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French Version

Lebanon's car market is back in gear

Sales start to creep up despite high fuel prices and political tensions

Lebanon's automotive market has rebounded from the losses it suffered last year and is expected to grow in 2006, bucking both political instability and sky-rocketing fuel prices.

Though the results of the Association of Automobile Importers (AIA) report for the first four months of 2006 - which measures car sales by monitoring the number of newly registered vehicles - are reason for optimism, they also indicate an increasingly stratified economy. Retailers of low-end and luxury vehicles are confident about growth prospects, but the future for mid-range vehicles is less secure.

The top five selling brands - Toyota, Nissan, KIA, Peugeot, and Honda respectively - accounted for some 50 percent of the total volume of vehicle sales in the first four months of the year, proving consumers are concerned with practicality and fuel efficiency first and foremost.

Charbel Abi Ghanem, marketing manager for RYMCO, Lebanon's Nissan agent and the only automotive company listed on the Beirut Stock Exchange, says that cars costing less than $15,000 - such as one of Nissan's most popular models, the Sunny - are RYMCO's best-sellers, and vehicles costing less than $13,000 account for 35 percent of overall car sales in the country. From January to May RYMCO sold 504 Nissans and 24 Lexuses valued at $12,850,000 in total.

"Last year was a very bad year, and the market had a 20 percent setback, but it is clearly recovering now," Abi Ghanem told The Daily Star. "This year we expect a volume growth of 8-10 percent compared to last year. We might even be looking at a growth industry."

The acting sales manager at Unicart - Lebanon's Honda dealership - echoed this sentiment, though she declined to divulge sales figures for either 2005 or 2006.

"We are doing better every year," said Roula Itani.

"There's demand for more practical family cars, with low [fuel consumption], and our new models, the Civic, and our CRV 4 by 4."

A representative from Sidia SAL, Lebanon's Peugeot dealership, offered a bleaker outlook for both the brand and the market. Though Peugeot claimed 9 percent of overall car sales in Lebanon from January to March this year, Patrick Tager says political tensions have stifled demand for the brand's higher-end models. A large portion of the 650 Peugeots sold by Sidia were the 307 model, starting at $14,800 excluding VAT.

"The car market has not grown at all in 2006. In fact we've done worse this year," said Tager.

"People want the cheapest car possible, that's it."

But the rankings of BMW and Mercedes on the AIA list - ninth and 10th respectively - prove otherwise. If sales were measured in terms of value rather than volume, the strong demand for luxury cars would be evident. Each brand claimed 4 percent of the car sales in the first quarter of 2006, despite the fact that the majority of models come with price tags ranging from $40,000 to $130,000.

Nathalie Khalife, the marketing manager for BMW and Mini, says sales have grown by 15 percent from the same period last year. Of the "265 units sold year to date," 96 have been economical models like the 3 series which starts under $40,000, and more consumers are taking advantage of BMW's fuel-efficiency option, but Khalife notes that "people who want to buy a premium car do not care about price of fuel."

"If you have the purchasing power to buy a $70,000 car you are not going to care if gasoline is LL20,000 or LL40,000 per 20 liters," she said.

Concerns about public perception and status shape the luxury-car market as much as external economic shocks. Najib Debs, the marketing manager at Lebanon's Mercedes dealership, T. Gargour and Son, said demand "depends on the season and the novelty of the product" and sales increase whenever a new model is unveiled.

"We feel there is big potential for growth," he said, "but a lot of factors are pulling it down, like the political situation and high taxes. Every time there is a riot or something we have a slow week, and then it picks up. It's hard to plan, and no one knows what will happen in two years."

Beirut 13-06-2006
Lysandra Ohrstrom
The Daily Star

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