The Association of Car Importers in Lebanon (denoted as AIA) recently shared its automotive report which explains that “As a result of the dramatic Beirut Port Explosion on 4/8/2020, the damages that importers of new cars incurred in their properties are estimated at tens of millions of dollars which will lead to the closing down of a number of companies and to the licensing of a large number of their employees and workers”
The (AIA) report shows that Lebanon’s deteriorating economic situation and the port’s explosion has had a severe impact on the car industry, as is the case with all the sectors in the country.
This is reflected in the total number of newly registered cars which slumped by 71.63% year-on-year (y-o-y) to reach 6,606 cars by December 2020 compared to the 23,289 registered cars in year 2019, due to the pandemic and severe economic instability in the country. In details, passenger cars dropped 72% yearly to 6,152, while commercial cars declined by 65.02% during the same period to 454 cars in 2020.
While the government and citizens are in a “wait and see” mode, the market is decreasing at a high speed. Consumer purchasing power and confidence are witnessing a considerable decline. It is no surprise that car dealers in Lebanon are facing tightening demand, especially for luxury cars, due to the tendency for clients to go for cars that are affordable, cheap and fuel-efficient. Demand for luxury cars has decreased immensely and consumers are prioritizing their expenses, as changing or buying a car is not an easy choice anymore, especially that Lebanese commercial banks are not providing facilities to customers.
In addition, and while the government is aiming to remove subsidies on several items including fuel, we expect a further deterioration in car sales in the coming months, as the cost of owning a car will increase dramatically.
The report also showcases the consequent drop in taxes paid by the Car Importing companies. The taxes fell from $265M in 2018 to less than $33M in 2020 paid to the State treasury.
It is worth mentioning that the AIA refrained from sharing detailed statistics on the sales of cars, but emphasized the above clarifications regarding the industry.
Yearly Growth of Registered Passengers Cars
Source:AIA, BLOMINVEST bank