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French Version

Car sales plummet as war hits consumer confidence - Figures down by 21.5 percent (Daily Star)

Car sales in Lebanon have plummeted by 21.5 percent during the first quarter of 2003 compared to the same period last year, mainly due to the war on Iraq, which damaged consumer confidence and spending habits.

According to figures released by the Association of Automobile Importers, only 2,976 new cars were sold compared to the 3,779 vehicles last year.

“The automobile market has been hit hard and we have witnessed a very dangerous drop,” said the president of the association, Samir Homsi, “but we are expecting an increase in sales by next quarter.”

However, experts in the automobile sector have attributed the drop in local sales of European cars to the strengthening of the euro, which has “increased prices by some 30 percent,” said Ziad Selfani, the brand manager at Kettaneh.

Another reason for the sharp drop is due to seasonal factors, since the peak season for new car sales starts traditionally in the third quarter of the year, with the beginning of summer and the introduction of new models to the market in the fourth quarter.

The brands, which have introduced new car models, have witnessed a strong increase in their sales. For example, Porsche, with its new Cayenne, posted the largest year-on-year increase at 566.7 percent by selling 20 vehicles, while Mitsubishi increased its sales by 71.3 percent, selling 173 cars. BMW posted a substantial sales decrease, selling 75.8 percent less cars, or in other words 105 new cars sold. Nissan, the largest car distributor in Lebanon, also saw a decrease in its sales, dropping by 26.9 percent.

“The leads we assembled last year during the car exhibition really helped us enormously, but the Iraq war has damaged the world economy by affecting consumer confidence, especially in the Middle East,” said Selfani.

The top 10 brands sold in Lebanon accounted for 2,194 vehicles, or 74 percent of aggregate vehicles sold in Lebanon, compared to 71 percent in the corresponding period of 2002. European cars accounted for 48.2 percent of vehicles sold in Lebanon. Japanese cars came in second with 40.9 percent, followed by Korean cars with 7.7 percent and American ones with 2.4 percent. Losses stemming from the disruption of trade between Lebanon and Iraq are certain, but exact figures vary.

According to official estimates, the Iraqi market takes in 45 percent of total Lebanese exports or $450 million a year. Most of the bilateral contracts were completed through the Iraqi public sector ­ perhaps making Lebanese especially wary of the change of a regime long friendly to local producers. Other smaller contracts and deals involve the Iraqi private sector and aren’t included in official data and statistics.

Beirut 10-06-2003
Tarek El Zein
The Daily Star

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