Crisis hits local car market
The global economic crisis has affected the auto
sales market, making things very difficult for countries known as
major carmakers. The past 15 years have seen record low sales in
the world automobile market.
According to Nusrat Ibrahimov, an independent Azerbaijani expert, global car sales dropped 7.8 per cent in 2008. As for January-February, the figure decreased 30 per cent compared to the first two months of last year.
Ibrahimov said US automaker General Motors is expected to stop operating in the coming days. The news came after the giant received a $13.4 billion aid package from the government last December, though the funding has not brought about any revitalization for the company. GM`s sales have more than halved and the company has thus lost its position as the world`s top carmaker. Ford Motors, America`s second largest automaker, whose sales are down 35 per cent, is facing a similar challenge.
The woes in the world`s auto manufacturing industry could not but affect prices in Azerbaijan`s car sales market. However, the anticipated drop in prices for cars offered by the local distributors of the world`s giant carmakers has not taken place. For instance, prices have not been reduced in three-fourths of the over 300 car dealerships owned by 50 companies operating in the capital, Baku.
A monitoring of the domestic secondary car market, conducted by the Real Estate Market Participants public union in March, revealed that sluggish activity observed in previous months continued. The group concluded that the stagnation had been mainly caused by a drop in demand and purchasing power of consumers as a result of the global recession. Supply increased 1.1%, while demand dwindled 4.6% last month, researchers found.
The public union also revealed that inactivity in the market has led to the extension of the time needed to sell vehicles by 6 days, to 85 days in March. Accordingly, risks rose and the liquidity of this type of property decreased. Petty traders, who have been struggling to cope with competition, continued to go out of business.
Further, Ibrahimov said that unlike the primary car sales market, more considerable price drops have been observed in the secondary market.
"Prices for vehicles dropped 25-30 per cent in this market in the past two months alone. Whereas an E Class brand Mercedes made in 1995-1998 was selling for $15,000-16,000 before, its price has now gone down to just $13,000-14,000. Overall, depending on the type of the car, a price difference of $500 to $2,000 is observed in comparison with the previous period," Ibrahimov said.
According to Ibrahimov, inexpensive Russian-made cars, which sell for only $3,000-5,000, are the most popular in Azerbaijan`s secondary sales market and the demand for them remains high due to their low cost and cheap spare parts. He emphasized that the largest reduction in prices for these vehicles has been reported in the secondary market and ranges between 7 and 15 per cent.
Ibrahimov predicts that since buying cars is more lucrative in the conditions of a slowdown in the global market, the number of cars in Azerbaijan is likely to increase further in the foreseeable future.
Latest statistics shows a surging number of vehicles in the rapidly developing South Caucasus republic. The figure has doubled to 800,000 in Baku alone between 2004 and 2008.
According to Nusrat Ibrahimov, an independent Azerbaijani expert, global car sales dropped 7.8 per cent in 2008. As for January-February, the figure decreased 30 per cent compared to the first two months of last year.
Ibrahimov said US automaker General Motors is expected to stop operating in the coming days. The news came after the giant received a $13.4 billion aid package from the government last December, though the funding has not brought about any revitalization for the company. GM`s sales have more than halved and the company has thus lost its position as the world`s top carmaker. Ford Motors, America`s second largest automaker, whose sales are down 35 per cent, is facing a similar challenge.
The woes in the world`s auto manufacturing industry could not but affect prices in Azerbaijan`s car sales market. However, the anticipated drop in prices for cars offered by the local distributors of the world`s giant carmakers has not taken place. For instance, prices have not been reduced in three-fourths of the over 300 car dealerships owned by 50 companies operating in the capital, Baku.
A monitoring of the domestic secondary car market, conducted by the Real Estate Market Participants public union in March, revealed that sluggish activity observed in previous months continued. The group concluded that the stagnation had been mainly caused by a drop in demand and purchasing power of consumers as a result of the global recession. Supply increased 1.1%, while demand dwindled 4.6% last month, researchers found.
The public union also revealed that inactivity in the market has led to the extension of the time needed to sell vehicles by 6 days, to 85 days in March. Accordingly, risks rose and the liquidity of this type of property decreased. Petty traders, who have been struggling to cope with competition, continued to go out of business.
Further, Ibrahimov said that unlike the primary car sales market, more considerable price drops have been observed in the secondary market.
"Prices for vehicles dropped 25-30 per cent in this market in the past two months alone. Whereas an E Class brand Mercedes made in 1995-1998 was selling for $15,000-16,000 before, its price has now gone down to just $13,000-14,000. Overall, depending on the type of the car, a price difference of $500 to $2,000 is observed in comparison with the previous period," Ibrahimov said.
According to Ibrahimov, inexpensive Russian-made cars, which sell for only $3,000-5,000, are the most popular in Azerbaijan`s secondary sales market and the demand for them remains high due to their low cost and cheap spare parts. He emphasized that the largest reduction in prices for these vehicles has been reported in the secondary market and ranges between 7 and 15 per cent.
Ibrahimov predicts that since buying cars is more lucrative in the conditions of a slowdown in the global market, the number of cars in Azerbaijan is likely to increase further in the foreseeable future.
Latest statistics shows a surging number of vehicles in the rapidly developing South Caucasus republic. The figure has doubled to 800,000 in Baku alone between 2004 and 2008.
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