chinese and Korean automakers are among many that have opened showrooms and are setting up distributorships. They hope to cater to growing numbers of wealthy businesspeople, international agencies and diplomats with the means to pay import and sales taxes that nearly double the sticker prices for imported vehicles.

Cars are still out of reach for most people in Burma, where annual incomes average US$200. Even a modest used compact from Japan such as a Toyota Corolla costs over $10,000 once shipping, taxes and other costs are included.

“I’d like to have a car someday,” said Shwei Hlaing, who at 22 is starting a career as a car salesman. “But I can’t afford one now.”

A short walk up bustling Kabar Aye Pagoda Road, Toyota’s new showroom has just two vehicles on display: a shiny silver Prado Land Cruiser SUV and a sparkling white HiLux pickup. The dealership plans to eventually also offer Camrys and Corollas, said marketing manager Soe Mar Shwe.

A brand new Prado Land Cruiser costs $150,000, including the import license fee and taxes, said Soe. A HiLux pickup sells for $78,500. At Big Boss Brothers, a 1997 Prado sells for a still-hefty $35,000.

Across the parking lot, the Toyota service department is buzzing as staff rush to answer phone calls and deal with waiting customers. Toyota set up its service department in Burma in 1996 and only opened the Rangoon dealership last month.

Though it’s just emerging from a half century of economic stagnation, Burma is drawing intense interest from automakers: further down the street is an outlet for BAIC, or Beijing Automotive Industrial Co. Further out, a Mazda distributorship. Chevrolet also recently announced an exclusive local distributor.

Online car sales may also be booming. There’s no official data, but over a dozen such websites are operating.

There’s huge room for growth in a country of over 60 million with only 38 vehicles per 1,000 people. That’s far less than the United States, where the ratio is 800 per 1,000 people, or even China, where it’s 60 per 1,000.

Soe, who has been with Toyota for 17 years, said she’s ready to trade up from her Nissan sedan. Rangoon’s traffic is a hassle, she admits, but she still likes driving.

“We cannot afford to have a driver, so we have to drive anyway,” she said.

Because of the abysmal state of public transport in Rangoon, a city of 5 million, those who can afford to drive, do. Those who can’t cram into ancient buses perched precariously on huge tires or hitch rides on pickups outfitted with benches and makeshift roofs.

For now, the market is mainly about used cars. Toyota Beltas, Honda Fits and Suzuki Swifts are among the popular smaller-sized cars favored for navigating packed roads and squeezing into tight parking spaces. For the countryside, high-riding SUVs are the wheels of choice.

Win Lai Aye, manager at parts supplier Aung Thein Than Co., said sales of lubricants and auto parts have slowed because the newer cars now on the roads require fewer repairs than the ancient vehicles they replaced.

But it’s just a matter of time before business picks up. Burma’s roads are in a rugged state, with only a fifth paved. The rest are dirt tracks that melt into mud during the five-month monsoon season.

“We expect that in two or three years, the demand for parts will rise again,” Win said.

Win Lai Aye’s own new car, a Toyota Mark II, she said proudly, is black, the same color favored by government officials in Burma. Most of Yangon’s cars are white, since that’s the color Japanese prefer.

Win Lai Aye was thrilled to get the sedan, but she’s not so crazy about driving it in Rangoon.

“The traffic jams. Everywhere, traffic jams,” she said, shaking her head.

Until recently, the oldest of Burma’s clunkers were stacked 20 meters (60 feet) high in the “car cemetery” north of the city, waiting to be scrapped by a military-run steel plant. Now, they’re being kept near a port outside the city, in row after dusty row. Nearby are parked hundreds of newly arrived cars, ambulances and other vehicles waiting to clear customs and hit Rangoon’s increasingly jam-packed roads.