Cars and the Automotive Sector in Cambodia
If you’ve been riding or driving to work recently, you’ve probably thought to yourself that the traffic in Phnom Penh just keeps getting worse. You would be correct in this assumption. Every time that ostentatious SUV driven by a Mao-suited Bong Thom almost runs you down, or that parked S-Class owned by that dickhead expat from the business community prevents you from accessing your favorite bar, you will shake your fist and boil with anger, which is a perfectly normal reaction. But you know what? It is only going to get worse.
The size of the Cambodian car and bike market:
When UNTAC was on the scene, annual motorbike sales were only approximately 22,000 in a country where there were only about 50,000 bikes. By 2011, 120,000 bikes were sold which swelled the total bike population to over 600,000. And that’s a lot of Dreams, Icons, Finos and Scoopys.
New bike sales continue to grow year on year, but in a sign of the times, the standards, range and brands available are growing too. An authorized dealership selling Vietnamese manufactured Vespas have already entered the market. Grey market Harleys, Triumphs and Ninjas are becoming more and more ubiquitous – there is even talk of Ducati entering the market…
But bikes alone, do not make the traffic increase. 2012 has been one for the ages in terms of car imports and registrations. According to the Ministry of Commerce, in the first six-months of 2012, vehicle imports are up by almost 45 per cent, compared to the equivalent period in 2011. The Phnom Penh Post quotes figures of over 486,000 vehicles imported between January and June of this year, with a total value of USD$239,000,000. The same period in 2011? Approximately 335,000 vehicles with a total value of about USD$175,000,000.
Now keep in mind that not all these ‘vehicles’ are passenger vehicles. In fact, by volume, passenger vehicles account for only 28 per cent of total vehicle imports. The rest are tractors, trucks, buses and ‘special vehicles’ such as fire engines and ambulances.
However, the Ministry of Transport estimates there are somewhere in the vicinity of 375,000 registered passenger vehicles in Cambodia. New cars are being registered at a rate of 80 per day and most of these are, of course, in Phnom Penh. Makes you think twice about heading down Monivong Boulevard at 5:30pm on Friday night, doesn’t it?
What are people buying?
Toyota. Toyota. Toyota. They are everywhere, and if you have been shopping around, you will have noticed that resale values for the Toyota family of products, that being Toyota, Lexus and Scion, are exorbitant compared to resale values in the West. A bog standard 1997 Camry, for example, will rarely fetch less than $7000 through any sales medium, grey market or private. Why is this?
Partially, this is because Toyota has a deserved reputation of manufacturing sturdy, reliable, high quality products. Parts are cheap and maintenance is reasonably straight forward. Ask any Khmer, and you will get a response along these lines. Toyotas are also in hot demand because ‘Brand Japan’ carries a lot of weight around these parts. Owning a Toyota over a Hyundai, Kia or Great Wall is a powerful status symbol.
What percentage of cars in Cambodia are Toyotas? Well, if you were thinking that every second car on Cambodian roads is a Toyota, you are basically correct. 40 per cent of the total number of passenger vehicles cruising around here are Toyotas or Scion product lines. Most are Camrys, Corollas, Land Cruisers, 4-Runners, Hiluxes and Rav-4s of any age. Given the poorly maintained roads and low-quality fuel, it is not hard to see why.
Cambodia’s own ‘economic miracle’ and the explosion of brand-new luxury vehicles:
Cambodia has averaged 10 per cent GDP growth over the last 10 years. Admittedly, this growth was coming off a fairly small base but it seems that the natural rate over the next few years will be between 6-7 per cent.
FDI is up, exports are up and wealth and prosperity arrived with a vengeance over that period. How that wealth has arrived at and how it was/is distributed is another question, of course.
One staggering figure is that there is USD$6 billion in deposits are now being held by Cambodian banks. Furthermore, these deposits are held by only 2.5 per cent of the country’s population. And this is not money outlaid on houses. Not on cars. Not on boats. Not in off-shore accounts. This refers only to deposits in Cambodian banks.
If Khmers are not putting their money to work, then how are they spending their savings? Well perhaps it is a reflection of the immaturity of the Cambodian property and financial markets, but cars are undoubtedly one of the primary means to spend one’s savings. Indeed, a car is often the first major purchase for middle and upper class Khmers. Cars bring face. Cars are sexy. Cars are visible. You can’t very well drive around with all your friends in your house, can you?
But not all cars are created equal. Every expat knows the car of choice for the aspirational classes. They are big, brash and pack huge stickers which scream their brand loud and proud at stopped perpendicular traffic. They are the Lexus brigade. 20 per cent of ALL cars on Cambodian roads are a Lexus of some type. The take-up of Lexus vehicles in Cambodia has got to be, pound for pound, the highest of anywhere in the world. If Albania is Mercedes Benz, then Cambodia is Lexus.
Admittedly, most of the Lexus’s on the roads are RX 300/330s and not the larger LX 470’s which are an oft targeted symbol of derision for being ostentatious, road hogging and aggressively driven. But consider this, the super wealthy who are responsible for buying up the brand-new Lexus LX 570s as well as Range Rovers, BMWs, S-Classes and increasingly even Rolls-Royce and Bentleys are doing so at a rate of 500 per year and that trend is rising. Brand-new luxury vehicles are pouring in from the US, the Middle East and Europe. Of course and unfortunately, most of these large, shiny, new luxury vehicles are destined to sit in Phnom Penh traffic.
So, if you regularly battle down Russian Boulevard, or Norodom, or Mao Tse Tung or any other major thoroughfare on the way home or to the bar, you may want to continue to ride your bike – or trade in your car. Whilst the rain may be inconvenient during these recent months, you can be assured that you will be at the bar at least 30 minutes before me.
Ben Siddons
80 new cars per day sounds a bit much in terms of authorised dealers. Is this meant to include the grey market new car imports that are sold by any type of dealer? That would make sense but there isn’t that many being sold by actual authorised new auto dealers. I think Toyota’s distributor might do that number in a good month and much less for the each of the other car brands sold officially with warranty. Would be interested to hear more on this, good article.
“The Phnom Penh Post quotes figures of over 486,000 vehicles imported between January and June of this year, with a total value of USD$239,000,000. The same period in 2011? Approximately 335,000 vehicles with a total value of about USD$175,000,000.”
Surely a mistake here in number of vehicles as They are only registering about 30,000 new vehicles a year
Small wonder the volume of sales is so high as based on those figures the average price of each new vehicle is around $500!
Hi Robb – yes mate you are absolutely correct. The number of new cars registered definitely includes the grey market. New cars from the grey market will regularly outsell their equivalents in the authorised dealers.
For example – there is no such thing as an S 550 in Asian spec. The S 550 is a US spec vehicle. Nonetheless, many sales of S 550’s have been to government types who stick official plates on those vehicles. Buying from the grey market saves 20-odd thousand versus the authorised asian-spec S 500, but the US spec vehicle can be practically unservicable.
Many of the bong thoms dont seem to get this, cost savings trump practicality. So at least for new MB S-Classes, the grey market probably outsells the authorised dealership 5 to 1.
Hi Paul,
To reiterate:
“Now keep in mind that not all these ‘vehicles’ are passenger vehicles. In fact, by volume, passenger vehicles account for only 28 per cent of total vehicle imports. The rest are tractors, trucks, buses and ‘special vehicles’ such as fire engines and ambulances.”
That being said, I do take your point. I derived the figure of 80 vehicles registered each day from fairly exhaustive market research from 2009, ’10 and ’11. The explosion in 2012 caught me off-guard. I am working to verify the figure quoted in the PPP with the Ministry.
Anecdotally however, I suspect the quoted figures are true. If so, this would put new car registrations somewhere above the 100 per-day mark by the end of 2012.
Interesting, but somewhat skewed article. $6 billion held by 2.5% would translate into 75,000 households (based on a pop. of 15 million and an average of 5 persons per household). This means the average deposit would be $80,000 per household. All things considered this is not that much, especially if you take into account that there are business deposits included, some from some larger foreign companies.
Also, as for all the huge SUVs – you noticed that a lot of them have government plates. Ministers and most state secretaries get them for free as their service vehicle (as part of the pay package) – plus they don’t pay any import duties on them. Considering the huge number of state secretaries this accounts for a good number of them already.
Going back in recent history, first it was Landcruisers, then it was the Lexii, both the 470/570 and the baby Lexus, now the ultimate status symbol is the Range Rover; only individualistic people go for an Audi Q5 or Q7, or the Mercedes S (2005 and up) and GL-class. Toyotas are pretty sturdy (never mind that they are recalling about 7 million cars right now for a fire risk) and spare parts are easy and cheap to come by, plus Cambodians have that knack for always doing the same thing as everybody else, be it in business, clothes, or make of car.
Most of the non-Toyota brands come from Germany or the Gulf. I know for a fact that about 100 of those are imported per year from Germany (I checked with the freight forwarder specializing in car transports to Cambodia as I am importing one myself right now).
Nice one Jay. I heard a nice story (that I dont know is true or not) about the genesis of the love affair with Land Cruisers. Apparently, back in the day, senior government types got around in manual 190E’s. However, they got the shits when they saw the UN employees driving around in ‘Cruisers. Obviously, they equated bigger with better and ditched the former for the latter in droves. This love affair evolved with the introduction of Lexus/Cruiser badge swaps in the early 1990s.
Re the plates; you could also do what a certain well-connected big guy I know does – unscrew the plates on the government issued peugeot and stick them on your 2012 Range Rover.
I went through those bloody import spreadsheets line by line and you are right, the Middle East accounts for most of the non-Toyota SUVs, but also the LX570s too. Check the side mirrors next time. Many of their ‘object closer than it may appear’ is written in Arabic.
Siddo,
That nice story is true because I was the one who imported all those 190Es back in the day. They all came from Germany at that time as the U. S. trade embargo was still in place. Once that was lifted the overseas Khmer started with all the Toyotas and, you are right, they couldn’t be sitting lower than a Pakistani in his Landcruiser.
HA! Awesome Jay. I am really happy to have the story confirmed from the horses mouth. There are still quite a few 190Es around today. Legendary car.
“486,000 vehicles imported between January and June of this year, with a total value of USD$239,000,000. The same period in 2011? Approximately 335,000…However, the Ministry of Transport estimates there are somewhere in the vicinity of 375,000 registered passenger vehicles in Cambodia.”
There’s something seriously amiss with those figures. How could almost half a million vehicles be imported in 6 months to a country this size? With an average value of approximately $500 each? Do those figures include bicycles, push-chairs and roller skates or something?
Hi Dermot,
Here is the link:
http://www.phnompenhpost.com/index.php/2012081057918/Business/vehicle-imports-up-45-pct-in-first-half.html
The question of value is an interesting one. Chapter 87 of the Cambodian Customs Tariff schedule outlines types of ‘vehicles’ for tax purposes. And yes – some (not all) types of bicyles are included. Other bikes are covered by Chapter 95. I also suspect that much of the overall figures are accounted for by those two-wheel tractor things you see in the provinces.
Remember too, that vendors will regularly play with ‘value’ amounts on vehicle import documention – so it is incredibly hard to get an accurate picture of the real value of vehicles imported each year.
Finally, I am certain that many cars imported into Cambodia are destined ultimately for Vietnam. The Ministry hints at this in the Post article as well.
‘Play with the value’ – sorry, Siddo, they can’t. They used to do that, true, but the government isn’t stupid either. So they consequently issued a set schedule for car values on which the tax is based, e. g. a 2001 Lexus 4.7 is worth $13,000, the tax would be $14,992.
Those statistics as cited in the PPP are plain garbage.
Jay – I know the schedule you are referring to; it is a tabulated document that gets updated each year. I am struggling to understand how it fits with the tax prescriptions in the Customs Tariff book, which seemingly ties tax rates only to engine size.
Do you know anything about how the two are reconciled? Would love to buy you a drink after Pcum Ben to pick your brain. Shoot me an email if you are interested. [email protected]
“An authorized dealership selling Vietnamese manufactured Vespas have already entered the market. Grey market Harleys, Triumphs and Ninjas are becoming more and more ubiquitous – there is even talk of Ducati entering the market…”
I note KTM has just opened a shop in Phnom Penh
Can you tell us more about the talk of Ducati entering the market ?
Hi Bob – RE Ducati, I have heard that a certain grey market dealer who dealt in high end vehicles is tendering for it. Also, in April, Audi AG purchased Ducati – so the franchisees of Audi in Cambodia will probably have a shot at bringing in Ducati as well.
Some countries do include various types of engines and engine powered equipment under these statistics such as those mini tractors or adapted rotavators used in farming. I was wondering if motorbike statistics are included in that number for passenger vehicles as it would bring down the value and boost the volume.
Yes Robb – my gut instinct is that motorbikes would be included in the cumulative vehicle figure. Certainly,they are counted as a ‘vehicle’ under Chapter 87 of the Customs Tariff schedule. Realistically, I dont believe the Ministry’s statistical gathering techniques are complex and developed enough to split out cars and motos.
I mean, they dont make a taxation distinction between a 3.0 litre Hilix workhourse and a $170,000 Audi A8L 3.0 TFSI.
Exuse me can you provide me car data in 2009 till 2013
1. How many new and second cars import into cambodia in 2009, 2010, 2011, 2012 and 2013?
2. How many type of cars (brand) in cambodia?
3. brand share of car?
4. How many sedan and 4X in 2009, 2010, 2011, 2012 and 2013?
thank you for provide me this data cuase i need it for my study to finish research proposal in Master degree.
I would like to know car population in Cambodia by geographic