Saudi bans old cars

The kingdom has prohibited the import of cars which are older than five years. The move is expected to adversely affect a lot of car dealers, reports Arab News

The Saudi Customs Department has started implementing an official decision banning the import of cars older than five years into the kingdom. “The ban is on used cars, buses and other light goods vehicles more than five years old. Heavy vehicles more than 10 years old are also not allowed to be imported,” Suleiman Al-Tuwaijeri, director of the Customs Department at the Jeddah Islamic Port, told Arab News.

The ban does not, however, cover spare parts for old vehicles in use, Al-Tuwaijeri said, adding that a six-month grace period has been granted to importers to set matters straight.

More than 140,000 used cars valued at SR17.5 billion ($4.6 billion) were imported in 2008. This accounted for 24 percent of total cars imported during the year.

“I don’t know what I am going to do next as the ban is a blow to my business of 24 years,” said Mustafa Baqsha, an importer of used cars.

He estimated 80 percent of workers in the used car market would become unemployed as a result of the ban. “I hope the authorities would review or at least relax the decision to make the ban applicable to cars manufactured before 2000.”

Saleh Abdullah, another trader, said that because of the ban, he had to dismiss some of his workers, and was also moving to a cheaper building. “I used to spend SR500,000 ($133,300) on rent and salaries a month, but now I have to move to cope with the falling income,” Abdullah said.

Several used car showroom owners told Arab News that the prices rose 20 percent over the past two months and that they believed they would remain at that level because of the upcoming summer vacations.

A meeting of the Automobile Committee of the Eastern Province Chamber of Commerce and Industry urged the authorities to relax the rule and ban cars older than eight years.

Ali Hussain Alireza, the chairman of the Automobile Committee at the Jeddah Chamber of Commerce and Industry said that 50 importers annually imported a total of 400,000 cars to the kingdom from various parts of the world and that stiff competition sent prices falling to the lowest possible levels.

“Some people expected the prices to fall by 30 to 40 percent. This is not true as prices of steel, aluminum and other metals used in manufacturing car parts did not fall. Hit by the financial crisis, international car companies suffered heavy losses last year and in the first quarter of the current year. They have cut down the volume of production to grapple with higher production costs,” Alireza said.

He said he believes the sale of cars in the kingdom will fall by 20 to 25 percent, particularly as new models are to hit the market soon.

First seen on Arab News.