Logo of Phnom Penh Post newspaper Phnom Penh Post - Kingdom’s rosy economic climate to drive automotive components sector

Kingdom’s rosy economic climate to drive automotive components sector

Content image - Phnom Penh Post
Cambodia’s thriving economy continues to woo foreign auto manufacturers. Photo supplied

Kingdom’s rosy economic climate to drive automotive components sector

Cambodia’s auto industry is sizzling as car sales continue to soar. Thanks to the steadfast economic growth and rising consumer spending.

Industry prospects look bright. The Ministry of Public Works and Transport announced that 3.2 million vehicles, including 2.7 million motorcycles, were registered in the Kingdom in 2015 – a 14 percent growth compared to the previous year.

While, in March, the Department of Customs and Excise revealed that Cambodia imported about 6,000 used cars every month.

Economic stability coupled with growing purchasing power, favourable demographics and a culture to compete with neighbours to own vehicles – are driving demand for vehicles at a faster pace in Cambodia – which could even rival its neighbours that boast car manufacturing plants.

Japanese models, mostly Toyota and Lexus are flooding the market (both new and used units), while luxury brands such as BMW, Bentley, Mercedes Benz and Roll Royce are trying to capture the cash-rich elite buyers.

“Cambodia’s car industry’s growth is tremendous and there is a massive change in demand, especially for luxury cars. Cambodia can compete with established players in the region,” Richard Yew, Regional Vice-President of AMB Tarsus Exhibitions Sdn Bhd, which will organise the ‘CamAuto 2018 Expo’ in early November told The Post.

Over 45 international companies will feature auto parts, accessories, service and repair equipment at the exhibition – a clear testimony that Cambodia remains a lucrative market in ASEAN.

The auto components’ sector is still at an ‘infant stage’, says Yew, but foresees a huge potential, largely to be driven by growing demand from the expanding middle class population.

Content image - Phnom Penh Post
Almost all auto parts are imported due to lack of production facilities. Photo supplied

As Cambodia’s economy continues to chalk a healthy seven percent growth this year and a modest 6.8 percent in 2019 and 2020, according to the World Bank, industry experts predict a growth in auto-related businesses – from sales of replacement parts to maintenance and services.

Albeit the automobile sector’s rosy climate, industry observers are still concerned of prevailing weaknesses such as the ‘grey market’ that could stifle Cambodia from developing its home-grown automobile industry and continues to depend on imports.

This will only strain the country’s foreign reserves. Last year, the Kingdom imported auto parts and accessories worth $488 million from Thailand, according to Thailand’s Department of International Trade and Promotion.

“Cambodia imports all vehicles and components from overseas, and there are not enough dealers and distributors in the country, especially for components.

“Investors are more interested in importing and selling products rather than manufacturing locally,” Dr Tan Monivann, Vice President of the Cambodian Chamber of Commerce told The Post.

He said companies should take advantage of the latest government policy, which was announced early this month that offers special tax incentives to small and medium enterprises (SMEs) to expand their businesses.

On October 2, Prime Minister Hun Sen signed a sub-decree on tax incentives for SMEs aimed at stimulating the local manufacturing sector and job creation.

The six core sectors are – agro-industry, food production and processing, manufacturers of waste processing products, tourism, producers of parts and equipment, and research and development of information technology.

But there are other prickly issues plaguing the auto sector, especially the components segment.

According to Kevin Khou, manager of Hong Ly Heng Auto Part, imported counterfeit auto components are hurting the market.

“Counterfeit auto products are destroying the market. This is very unhealthy and we need to push quality products because it also concerns safety issue,” said Khou.

The expo will be held at the Diamond Island Exhibition and Convention Centre in Koh Pich from November 1 to 3, where participants from China, Malaysia, South Korea, Singapore, Thailand, Taiwan and the United Arab Emirates are expected to exhibit their products.

MOST VIEWED

  • Kingdom's Covid cluster cases jump to 194

    The Ministry of Health on February 25 confirmed 65 new cases of Covid-19, with 58 linked to the February 20 community transmission. The latest cluster cases include nine Vietnamese nationals, five Cambodians, one each from Korea, Singapore and Japan, with the rest being Chinese. This brings the total number

  • Locations shut, dozens more Covid-19 positive

    The Ministry of Health has closed 23 locations in connection with the February 20 community transmission of Covid-19 and summoned for testing anyone who had direct contact with affected people and places. The number of discovered related infections has risen to 76, including 39 women. In a press release,

  • Cambodia's Covid cluster cases rise to 137

    The Ministry of Health on February 24 recorded 40 more cases of Covid-19, with 38 linked to the February 20 community transmission. Of the 40, two are imported cases involving Chinese passengers. The 38 include two Vietnamese nationals and one Cambodian, with the rest being Chinese. This brings the total cases

  • Covid cluster raises alarm, health bodies urge vigilance

    The Ministry of Health and the World Health Organisation (WHO) in Cambodia have expressed great concern over the February 20 cluster transmission of Covid-19 in the community. Both entities appealed for vigilance and cooperation in curbing further spread of the virus. Ministry spokeswoman Or Vandine said

  • PM confirms third Covid-19 community transmission

    Prime Minister Hun Sen on February 20 announced the Kingdom's third outbreak of Covid-19 community transmission after 32 people tested positive in just over 10 hours. Addressing the public from his residence after an emergency meeting, Hun Sen said: "I dub it February 20 Community Event, in which 32 cases

  • Cambodia to make auto-rickshaws

    Locally-assembled electric auto-rickshaws could hit the Cambodian market as soon as early in May after the Council for the Development of Cambodia (CDC) gave the greenlight to an investment project at the weekend. According to a CDC press release, it will issue a final registration