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New Car Boom Slows Amid Downturn

Despite Cambodia’s relatively small population, a number of international car companies are competing with each other for business, even as the global economic downturn is causing some woe.

There are more than 10 international car companies in the country, including Germany’s Mercedes, South Korea’s Sangyong and Japan’s Mitsubishi, Nissan, Suzuki and Toyota.

Kong Noun, president of TTHK, which imports Toyota brands, said he sold more than 1,000 vehicles in 2008, twice as many as the year before.

“Toyota is popular among costumers in Cambodia,” he said. “We are proud of competition, so I can say I have choosen the right partner.”

Cambodia has about 14 million people, but a third of them live on less than a dollar a day. A small number have shown keen interest in personal vehicles, but distributors remain optimistic in the market.

“Although Cambodia is a poor country, those who can afford to buy a car are not poor, and they wish to buy the most modern ones,” said Seng Veng, president of Ford in Cambodia.

Cambodia imported 20,000 new vehicles this year, most of them for wealthy businessmen or government officials. Most people still purchase cheaper used cars, a trend that can limit the new-car market but also might change.

“Cambodia is still a growing market, I guess,” said Paul Freer, vice president of Huot Traco, which imports Sangyong. “You will see people start using a new car rather that the second-hand.”

Companies say they are looking for that long-term growth.

“When we decide to come here, we are not looking for a short-term business, but a long-term opportunity,” said Michio Nishihara, general manager of Cambodia’s Mitsubishi Corp. representative office.

The new car market provided a good opportunity, economists said, but companies won’t be able to avoid the fallout from the global economic downturn.

Hundreds of new, modern cars now sit quietly in showrooms and warehouses across Phnom Penh, a much different scene from the middle of the year, when customers from across the country were seeking new cars.

In the wake of the shrunken global economy, Cambodia’s car dealerships have been competing through discounts, offers of free motorcycles, lucky draws and free gasoline.

Kong Noun said his sales had fallen 50 percent since May, but particularly in October and November.

“So now we have new ideas on how to sell our cars,” he said.

Seng Veng said the slowdown had cost his company $2 million.

“What we will have to do is just simply start slowing down the import of cars,” Freer said. “If we were importing 50 a month, it will reduce to five a month.”