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Logo of Phnom Penh Post newspaper Phnom Penh Post - Auto importers feel the pain as global crisis cuts sales

Auto importers feel the pain as global crisis cuts sales

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081224_13.jpg

With global automobile sales in freefall, local dealers are expecting the worst as some importers predict a drop of more than 40 percent over two years

Photo by: GEORGE MCLEOD

A Ford dealership in Phnom Penh. Ford has fared better than other companies in Cambodia, yet has seen sales slip 10 percent.

AMID tumbling real estate values and growing concern over the local implications of the global economic slowdown, Cambodia's auto sales are expected to drop as much as 40 percent over the next two years, economists and auto distributors say.

"We predict car demand in Cambodia will drop by as much as 40 percent within the next two years," said Kong Nuon, president of Toyota distributor TTHK Co Ltd on Sunday.

The declines in local sales come as the global market plummets with Toyota forecast it first reported loss Monday and US auto giants on the brink of bankruptcy.  

"Unpopular models may face higher declines," he said, adding that the previously booming real estate market had fuelled an increase in consumer spending on automobiles.

Kong Nuon estimated that demand for new car models in Cambodia was about 2,800 per year on average, with an additional 20,000 second-hand cars changing owners annually.

Toyota remains the Kingdom's most popular import maker, with up to 70 percent market share, he said.

"In past years, six importers brought in an estimated 300 Toyota models each per year," Kong Nuon said, adding that TTHK Co inked an agreement with the Toyota Motor Corp last week to become the exclusive distributor of Toyotas in Cambodia.

With the global crisis ... It is impossible for auto sales to increase next year.

"From now on, we have exclusive rights to distribute Toyotas. We have submitted documents to register with the Commerce Ministry to help curb any further imports of Toyotas by other importers," Kong Nuon said.

But the dire state of international markets and a local economy marked by rising commodity prices and shrinking real estate and construction sectors have stripped Toyota of up to 40 percent of annual sales over last year.

The sales slowdown could have indirect implications for Cambodia's auto industry as importers face cutbacks.

TTHK currently employs 88 people and has no immediate plans for layoffs, but the company has been forced to cut expenses by 10 percent, Kong Nuon said.

Ford still strong

But Ngorn Saing, deputy general manager of RM Asia, a Ford distributor and Cambodia's second-largest automobile importer, said Monday its sales could see a rise of up to 10 percent next year.

"Our customers are mostly businesspeople rather than those who have made profits on real estate," he said.

Sales of Ford models this year have dropped just 10 percent over last year, Ngorn Saing said.

Kang Chandararot, president of the Cambodia Institute of Development Study, told the Post Monday that a drop over the next two years was likely because of its traditional link to the property sector.

"With the global crisis and a recession in Cambodia's real estate market, it is impossible for auto sales to increase next year," he said, adding that it could take until 2010 for a recovery.

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