Chinese cars make inroads in Myanmar’s market

Sunday, January 2, 2011

YANGON - Min Min yawned as he gazed at the compound of his second-hand cars dealership in Yangon.

“I come here every day as usual but go back home without a single kyat in sales,” Min Min, 45, said.

Myanmar’s market for second-hand cars shifted into low gear last year due to an influx of new Chinese vehicles imported in bits by Chinese-Myanmar joint ventures and assembled locally.

Chinese models are now cutting into what was once one of the world’s most lucrative markets for Japan’s used-car exports.

Myanmar’s domestic vehicle market has been dominated by imported second-hand Japanese models for more than three decades.

With the country under military rule since 1962, automobile import licenses were only given to ministries, military-owned corporations such as Myanmar Economic Holdings and Myanmar Economic Corporation, and business tycoons close to the ruling generals.

These monopolies pushed second-hand car prices in Myanmar to among the world’s highest.

Typically, a 20-year-old Japanese saloon sold for about 30 million kyats ($30,000) in the golden years of the used car business.

Things turned in 2009, when the government allowed joint ventures between Myanmar and Chinese companies to be set up to import dismantled automobiles for assembly in Myanmar.

Last year these locally assembled Chinese models started to hit the market in a big way.

“We used to sell a 1988 Toyota Sprinter for 45 million kyats in 2008. Now, it’s hard to sell it for even 17 million kyats,” one Yangon second-hand car dealer said. “Chinese cars are now dominating the market because of their cheaper prices.”

“Before Chinese cars came into the market, we sold Japanese-made High Ace cars at 60 million kyats,” the dealer told DPA. Equivalent Chinese models were now available for half that, he said, “so we need to cut down our price to 55 million kyats.”

Even prices for Chinese cars are still steep in the country where where the minium wage is less than $50 a month.

The newest Chinese sports utility vehicles, for instance, sell for $50,000. Even so, the new competition has been welcomed by those few who can afford cars.

“I just bought this new Chinese car with Japanese technology at a very reasonable price,” said Aung Thaw, a businessman in his thirties. “If I wanted a similar car two years ago, I could only buy quite an old Japanese one for the same amount of money.”

Some privately owned companies such as Ramma and SSS have also started selling new Chinese models at Yangon trade fairs.

Before 2009, the ruling junta only allowed local companies to establish car assembly plants in the country’s 18 industry zones.

These cars, assembled without Chinese help, were of poor quality, industry sources said. Some manufacturers cheated by importing whole cars from neighbouring Thailand and China and selling them as locally assembled, the sources added.

With the new regulations allowing some international joint ventures, there are at least five plants assembling Chinese brand cars.

Some local firms are also preparing establishing joint ventures with Japanese automobile firms, sources said.

“I saw some Japanese joint-venture cars in the market selling at a price of between 30 to 40 millions kyats,” Min Min said. “It will change the trend of local car market again,” he added. “Maybe I should change my job.”

Filed under: Economy

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