Automarket gains speed

Customs duties on cars are to rise from July 1st, as Customs Union fees come into force, shaking the domestic market for second-hand vehicles

Prices have grown by around $1,000 in just a few days, with western suppliers of second-hand vehicles reacting promptly. Cars have grown in price by $500-1,500 on the markets of Lithuania and Germany, with demand remaining overwhelming. Never before have we witnessed so many cars on our roads bearing transit plate-numbers. Even those with no previous plans to sell or buy a car are considering the idea.

It’s no surprise, since 90 percent of all cars driven in Belarus are bought on the second-hand market, with most arriving from western countries. From July 1st, imports of such vehicles will significantly drop in volume, as the customs duties on the average car will exceed its price. There are two ways of avoiding the price hike: buy a second-hand car from within the Customs Union; or buy a new vehicle, assembled or produced in Belarus, Russia or Kazakhstan.

Over the past five years, production (primarily assembly) of foreign cars has risen 8-fold in Russia. Last year, the manufacture of foreign branded cars even exceeded the production of domestic vehicles, for the first time in our history. About fifteen assembly facilities of the largest global companies operate in the country and, soon, Belarusians will have to rely on them. Russia offers a wide choice of its own foreign cars, manufacturing most models which enjoy popularity in Belarus. Domestic buyers tend to be suspicious of deluxe models, preferring to buy more common vehicles, for which it’s easier to buy spare parts.

Experts believe that the future levelling of customs fees across the Customs Union opens up good prospects for Belarus’ own assembly facilities. The Chairman of the Belarusian Automobile Association, Sergey Mikhnevich, is keen to create conditions to attract the largest global producers, encouraging them to open factories here. He asserts that we should forge ties to ensure we do not remain an outsider. “Car assembly could bring significant benefits where cars are produced in dozens of thousands annually,” he says, adding, “The capacity of the Customs Union makes it possible to launch such facilities in Belarus. The model range needs to be constantly updated, with factories able to respond promptly to changing technology and trends. Belarus boasts highly qualified specialists, in addition to machine building enterprises, which can help set up the production of spare parts. We should start by manufacturing components, with car assembly following at a later date. It’s no easy task, although we have successful experience in manufacturing tractors and trucks.” So far, only Iran’s Samand cars are assembled in Belarus but a joint Belarusian-Chinese venture is being considered, with talks underway.

Experts say that prices will continue growing on the secondary market for several months, with second-hand foreign car prices only stabilising when they equate to those of Russia. Cars are now being exported to Russia. Where ‘younger’ cars have traditionally been of greater value, those which are suitable for sale to Russia are most in demand. From July 1st, our secondary car market will really only exist within Customs Union territory. Not everyone is ready to pay $12,000-15,000 for a simple, economy class car. After July 1st, those who have avoided falling prey to the current rush, will still have the opportunity to sell their cars.

Most Belarusian car dealers are to begin importing foreign cars assembled in Russia later this year, allowing us to buy a famous brand vehicle while avoiding huge customs duties. Sellers will be able to revive the market for new cars, which has been in crisis for several years now.

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