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Q1 car sales up as margins drop

Q1 car sales up as margins drop

Sales of new cars increased in the first quarter compared year on year, but some vendors say increased competition has narrowed profit margins on their new car sales.

Narita Motorcare Cambodia – the exclusive importer of the Nissan brand – has seen sales rise by 15 percent in the first quarter over the same period last year, said Managing Director Long Narith.

“This shows improvement in our economy and political stability, so people can spend more on new cars,” he said.

Although demand has risen even further, Long Narith said last month’s earthquake in Japan had impacted his sales.

“We have high demand, but we face a lack of supply. Our distributor in Japan has delayed production,” he said, adding he hoped this would be temporary.

He also pointed to narrowing profit margins on each unit sold in Cambodia as competition heats up among automobile seller.

Declining to disclose the number of vehicles sold in the first quarter, he said the firm aimed to move between 400 and 500 units during 2011.

Ford importer RM Asia Company General Manager Seng Voeung said sales of the American car brand had increased by more than 10 percent during the first quarter 2011 compared to the period last year.

“People are returning to buying brand-new vehicles instead of second hand cars, as our economy is bouncing back,” he said.

“That’s why our sales are improving.”

People are returning to buying brand-new vehicles instead of second hand cars

RM Asia claims to have sold approximately 100 units in the first quarter.

Increased car loans from commercial banks were also contributing to increased sales, he said.

Seng Voeung also claimed his company profit margins are decreasing due to more intense competition among vendors.

“Even though sales are coming back, revenue has decreased, as we want to discount prices [to combat] more competition.”

Ford sales had declined about 10 percent last year, but Seng Voeung said the distributor was on track for a 15 percent increase to 400 vehicles for 2011.

Toyota – which claims to be the market leader in Cambodia – is aiming for sales of about 600 units in 2011, said Toyota Cambodia President Kong Nuon.

“We always have competition, but buyers trust our brand name,” he said.

Chevrolet importer Auto Sales (Cambodia) Limited Facility Manager Chanchal Singh says sales volumes of its new vehicles are increasing rapidly compared to last year.

However, he added, new car sales represents only about 11 percent of the total automobile market in Cambodia.

“Our sales are increased because we are targeting customers looking for style and luxury,” he said, adding the firm is increasingly looking to improve its ‘after-sale’ service.

Cambodia imported a total of 562,529 old and new vehicles worth US$252 million in 2010, up from 361,146 units worth $186 million in 2009, according to previous data from the Ministry of Commerce.

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