Myanmar auto industry shifts from used to new in shake-up

Myanmar, long known as a used-car paradise, is undergoing a drastic change in its automobile industry as the government tries to cultivate production by restricting secondhand imports.

Sakura Trade Center, the Southeast Asian nation’s biggest auto importer, opened a Suzuki showroom Saturday in central Yangon. The dealership is Sakura’s first for new vehicles, as the company has focused on used cars since its 1993 founding.

In peak times, Sakura imported 10,000 used autos yearly from Japan. But President Htay Aung said the company no longer can expect growth in used vehicles. Sakura will open three more new-car showrooms in the first half of 2017, and the president said new autos will account for some 90% of overall sales in 2018.

Another major player, Farmer Auto, debuted its first new-car showroom in the fall.

This shift is driven by import restrictions on used vehicles announced in November. Starting in January, imports of right-hand-drive vehicles will be banned in principle, and only those built between 2011 and 2014 will qualify for an exemption given in exchange for certificates showing the scrapping of older cars.

An estimated 120,000 used vehicles will be imported from Japan in 2016. A sharp drop appears inevitable next year, hammering many small and midsize import companies.

The Myanmar Automobile Manufacturer & Distributor Association is protesting the ban, as the industry group says vehicle prices will soar to a level that ordinary people cannot afford. Used-car prices at a Yangon dealership jumped 10-20% over the past month.

A 32-year-old worker with a nongovernmental organization had been considering a purchase, but now intends to wait in light of price volatility stemming from the policy change.

More than 90% of the roughly 540,000 passenger vehicles registered in Myanmar as of the end of fiscal 2015 are said to be preowned autos built in Japan.

Source: Nikkei Asian Review

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