Increase in prices of used cars prompts calls for organization

Increase in prices of used cars prompts calls for organization
Updated 08 January 2013

Increase in prices of used cars prompts calls for organization

Increase in prices of used cars prompts calls for organization

A lack of organization and control contributed to the recent price increase of used cars by 15 percent. This issue caused a stir among low-income citizens who called for organizing the process of buying and selling used cars to reduce fraud.
A director of a car showroom in Dammam said that sheriteah (certified dealers of used cars), should be granted a special ID card. These would enable them to eliminate the chaos in the used car market that has become a haven for uncontrolled labor.
The chairman of the Cars Committee in the Eastern Chamber, Hani Afaleq, told Aljazeera newspaper that sheriteah is a profession that is not licensed by any supervisory authority.
Previously a sheikh of exhibitions was in charge as an authority for this profession, as well as others. The current authority of car exhibitions is spread between several governmental departments such as municipalities, trade, traffic, etc.
The rise in used car prices has two sides, said Afaleq. The rates of increase of the prices of the imported cars were typically between five to 10 percent. These are considered normal according to the availability, type of product, and its prices abroad. This type of increase is also acceptable compared to the price increase of the new cars.
As for local used cars, there is an actual and large price increase of up to more than 15 percent. This is due to the high price of new cars in the market and the increase in demand for certain types of cars, which cannot be met, either because of price factors or because of the lack of products.
The import of cars that are older than five years has been banned. This would ensure the absence of old cars in the market, said Afaleq, although he thinks the age should have been increased to eight years.
He added that this ban could have been followed also by a definition for the age of cars that are already on the road, causing disruption and congestion, as well as a study of the age and technical situation of large trucks.
The ports allow entry only for used cars, which comply with the new law and have all legal import documents. The cars rejected to enter to the country due to a supervisory custom decision represent only a very small percentage of the imported cars.
Afaleq pointed out that the growth rate of cars in the past three years in the Kingdom generally reached 10 to 15 percent, and is expected to continue at the same rate for the next few years.
The year 2011 brought 600 thousand new imported cars, almost 60 thousand used cars from the US market, in addition to approximately 80 thousand from the Gulf states.
The exchange and inflation rates added to the price hikes, as well as the development of new models, and other economic and logistic reasons that vary by country of import. Also, this increase, which is usually from five to 15 percent, usually peaks with the arrival of the new models, and then it begins to decline by the end of the year. He therefore advised that buyers wait and refrain from making a purchase upon early arrival of the model, especially with a new type of vehicle.
The chairman of the National Committee for Car Dealers, Faisal Abushusha, attributed the high car prices from one generation to another to several other factors. These included the continued investment in research and development to produce advanced technology that copes with the operating requirements and the new generation, currency exchange rates, and higher energy prices. Additional factors, according to Abushusha, include a high standard of living in the manufacturing country, the raw material prices, and the higher prices for transportation and shipping.
He also added that the difference in car prices is based on production conditions and the economic situation of each country, the manufacturer’s capabilities and the extent of its investment in research and development, and currency exchange rates and the volume of production.
Abushusha proceeded to note that agents do not play a role in raising prices, but in fact, the opposite is sometimes true. They may often waive their profits and incur some of the costs in order to boost price competitiveness. It is difficult to monitor and regulate these dealerships, Abushusha explained, because there are no price lists or guides that indicate the price of the used cars.