Translated material
Oil temptation
The Belarusian car market is facing a drop in demand
At the beginning of 2010, experts predict a significant decline in the Belarusian automobile market, followed by long-term stagnation. The reason is an increase in duties on foreign cars to the Russian level. New conditions for importing cars will come into effect on January 1. The rise in price threatens to lead to a serious drop in demand and even to the closure of a number of car dealerships.The decision to unify duties was made by Belarus after the signing at the end of November of documents on the creation of a trilateral customs union with the participation of Kazakhstan and Russia. Information about the upcoming increase in prices for foreign cars by 30-40% excited consumers, who bought up almost all the new cars imported by car dealers. “Today we are not talking about discounts or promotions. There are practically no cars left,” Ilya Prokhorov, assistant general director of the Atlant-M holding, told Vremya Novostey.
The new duties apply only to enterprises for now; individuals will be able to import cars under the old rules for another six months. But cars from private sellers on the secondary market have already become more expensive - according to experts, the average price increase for them is about a thousand dollars. “Used car prices are going up. They will continue to grow next year, although perhaps not as fast as for new foreign cars,” Anatoly Shevchenko, editor-in-chief of the Belarusian newspaper Autodigest, told VN.
The introduction of different duties for legal entities and individuals worries car dealers. “If a single duty were introduced, it would be much better. Of course, in this case, there would be a calm on the market for about six months. But after that, people would adapt to new prices,” Mr. Prokhorov noted. If a single duty were introduced, the difference in price between new and used cars would be reduced, which would contribute to an increase in demand for new foreign cars and, as a result, to a rejuvenation of the vehicle fleet. Maintaining low duties for individuals will allow car dealers to saturate the market with used cars within six months, which will slow down the recovery in demand for new foreign cars.
In addition, the lack of uniform rules will lead to the use of not entirely legal methods of work, including registration of cars in the name of dummies. “The worst thing in this situation is for official dealers, the best thing is for those who work according to black schemes,” noted VN’s interlocutor. The expert believes that in 2010-2011 the volume of sales on the Belarusian car market could fall tenfold, to the level of 2001-2002. In his opinion, next year car dealers will import cars only on order, and also make money on services. Not everyone can survive in such conditions.
Official Minsk understands these problems. Obviously, this is why the authorities have refused to agree on an import duty on passenger cars since the creation of a bilateral customs union with Russia in 1995. Now Belarus has agreed to the unification of duties in the hope that, within the framework of a trilateral customs union, it will be able to achieve the abolition of duties on Russian oil supplies. However, the other day, Russian Deputy Prime Minister Igor Sechin said that the terms for the sale of oil and gas would not be as profitable as Minsk would like, and that negotiations on these issues have not been completed.
“Wanting to receive large benefits for oil supplies, Minsk bet that there would be no outrage. Therefore, the Belarusian authorities did not take into account the interests of car dealers and ordinary motorists,” Yaroslav Romanchuk, head of the Mises Research Center, told VN.