JEDDAH: The Saudi Customs Department started implementing yesterday an official decision stopping the import of cars older than five years into the Kingdom.

“The ban is on used cars, buses and other light goods vehicles more than five years old. Heavy vehicles more than 10 years old are also not allowed to be imported,” Suleiman Al-Tuwaijeri, director of the Customs Department at the Jeddah Islamic Port, told Arab News.

The ban does not, however, cover spare parts for old vehicles in use, Al-Tuwaijeri said, adding that a six-month grace period has been granted to importers to set matters straight.

More than 140,000 used cars valued at SR17.5 billion were imported last year. This accounted for 24 percent of total cars imported during the year.

Expressing his concern about the future of the market, Mustafa Baqsha, an importer of used cars, said, “I don’t know what I am going to do next as the ban is a blow to my business of 24 years.”

Noting a rise in the prices of used cars, Baqsha said, “We used to buy cars at around SR5,000 per piece in the US. But now their supply is falling because of the huge demand there for cars that are less than five years old.”

He estimated 80 percent of workers in the used car market would become unemployed as a result of the ban. “I hope the authorities would review or at least relax the decision to make the ban applicable to cars manufactured before 2000.”

Some traders told Arab News that importers had hoarded cars expecting the demand to rise after the import ban.

Saleh Abdullah, another trader, told Arab News he was hit so hard that he dismissed some of his workers and was moving to a cheaper building. “I used to spend SR500,000 on rent and salaries a month, but now I have to move to cope with the falling income,” Abdullah said.

Several used car showroom owners told Arab News that the prices rose 20 percent over the past two months and that they believed they would remain at that level as the summer vacation is close.

A meeting of the Automobile Committee of the Eastern Province Chamber of Commerce and Industry urged the authorities to relax the rule and ban cars older than eight years.

Chairman of the Automobile Committee at the Jeddah Chamber of Commerce and Industry Ali Hussain Alireza said 50 importers annually imported a total of 400,000 cars to the Kingdom from various parts of the world and that stiff competition sent prices falling to the lowest possible levels.

“Some people expected the prices to fall by 30 to 40 percent. This is not true as prices of steel, aluminum and other metals used in manufacturing car parts did not fall. Hit by the financial crisis, international car companies suffered heavy losses last year and in the first quarter of the current year. They have cut down the volume of production to grapple with higher production costs,” Alireza said.

“Ford International will hold a conference of all its agents in the Middle East in Detroit to learn their views on the market for US cars. The company is currently inclined to manufacture less expensive and smaller cars,” he added.

Alireza said the rise in the prices of cars left the market wide open for used cars. The businessman commended the low tax regime in the Kingdom that keeps prices at affordable levels for customers. He said he believes the sale of cars in the Kingdom will fall by 20 to 25 percent, particularly as new models are to hit the market soon.

Alireza described the customers’ expectation for falling car prices as unrealistic. He said he believes that the financial standing of Saudi car distributors and companies is strong and that jobs in the Kingdom are secure.