or features of the national car market

Natig Zarbaliyev,
Chairman of the Azerbaijan Automobile Dealers Association (AADA)

1st paradox

Covid-19 has made numerous interventions in the course of human history, influenced the lifestyles and occupations of countries and people, and it seems that this process is nowhere near its end. For more than 100 years, it has been impossible to imagine human life and activity without cars. The automotive sector has a huge share in the global economy, but, unfortunately, this invisible virus has also hit the car industry. At first, panicked potential customers changed their minds about buying a car in favor of staying indoors and therefore healthy. Later, as lockdowns were introduced in various countries, factories and dealerships were closed. It is true that these enterprises soon reopened, but the lack of spare parts, especially electronic "chips" still does not allow manufacturers to work at full capacity.

Although paradoxical at first glance, the prolongation of the pandemic has also saved the world car market from complete bankruptcy. People who have been exposed to the disease have begun to realize the importance of personal vehicles in the process of protecting themselves and their families from the virus. Due to restrictions on public transport in most countries, especially residents of large cities, including families who did not think about cars two or three years ago, began to contemplate the possibility of buying a car. But I do wonder, how real is this opportunity in our country? Let's first look at the statistics of the regions where most cars are usually sold.

It is known that the "world tour" of the coronavirus began in China, but statistics show that the pandemic did not have a significant impact on the sale of new cars in this country. Thus, in 2020, compared to 2019, the demand for passenger cars decreased by only 6.7%, but let's take into account that during the two pre-pandemic periods, there was a decrease. In short, the virus failed to overwhelm the world's largest car market - the Chinese market.

In 2020, the second largest in the world - 14.59 million cars and light commercial vehicles were sold in the US market, which is 14% less than the previous year. It is known that, unlike Europe, this country did not go into a second lockdown, and it seems that this fact saved the car market from a stronger blow.

In Europe, including the United Kingdom, car sales in 2020 were close to 12 million units, down 24.3% from 2019. The largest market on the continent - the registration of new cars in Germany decreased by 19%, in France - by 25.5%, in Italy - by 27%, in Spain - by 32.3%.

2nd paradox

Now let’s review the situation in Azerbaijan. According to the report of the State Customs Committee, 49,692 cars were imported to Azerbaijan in 2020. This number is 15.1% higher than in 2019. It turns out that no pandemic is dangerous for our car market. Sales are declining all over the world, but in our country the opposite is happening. What is the secret?

In fact, it's no secret that while in China, America and Europe people buy and register new cars, we bring old cars into the country. Ones that have been pre-used for years, often damaged, drowned, completely unsafe and environmentally unfit for use. In return, we export a large amount of currency. Thus, the total cost of imported cars in 2020 amounted to 647,596,790 US dollars. I wonder how much of this money was paid for new cars?

According to a study conducted by the Azerbaijan Automobile Dealers Association (AADA), which unites official importers, the number of new cars imported into the country in 2020 was between 9,000 and 10,000. This means that 40,000 old cars were imported throughout the year. Let's pay attention to the composition of the country's car fleet today. According to AADA's analysis, about 1 million cars (80 percent of the total fleet) have a service life of more than 10 years. In particular, more than 300,000 cars are 20 years old, and 125,000 cars are 30 years old. Finally, more than 100,000 cars were produced more than 40 years ago. This information shows that in total, more than 500,000 dangerous and environmentally harmful cars are used on our roads. The worst thing is that the mass import of either old or relatively new, but crashed, submerged, "welded" cars continues.

3rd paradox

According to the State Customs Committee, in the first half of 2021 alone, Azerbaijan imported 47,374 cars worth $474,615,000, which is 70.5% (!) more than during the same period last year. If the number grows 100.000 units larger by the end of the year, Azerbaijan might hold the record for transporting the most cars from abroad. Now let's see which cars we are talking about. A typical section operation shows that each imported car costs about $ 10,000. However, it should be noted that the country also imports new cars belonging to the middle segment, as well as premium and luxury classes, priced at 50, 100, 150 thousand dollars and more. Even if the number of those isn’t too large, a significant part of the total can be attributed to them. It turns out that the average pre-customs value of imported second-hand cars is even lower, about 6-7 thousand dollars. It is quite clear that such a vehicle couldn’t possibly  meet any safety and environmental requirements. That's why cars, even minor ones, increase the already heartbreaking death toll, and the corridors of the National Oncology Center are full of people diagnosed with lung cancer.


4th paradox

During the last days of the auto show in Frankfurt, Germany, before the pandemic, public organizations dealing with environmental issues held a performance in front of the pavilions. Gasoline-powered cars were lifted high and crashed to the ground. It was said that soon only electric vehicles would be allowed on European roads. Does that mean that all the cars that pollute the air will be destroyed? Never! They will keep flooding our roads, poisoning our families, just for the sake of a low priced vehicle. Another paradox is that the list of countries where the most used cars are imported from does not end with Germany and the United States. In the first quarter of this year alone, cars were imported to Azerbaijan from more than 30 countries: Russia, Germany, the United States, Australia, Austria, Belgium, Great Britain and Northern Ireland, South Africa, the Czech Republic, China, France, India, Indonesia, Iran, Spain, Sweden, Italy, Canada, Korea, Hungary, Mauritius, Mauritania, Mexico, Morocco, Netherlands, Romania, Slovakia, Slovenia, Thailand, Turkey, Japan, New Zealand…

I wonder if all these countries have adopted state programs on road safety. We have adopted such a program and approved it by the Order of the President of the Republic of Azerbaijan dated December 27, 2018. The full title of the document is as follows:
STATE PROGRAM on traffic safety in the Republic of Azerbaijan for 2019-2023. The program includes "taking necessary measures to prevent the import, sale, use of vehicles that do not meet technical regulations, their spare parts, accessories and consumables, as well as other forms of circulation in the Republic of Azerbaijan". The aims of this program are; to take measures to stimulate the import, purchase and sale, as well as other forms of turnover of environmentally friendly electric vehicles in the country, as well as improve the relevant regulatory framework with the establishment of various benefits and privileges. 


Resume

It is quite clear that the process of renewing the country's car fleet must be carried out in a comprehensive manner. Which means, before imposing any restrictions on the import of old cars, customs duties for the import of new cars and credit conditions for sales must change. These fees and conditions should be accessible to the vast majority of the population. Otherwise, scrap metal will continue to be transported to the country under the guise of cars.

The Association of Auto Dealers regularly addresses proposals to the Cabinet of Ministers, relevant ministries and other official bodies, reflecting these problems and ways to solve them, organizes discussions and makes statements in the media. Official car importers are fully aware of their responsibility in the implementation of the above-mentioned state program and are ready to provide high quality services to the population by bringing the most modern, safe and environmentally friendly cars to the country. In all developed countries of the world, when preparing normative documents regulating the development of any business sector, government agencies establish a dialogue with business associations representing that sector and use their experience. AADA supports the importance of such dialogue. For the beauty of our cities, the safety of our roads and the health of future generations…