Dealers Freezing Car Sales

30.03.2011 13:28
Архив Редакция

Belarusian car dealers have halted sales of new cars due to the uncertainty in the domestic forex market - only a few of them have been able to buy any foreign currency to pay for the cars for the last two weeks. Sales are expected to be resumed in early April, if the situation with the acquisition of foreign currency becomes more understandable.

According to the chairman of the board of the Belarusian Automobile Association Sergei Mikhnevich, currency restrictions, introduced by the National Bank, have affected the dealers’ work. «In this situation, dealers have been forced to take the decision to suspend car sales,» says head of BAA board.

However, a simplified regime for the purchase of foreign currency at the auction of the Belarusian Currency and Stock Exchange will again operate for the banks from April 1. As Telegraf previously reported, March 22, the central bank of the republic abolished a 30-day reservation of funds in the Belarusian rubles, introduced on March 16. Now this procedure will be held in the former regime — one working day prior to bidding.

In this regard, car dealers hope to acquire the amount of currency, necessary to do business.

«April 1, dealers will begin applying to purchase foreign currency, and watch how and at what rate it will be sold by banks. If everything is normalized, then, respectively, dealers will normalize their sales. If again there are difficulties with the purchase of currency, sales will not be renewed until the problem with the acquisition of foreign currency is completely solved,» «Belarusian News» quoted Sergei Mikhnevich.

Restrictions of National Bank Only Worsen Situation, BAA Head

According to BAA head, the measures of the National Bank to stabilize the situation, only make it worse in reality.

«Restrictions on foreign exchange to importers, as well as the panic on the domestic market, have resulted in the importers’ inability to ensure demand not only for cars but also for the entire imported products. As a result, citizens export their currency to buy imported goods in the neighboring countries. What is important is that importers would have spent one and a half times less of the currency to import these products as they buy products at wholesale factory prices. Accordingly, citizens export one and a half times more currency because they buy goods at retail prices,» said the head of BAA.

Shortage of Foreign Currency Caused by Car Duties, Chairman of BAA

Foreign exchange deficit in the domestic market, says Sergei Mikhnevich, has arisen due to the short-sighted policies on the foreign cars duties.

«Last year citizens have imported about 200 thousand cars due to the difference in fees for legal entities and individuals. The total amount of exported overseas currency was not less than $1.5 billion at an average price of the vehicle not less than $7.5 thousand. In this situation, at least half that amount and even more will be removed outside the country due to the expected increase in taxes for individuals from July 1 this year,» he said.

According to the National Statistics Committee, over 15 thousand cars were imported in Belarus in January, which is 2.18 times more than in the same period of 2010. If this trend continues, the outflow of currency abroad may exceed the 2010 level — $1.5 billion.

Meanwhile, due to the expected increase in fees, high consumer demand for cars has triggered not only the outflow of currency abroad, but higher prices in the domestic market as well.

«BMW of the fifth series of 2001 costs about $13 thousand at the automotive market in Zhdanovich. This car cost about $7 thousand six months ago. The average price of cars has risen by $1-2 thousand,» said the expert of the automobile market Dmitri Novitski.

Prices have also risen due to the external demand. In particular, the expert said, the Russian citizens are willing to buy cars in Belarus.

The showrooms’ prices have increased by about 5% because of uncertainty in the foreign exchange market, including the exchange rate in the short term.

Sergei Mikhnevich noted that exchange rate policy of car dealers will depend on the rate of purchase of currency in the OTC market. However, he admits that the prices, which depend on the currency value, can rise by 20%.

The situation on the currency market has had a negative impact on the development of service centers. In 2010, when sales dropped, many dealers were able to continue their work only due to the car service.

Lack of Currency can «Kill» Car Service, BAA Head

Now, however, said the chairman of BAA, dealers cannot gain currency because of currency restrictions. That is, they cannot buy the filters, fuel pumps, control devices, dampers and other necessary products, required for normal maintenance.

«If the situation does not change, dealers will be forced to refuse customers in car maintenance in the coming months due to lack of opportunities to buy the currency to purchase spare parts. This will lead to greater outflow of currency abroad, where citizens will be forced to go for the purchase of spare parts or maintenance at overseas stations. In addition, such a situation will trigger the growth of illegal service centers in the country,» predicts Sergei Mikhnevich.

However, despite the volatility, dealers expect that the market of new car sales will rise slightly after the first quarter of the year.