1,300cc car engines still in high demand despite drop in 1,500cc price, dealers say

Myanmar’s Vehicle Import Supervisory Central Committee recently announced that new revaluation rates on cost, insurance and freight (CIF) for imported cars will take effect on January 1.

Since these rates provide the basis for tax calculation of imported vehicles, changes in such rates can ultimately affect motor prices. According to the announcement, the CIF revaluation rates for cars with 1,300cc engines, which are mostly bought for recreational use, will remain the same.

Car dealers have predicted that strong demand for 1,300cc-engine cars will continue although the CIF rates for cars with 1,500cc engines are set to decrease next year. This is mainly because taxes for 1,500cc-engine vehicles are still more than twice as high as those for 1,300cc-engine cars.

“The new CIF rates have been recently announced. Last year, the government didn’t specify the exact rates for 1,500cc engines. It only said that those cars with engine power below 1,350cc would be revalued at US$ 5,000. So, those above 1,350cc—including 1,500cc cars—had varied in revaluation rates. This year, 1,500cc-engine cars are also to be revalued at a reasonably low level compared to last year. Even looking at this, you cannot say that there will be a big increase in demand for 1,500cc cars. Because the tax for 1,500cc is double that for 1,300cc,” said Htut Hteik from Distinct Trading Co Ltd, which is involved in motor trading.

For example, Htut Hteik said that if a Honda Fit (1,300cc engine, 2012 model) is valued at US$ 5,000, taxes of Ks 5.1 million (US$ 5,100) will be paid. However, if the same model with a 1,500cc engine is valued at US$ 10,500 according to the new rates, the tax amount will become Ks 13.5 million (US$ 13,500), which is more than double the total tax for a 1,300cc-engine model.

“Since the CIF rates for 1,300cc-engine cars don’t change, their demand will continue to be strong. But for 1,500cc cars, their tax alone can amount to the total cost of a 1,300cc car. So, I don’t see any prospects for an increasing demand for 1,500cc. Those cars between 2000 and 2008 models that are imported with the slips the government gives for returning old cars will become cheaper due to the decrease in CIF prices. The cost of these models will be reduced by as much as Ks 4 million (US$ 4,000) for some. So, we expect their demand will increase,” said Moe Kyaw Swar, owner of a local car showroom.

“Although the government has brought down the CIF rates for vehicle importers, there is already an excess amount of cars in Yangon and Mandalay cities. So, a big increase in demand is impossible. The car prices won’t also decrease that much. If the demand increases in Myanmar, car prices in Japan will also be likely to increase [as Myanmar imports vehicles mainly from Japan]. So, car prices [including 1,300cc] will not go down below the current level,” said Aung Kyaw Soe, a car importer.

Source: ELEVEN Myanmar

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