By Emel Akan
Epoch Times Staff Created: March 25, 2013 Last Updated: March 25, 2013
Iraq—Western cars were banned in Iraq under Saddam Hussein. The country
was flooded with VW Passats that were shipped from Brazil between 1983
and 1990 in exchange for oil. Even now, cars up to 30 years old,
including these Passats can still be seen on the roads, and car
ownership is tiny at only 1 in 20.
But with security settling
down in recent years, increasing interest in cars has led the automotive
industry to invest heavily to capture market share.
has been deprived of cars for so many years. The number of cars
relative to population size is still very low,” said Nihad Zacharia,
managing director of NIM Trading, the major distributor of Kia in Iraq,
citing the low penetration levels as a big opportunity for automakers.
has a population of over 30 million and vehicles per capita is
estimated around 5 percent, lower than neighboring countries Iran and
Turkey, which have 15 percent penetration.
Even after the fall of
Saddam Hussein in 2003, security and poverty stayed as major hurdles
for growth of the automotive sector. However in recent years the streets
have become safer. Improvement in safety and wealth are seen as
important drivers for growth in car sales.
“Over the next 4–5
years we expect growth in automotive sales to be tremendous. Security is
not an issue in Iraq,” said a representative of Volkswagen and Audi.
is no reliable source for the number of cars sold in 2012. However
according to estimates the number could be between 200,000 and 250,000.
“We know that roughly 145,000 cars entered through Northern Iraq border
and 100,000 through other borders. These include both new and used
cars,” said one distributor.
The huge growth potential of the
Iraqi market has triggered intense competition among major brands to
capture market share. Brands such as Toyota, Hyundai, Kia, GM, and
Nissan have started to invest heavily in marketing to tap the rising
Sumitomo has been active in Iraq since 1960s with the
sale of Toyota SUVs. The company has successfully met the rising demand
for pickup trucks and taxis in the northern part of the country.
to the information provided on Sumitomo’s website Iraq is expected to
grow into a large market, equivalent to Saudi Arabia, where 200,000
Toyota cars are sold every year. Sumitomo pledges it will place greater
emphasis on car sales in Iraq than ever before, aiming to sell 100,000
cars a year in the future.
Kia sold 50,000 units in Iraq last
year and has a quite sizable marketing budget according to Zacharia. “In
addition to direct ads, we participate in auto fairs, invest in
sponsorships and social responsibility projects. We have sponsored
sports teams in Iraq and launched road safety programs at schools
together with Ministry of Education to increase traffic awareness and
make the public trust the authorities, which is key to building modern
Chinese brands such as Geely and Cherry are also very
popular in Iraq. According to IHS Global Insight Chery’s cumulative
exports to Iraq were 30,000 in 2012.
Despite improvement in
wealth and security there are still some hurdles to overcome. In Iraq
all vehicles are bought with cash, and car insurance is not possible.
However, improvement in banking and insurance systems should help boost
car sales in the future.
A shortage of manpower in service
centers is another issue. To overcome this problem, a vocational school
project has been started by leading brands including Kia, GMC,
Chevrolet, Cadillac, and MAN. With the support of the Ministry of
Education, The Polytechnic University of Erbil and GIZ (The German
Agency for International Development) Iraqis are given vocational
training and employment opportunities in automotive sales, service, and
Improvements in road infrastructure will also
be key for future growth of the automotive sector in Iraq. “Roads are
not sufficient. We see traffic jams in many cities with rising
migration. And there is no public transportation.” said Zacharia.
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