Vendors come out of shadow into light

New Law ‘On Trade’ to hit ‘grey’ market for spare auto parts
By Veniamin Sviridov

Some buy cars partly as investments, planning to maintain them in a good state for onward sale. However, not everyone takes their car to an official dealer for servicing or when new parts are required, since prices can be steep. A market exists for smuggled spare parts, which evade taxes and can thus be sold more cheaply. Needless to say, this opens the doors to abuse, safety violations and ‘fake’ parts, as well as affecting the state budget. The ‘On Trade’ amendment should deal a crushing blow to such activities, notes the Deputy Trade Minister, Irina Narkevich, bringing the auto parts market under a closer eye.

Recently, the state has been making efforts to monitor this retail segment more acutely, with a special interdepartmental working group established two years ago. It’s quite difficult to determine the volume of such sales but it’s thought that as many as 80-95 percent of regional sales may be ‘shady’ (just over 30 percent in Minsk). In fact, most sales occur via ‘conventional’ market sites (tables, open air shelving units and containers) so the new law aims to tackle this by only allowing sales of auto parts through permanent market or retail sites by 2015 (or, at the latest, by 2016). Vendors will also be obliged to use cash registers by July 2013, explains Ms. Narkevich. She tells us, “Consumers should receive a receipt, so that they can claim their rights, if necessary.” Used vehicle dealers will need to obey the same rules, with only individuals be allowed to work without a cash register but they can operate only five days a month.

The working group is not only developing penalty measures to bring spares parts vendors into the realm of legal sales but is exploring avenues to inspire investment into the creation of specialised stores and shopping centres — such as reduced site rental costs. Ms. Narkevich is hopeful that major importing companies may create dealership chains in Belarus to ‘enhance competition and improve the quality of customer service’.

The process has already begun, with leading auto wholesaler Armtek opening its own dealerships in Bobruisk, Orsha and Minsk. In January, its outlets will appear in several other cities, with another 20 added countrywide in 2013. The Director General of Armtek, Denis Moroz, asserts that it will take some time to curb the ‘grey’ market but believes that customers will prefer to buy parts officially using specialised catalogues, since the authenticity of parts cannot be determined by eye. The specialised advice of official dealers is needed, especially considering the technology used in modern cars. “The modern technical level of the automobile industry dictates the need to introduce new principles of trade,” says Mr. Moroz. As an example, he notes that the price of brake pads can differ considerably depending on the manufacturer; all may be of high quality but some are designed for sports cars while the cheaper ones are suitable for slower urban driving and planned braking. With the range of automobiles available comes the need for a wide range of products. “Only a big company can afford such luxuries,” Mr. Moroz admits.

Ms. Narkevich notes that large importing companies plan to make use of the interdepartmental working group’s expertise and is hopeful of the creation of a transparent, civilised and developed spare parts market. Maintenance services also have great export potential. She is certain that the industry can develop competitively, with drivers from neighbouring regions coming to Belarus for their servicing.
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