Sunday, August 20, 2017

CIF changes put small cars back in charge

Car traders say recent changes to the cost, insurance and freight valuations used to tax imported vehicles have boosted demand for smaller cars. (Yadanar/The Myanmar Times)Car traders say recent changes to the cost, insurance and freight valuations used to tax imported vehicles have boosted demand for smaller cars. (Yadanar/The Myanmar Times)

Demand for small-engine passenger cars is running strong in the wake of changes in December to the cost, insurance and freight valuations used to tax imported vehicles.

Consumers are instead looking to cars with sub-1350 cubic centimetre engines made from 2007 onward that do not require an import permit, use less fuel and are cheaper to buy, say car traders.

Vehicles affected by the December import changes require an import permit, earned by submitting an older vehicle for scrapping, which change hands for about K9 million. The tax levied on imported cars averages about K5 million, while shipping costs from K1.5 million to K2 million, importers say. All told, eligible vehicles – made from 1996-2007 – cost at least K18 million, while a smaller cars can be bought from car lots in Yangon for K10 million, said traders from Hantharwaddy car market.

Dr Soe Tun, owner of the Farmer car showroom on Saya San Road, said: “Everybody wants to buy later model cars even when the prices are the same. And even if we can get an automobile shipped for free from Japan, we can’t sell it for less than K16 million.”

But Myanmar Automobile Industries Association central executive committee member U Aung Naing Tun said he does not believe the trend is universal.

“More late-model luxury cars are being imported but late model trucks are not,” he said. “Early model trucks, made in 2000 or 2001are being imported in large numbers because they’re cheap and people can afford them.”

But registration discrepancies have led to problems in port, Dr Soe Tun said.

“Automobiles produced in October, November and December of 2012 are registered as 2013 models – one year up. That’s why some imported automobiles are one year down,” said Dr Soe Tun.

In previous years port authorities have not allowed models with non matching numbers to be released, but the government has eased some restrictions: models one year too old can be released with payment of half the accessories value, while models that are two years down can be released with the same payment plus a fine and port fees, said importers.

Last month, importers and some car showroom owners of the Myanmar Automobile Industries Association held a press conference over 22 impounded vehicles in Yangon Port.

“Seven vehicles have already been taken out from port, but there are still five automobiles that are two years down. Some of them are already on the port auction list because they have exceeded 60 days in port. Owners need to protest against their placement on the auction list and have to apply again with Customs for taking them out of port,” said U Aung Naing Tun.