05 JAN 2018
While used Toyotas are more popular, interest in new cars assembled locally by the likes of Ford, Nissan and Suzuki is rising. Photo: The Myanmar Times
The government’s new 2018 car import policy restricting car imports to new left-hand-drive vehicles has changed the way car owners make decisions on buying or selling vehicles. Within the short term, used cars made by Toyota are expected to be in demand. Over the longer term though, the sale of new vehicles made by other car makers will rise.
With the new policy in effect, prospective car buyers now have several options to choose from when considering which vehicle to purchase. These are brand new locally assembled left-hand-drives, new imported left-hand-drives and used right or left-hand drive cars.
Over the next few months, car dealers are expecting more demand for used Toyota right-hand-drives, which were produced and imported for domestic use in the past. As such, Toyotas are perceived to be of good quality by the locals and represent the largest proportion of vehicles on the road.
“For buyers with a budget of K40 million-K50 million, they should go for the used Toyotas made between 2011 and 2013 as these vehicles are of higher quality and will no longer be available from now on,” said U Min Min Maung, managing director of Wun Yan Kha car sales center.
For example, those looking for vehicles to go on long-distance or family trips can opt for the Toyota Surf or Alphard, as these cars car carry up to seven people and cost around K40 million or less.
“Those who cannot afford to buy the Alphard can go for the Toyota Wish, which has the same passenger capacity as the Alphard but at a lower price,” said U Aung Than Win, chair of Motor Vehicles Trading Association.
For buyers wanting smaller vehicles for basic transportation and shorter distances, they should choose used Toyotas with 1,300 cubic centimeter engines, which is more fuel efficient and easier to park on the narrow, congested roads of Yangon. These vehicles are priced between K15 million and K20 million.
Option to sell
One other important factor to consider when buying a car is its resale value. In Myanmar, almost every owner is likely to sell his car, while buying second hand is common practice. Currently, used, imported Toyotas are perceived to have better quality and resale value than new locally assembled vehicles.
This is because “sellers can cover the cost of the car when they sell to others. The older Japanese cars are in demand and much easier to sell than some of the new ones owing to perceptions on quality. Sometimes, sellers of used Japanese vehicles can even profit from the sale. What’s certain is they will not lose their initial capital with a Japanese car,” said U Min Min Maung.
In comparison, even though new locally assembled cars come with warranties and may be even cheaper than a used Toyota, owners are unlikely to recover the cost of the vehicle when selling them in the second hand market.
“Other than considering their own preferences for cars, buyers are also thinking about how easy it is to sell the car if they need the money or want to change cars. So, they should choose cars that are well-received by the market,” said U Aung Than Win.
Ma Su Myat from Ahlone Township, who intends to buy a car soon for a budget of up to K35 million, said she will likely choose a used Toyota Mark II instead of a new car assembled locally. “I think the imported Toyota, even though it is second hand, is comparable to a new one made here. But more importantly, this brand is popular in Myanmar and easy to resell,” she said.
U Aung Than Win agreed. “Toyota is very popular in Myanmar. So many models are imported from overseas and buyers have a lot of options to choose from,” he said, adding that the availability of spare parts and service centers for used Toyotas is also more accessible in Myanmar, which is a big plus when choosing between car makers.
After Toyota, buyers tend to choose Honda as a second option, with Nissan and Suzuki making up the third and fourth option.
Price over brand
Nevertheless, car dealers said customers are now less concerned about the brand and becoming more price conscious. “In my experience, customers are starting to compare more between new and used cars. Used Japanese right-hand-drives are becoming much too expensive because of the new policy so buyers are getting less bang for their buck,” said U Aung Naing Tun, director from Sakura car sales center.
In fact, it won’t be long before demand rises for new locally made left-hand-drives by Nissan, Suzuki and Ford. “Interest in the new cars is starting to pick up. Customers are starting to base their decisions more on price and value over brand. Moreover, unlike the used Toyotas, the prices for new cars are stable and customers can buy whenever they want. I think the Japanese used car market won’t be able to compete with the new car market over the longer term,” said U Aung Naing Tun.
Ma Witt Ye from Hlaing Township is one of those customers. “I will buy a new car for about K30 million because there is a warranty and after sales service. Some people say locally made cars are not of good quality. But at least I will be driving a new car. I will think about selling it later,” she said.
Local car makers are also permitted to issue coveted Yangon license plates to buyers. The Yangon Regional Government last year stopped issuing parking recommendation letters, which is required documentation for obtaining a Yangon license plate. Vehicle owners with Yangon license plates are allowed to park overnight in Yangon. Currently, car buyers are issued with license plates from other states and regions.
Ref:https://www.mmtimes.com/news/what-consider-when-purchasing-vehicle-2018.html
Car permit prices likely to tumble
Export companies and hotel and tourism operators with at least US$100,000 in domestic bank accounts, as well as Myanmar workers abroad who have at least US$30,000 in bank accounts here will be able to access permits in coming months, the Ministry of Commerce website states.
A ministry official told The Myanmar Times on December 20 that about 900 export companies and 700 overseas workers had applied for import permits, with about 30 percent already approved.
Soon after the government unveiled the “overage” car import substitution plan in September the price of import permits – obtained when a 40-year-old or older vehicle was submitted to the government for scrapping – hit a high of about K12 million.
But the ministry official said in coming months that permits would no longer be required because car sales centres would be opened, allowing consumers to buy vehicles directly.
In mid-December the Ministry of Industry briefly opened sales centres in Yangon and Mandalay to sell 1000 Chinese-made Chery QQ3 sedans. However, the cars sold out within a week.
The official added that nine service companies, including Sakura Technical Services Company, Diamond Auto Services Company and Sandrar Services Company, would open sales centres in Yangon and Nay Pyi Taw in January.
For the time being they would only be allowed to sell vehicles to people with import permits but in future would be allowed to sell freely, he said.
Under the overage car substitution program buyers were limited to selecting cars made between 1995 and 2002 but the companies and overseas workers with US dollar accounts will be able to bring in brand new vehicles.
About 6700 cars have already been imported under the import substitution program, with about 12,000 older vehicles submitted for substitution.
Ko Aung Naing Htun, the manager of Sakura Technical Services and automobile sales centre, said the price of selected Toyota models in Tokyo used car auctions had skyrocketed on demand from Myanmar since September.
Toyota Mark II sedans, colloquially called shwe ngar or gold fish, increased in price from US$2000 to $7000 for 2001-02 models because they were in such strong demand. Buyers have been circumventing the import substitution plan’s $3500 value cap by paying money to the sellers in Japan through the illegal hundi remittance network, he said.
“An organisation should be set up to monitor the prices paid at auctions in Japan to ensure that people don’t cheat the system,” he said.
U Aung Win, car trader at Yangon Hantharwaddy car trading zone, said import permits acquired by overseas Myanmar workers were only valued at between K2 million and K4 million because the market perception was that the import process was too complicated.
He added that import permits obtained through the car import substitution program had not fallen greatly in value yet because market demand was still strong. But he added that when the next batch of cars, with htasingtoo number plate prefixes, started being submitted for import permits prices would probably fall by about 20 percent because there were about 50,000 of these vehicles on the road, although most were government vehicles.
Ref:https://www.mmtimes.com/business/1586-car-permit-prices-likely-to-tumble.html
Old car, permit prices rising again, say Traders
27 AUG 2012
After months of steady declines, prices for used cars and import permits are on the way back up, car traders said last week.
They say a pause in the government’s overage car import substitution program, coupled with rumours that importers would be able to buy even newer vehicles, have pushed prices upward.
The Ministry for Commerce announced in early May that citizens with foreign currency bank accounts held at state-run banks could import cars made between 2007 and 2010 with engines of 1350 cubic centimetres or less in capacity without a permit. Foreign currency accounts with private banks have since been added to that program, with popular small cars, such as Toyota Vitz, Suzuki Swift and Honda Fit, selling for between K11 million and K20 million.
The earlier car import substation policy, which was unveiled in September, had limited imports to cars made between 1995 and 2006.
However, owners of the many car sales centres that have opened since September asked the government in May to amend the import substitution policy to allow them to import newer vehicles.
U Kyaw Nyunt, a trader at Yangon’s Hantharwaddy car trading zone, said the hottest selling vehicles are those eligible for immediate substitution – pazuat prefix – or the next batch, balachaik, which is widely expected to follow after the window for pazuat-plated cars finishes in August.
“There is strong demand for cars with balachaik-prefix plates, which is pushing prices upward because there are comparatively few of these cars available,” he said.
By late August the price of import permits had climbed to about K8 million, up from K7-7.5 million in early August, and K5 million in July.
However, the highest price of about K16 million was reached in late April, just before the announcement concerning small capacity cars.
The precipitous price fall left some buyers who had ordered cars at the peak of the market to absorb large losses, traders said.
U Htun Aye, a spokesperson for Shwe Yamon car sales centre in Mayangone township, said the government should consider a new approach to allowing people to import cars.
“The policy is strange – people are allowed to buy cars through showrooms but they are also allowed to import from trading companies, which is not always reliable.
“I think that perhaps the whole system of import permits should be scrapped,” he said.
U Htun Aye said the system left everybody, including buyers, sellers, traders and sales centre owners, vulnerable because prices could not be predicted.
“People should be able to buy cars however they like, if they can afford to. This should not depend on the government’s policy,” he said
“Showrooms should be able to sell cars made later than 2006 but now we’re not in a position to do all we can for customers,” he said.
The government has allowed car sales centres to accept consignments of second-hand vehicles from Japanese firms, which can then be returned if they go unsold. However, some centres have reportedly been forced to accept major losses in recent months because they pre-paid for cars.
Another Hantharwaddy dealer said the consignment system is not effective.
“Plenty of car sales centres are working with traders and brokers at Hantharwaddy to sell their vehicles because they don’t want to hold too much stock at once,” he said.
Meanwhile, a Ministry of Commerce official said cars worth up to K10 million would be imported from Thailand soon.
He added that the cars could be charged a customs duty of 5 percent, compared to the 30-40pc normally levied because they will be imported under the ASEAN Trade in Goods Agreement. However, because the country of origin is Japan, not Thailand, officials were still discussing how much tax would be charged.
“Although officials announced [on the Ministry of Commerce website] that ASEAN and ASEAN relate countries [including Japan] will be charged lower customs duty they are still discussing the tax rate,” he said.
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