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Car Market in Stagnation Mood

After the change of government in February 2021, the imports of cars have been restricted in order to control a major avenue for foreign currency outflows. With limited arrival of imported cars, the car market has been in doldrums for quite a number of months, according to major car importers and traders.

“Car prices jumped significantly when the Dollar rate went up to 2,700 Kyats six months ago.  Even for a Suzuki light truck, the price shot up from five million Kyats to eight million Kyats (~$4,000+) within a couple of days then. Now with the exchange rates back to below 2,000 Kyats, people are all  having wait and see attitudes. Not much transactions nowadays. The prices have generally gone up compared to the previous year. There are no cars priced around 10 million Kyats (~$5,000) in the market at present. Without spending 20 to 30 million Kyats ($10,000 to $15,000) you cannot have a decent car,” said Dr Soe Tun, Managing Director of Farmers Auto Co., Ltd.

Based on car traders, car prices are unlikely to fall; Kyats depreciation against the Dollar, higher logistics costs, control over car imports are all contributing to the high prices and hence, the market gloom.

Soe Tun continued, “The Dollar is at 1,900 – 2,000 Kyats. The government rate is around 1,800 Kyats. Yet for car traders, the effective rate they are using is 2,000 Kyats. Be it SKD (Semi-Knocked Down), CKD (Complete Knocked Down) or completed units, the only viable transport route right now is through the sea trade. Borders are closed most of the times due to COVID. For transport in containers via sea, previously it cost only $700 – $800. Now it is $4,000 – $5,000 per car container. It is four to five times increase. Even if you are willing to pay, it would take four to five months lead time for the car to get to Yangon. The government control over imports is also aggravating the issue. Imports are no longer aplenty. Therefore, I do not foresee car prices dropping at all.”

COVID and on and off closure of SKD factories are also keeping ‘Assembled in Myanmar’ car production low. Once the SKD factories are back to normal capacity, the car market might be stabilised and active once again. All traders and consumers are hoping for that.