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French Version

Car sales stall as Lebanese wait to see which way the country will go

Retailers say business is down 18 percent from this time last year

Car sales have continued to plummet in Lebanon since the summer war as middle-class customers can no longer afford new cars and luxury-car customers put off purchases, several local dealers told The Daily Star on Tuesday.

Sales are dropping at nearly all dealerships, and the few remaining buyers are hunting for fuel-efficient bargains and swearing off added options, said Varouj Babikian, sales consultant at Rasamny Younes Motors (RYMCO), Lebanon's licensed dealer of Nissan, Infiniti and GMC.

New vehicle sales were down 18 percent in January 2007 compared to the same month last year, largely due to falling demand for mid-range cars costing from $10,000-$20,000 engines of 1.6-2 liters.

Many middle-class Lebanese are looking abroad for work, and the budgets of those who remain have shrunk, spelling hard times for local car dealers.

"Eighteen percent is enormous," said Samir Homsi, president of the Association of Car Importers in Lebanon and CEO of Impex Trading, the local dealer for Chevrolet and Hummer. "The middle class is disappearing totally - in bad days, the smaller incomes get more affected than the larger incomes."

"The family suffering from the economy is moving to a smaller car," he added. "They can't afford to buy the 2-liter and the 1.8."

Some dealers have tried to lure clients with deep discounts - RYMCO offered to pay value-added tax, registration fees and provide three years of free service on new vehicles. As a result, sales have been "much better" at RYMCO, said Babikian.

Political uncertainty is also influencing sales of luxury cars. Turnover for Lebanon's licensed Mercedes dealer, T. Gargour et Fils, have dropped 50 percent since the war, said sales manager Negib Debs. Many people still shop at the showroom but decide against a purchase when another security incident occurs, he said. The company has no plans to slash the prices of its vehicles.

"Maybe Nissan can do it, but we cannot," Debs said. "We tend to sell cheaper cars now. The customers who are buying now are looking for good deals because of the situation."

But the national sales manager at Bassoul-Heneine, Lebanon's licensed BMW dealer, says the purchasing power of most luxury car consumers has not been influenced the political situation. They are simply hesitating, said Ziad Richa. BMW buyers do not cut back on options, either - customers have been ordering fully loaded versions of the new X5, which retails for more than $100,000.

Overall, however, business is "very bad" at the BMW dealership, with turnover off by more than 50 percent, Richa said.

"There are lots of people who want to buy the car, [but] the will to purchase is suspended," he said. "It's not a financial problem - rich people still have money. The main buyers, for the moment, are customers who have their work outside Lebanon."

"The economic situation is hitting the middle class - the middle class is decreasing, their purchasing power is also decreasing, [and] a lot of people are leaving the country."

The absence of tourists is also dragging sales down, since car-rental companies have fewer customers and no need to buy cars. At RYMCO, sales to rental agencies have declined from one-third of total sales to one-quarter, said Babikian.

"Whenever we don't have tourists in Lebanon, we don't have rental cars," he said. "They have a little bit of a problem."

Beirut 28-02-2007
The Daily Star

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