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Jordan: Agents push for lower tax, age limit to boost, regulate car sales

By Omar Obeidat

AMMAN -- Agents of new cars, who are struggling to compete in the local auto market, believe it is time for the government to consider age restrictions on imported used vehicles.

According to Jordan Customs Department figures, around 72,000 cars, both new and used, worth JD539 million, were imported to the local market last year.

Salameh Jundi, president of the Automobile and Spare Parts Agents Association, told The Jordan Times Sunday that the share of new cars in the automobile sector is between 22 per cent and 25 per cent only.

Jundi, who represents agents of new cars in the Jordan Chamber of Commerce, echoed the same remarks of several dealers by calling on the government to restrict the age of imported used cars to between three and five years.

Another suggestion made by Jundi to help revive the auto sector in the country and to enable people to buy new cars was to cut the special tax on small-engine cars by half.

"We [car dealers] have prepared a study on the market and we sent recommendations to the government to cut the special tax from 81 per cent of the value of the vehicle to 40 per cent on cars whose engine size is between 1,300CC and 1,600CC," he noted, expressing hope that the government would seriously look into this proposal.

Limited-income people prefer to purchase used cars as they find their prices reasonable, but later they discover that the used car, which needs frequent maintenance, has become more expensive than a new vehicle, which lasts for four to five years without the need for maintenance, he added.

Nihad Zachria, general manager of KIA Motors-Jordan , agreed with Jundi, saying that demand for used cars, particularly those older than six years, is much higher than brand-new vehicles, a fact that he said harms the consumer as well as the economy.

Zachria told The Jordan Times over the phone that there are 1.099 million vehicles in the Kingdom, 68 per cent of which were manufactured more than 10 years ago.

In regards to the sales of KIA motors , he remarked that the agency is one of the biggest in the country in terms of sales. However, he emphasised that his dealership is competing for less than 25 per cent of the market share, which is dominated by used autos.

Stating that KIA Motors-Jordan is employing around 160 people in addition to investing in marketing, Zachria said: "A company like KIA is competing against a man and his son [running a used car agency] or a man who employs a guest worker."

Noting that new car fuel consumption is 40 per cent less than an old one in addition to less carbon dioxide emission of 40 per cent, Zachria suggested reducing customs duties on new small-engine cars in addition to limiting the age of imported cars to two years like other neighbouring countries, such as Syria and Iraq.

"The government has to take measures to prevent turning the local market into a scrap yard for used cars," he stressed.

Nadim Haddad, marketing and sales manager at the Central Trade and Auto Company (CTA), Toyota agent in Jordan, criticised the status quo in the auto sector, emphasising that it has become unfeasible for agents of new cars to compete in such a small market, where advantages are exclusive to traders of used cars.

There are around 15 agencies for new cars, and each agency is employing between 50 to 100 people in average, he said, adding that these dealerships also have maintenance centres and provide manufacturing warranties.

Haddad, who said that the number of employees at CTA is around 300, echoed the same remarks that cutting taxes on economy cars and restricting the entry of old vehicles is the solution to upgrade cars on the Kingdom's streets and would enable limited-income people to buy relatively new cars.

"We are not against used cars but against outdated ones," he stated.

"It is insane that the price of a brand new Toyota Corolla, which is a small-engine car, is around JD25,000 because of the special taxes imposed on automobiles," he told The Jordan Times yesterday.

Nabil Rumman, president of the Jordan Free Zone Investors Association, who represent importers of used cars, did not differ with the agents.

"We have urged authorities several times that it is time to restrict the imports of old cars in a bid to stimulate the sector and boost demand for new motors," he noted, adding that five to seven years would be a reasonable age for imported autos.

"We have more than enough old cars," Rumman said, indicating that a total of 25,000 cars entered the local market during the first five months of this year, the majority of which were used and Korean made.

© Jordan Times 2011