Rangoon – Burma's domestic car industry, under the Burmese junta's Ministry of Industry, is experiencing a decrease in sales as several factors have contributed toward lower demand for domestically made vehicles.
Car producers and car dealers from Rangoon say that the domestic car market has been sluggish for the last two weeks due to stiffer competition in the industry, more imports from Japan, the low quality of domestically produced cars and due to economic recession.
"One of my friends bought a car produced by an industrial zone with an installment of 165 lakh (approximately US$ 13,500). And then he resold his Town Ace design for just 140 lakh (approximately US$ 11,500)…for no profit. Only some saloon cars can earn a profit. Myanmar Economic Holdings is also importing a lot of cars, which deflates the local market," a well informed car dealer said.
"Car deals can hardly be made now in the market due to the liquidity crunch. Buyers have to make a lot of repair work to domestic cars produced in industrial zones. Sometimes the wheels do not turn when you turn the steering wheel. These cars can be used for only short distance travel, such as ferrying workers to the worksite. They are also not comfortable to ride in and the quality is very poor and substandard. But, the buyers of these domestic cars must spend at least an extra two lakh (approximately US$ 165) for repairs," he said.
Previously, dealing in domestically made cars could earn a handsome profit, but now domestic models are losing dealers up to 30 lakh (approximately US$ 2,500) per car while Japanese manufactured low models (early model cars) are costing dealers an average of 20-30 lakh per car (approximately US$ 2,050), car dealers from Hantharwaddy car market said.
"It is due to a low standard of car engineering too," another car dealer said of domestic models. "The car parts rust after only one year of use. Car body steel plates are so thin and become rusty after one monsoon season. Moreover, all domestically produced cars have to be repaired and renovated, though only used parts are available for these cars."
Domestically produced cars are made from used cars imported from China, Thailand and Japan with new imported engines. Domestic car producers only add finishing touches and lack technology, skill and modern machinery, he added.
Meanwhile, Myanmar Economic Holdings Ltd., as well as some private domestic companies, is importing more cars from Japan, which simultaneously forces the price of imported models down. Though it is good for car buyers, it is bad for the domestic made jeep and light truck industries, as they are substandard and cannot compete with imported Japanese cars in both quality and price, dealers said in reviewing the current trend.
Japanese manufactured Super Saloon car prices have declined from 30 million kyat (approximately US$ 24,700) to 25 million kyat (approximately US$ 20,570), Suziki R+ from 50 million kyat (approximately US$ 41,150) to 46 million kyat (approximately US$ 37,860).
At the same time, the price of a Light Truck Jeep (popularly known in Burma as a pygmy jeep) produced in Rangoon, as well as jeeps produced by Burmese manufacturers Shan Star, Mandalar and Htilar, have also declined from 13 million kyat (approximately US$ 10,700) to 8-9 million kyat (approximately US$ 7,000).
"Previously, the buyers gave advance money for our cars. It made it convenient for both parties. We got continuous orders. But now dealers dare not hold our cars in their hands as prices are falling. All buyers of our cars are losing money so that we cannot get new orders for our industry. And there are also no new buyers," a light truck manufacturer from Rangoon's South Dagon industrial zone remarked.
As a result of the depressive auto market, some jeep manufacturers from South Dagon Township, light truck manufacturers from Taunggyi industrial zone and some other jeep manufacturing companies are preparing to suspend some production lines as no new orders have been received.
Reporting by a Mizzima correspondent in Rangoon, with additional reporting and writing by Phanida in Chiang Mai.
