Used car prices expected to rise by up to 30%

Int’l supply disruptions, unprecedented demand drive up costs

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Cars sit idle at the Zarqa Free Trade Zone in this undated photo. The price of imported used cars is expected to rise sharply by the end of 2022, according to representatives of the sector. (Photo: Mohammad Zaro/JNews)
AMMAN — Imported used car prices are expected to sharply rise by the end of 2022, according to the automotive sector’s representative  at the Jordan Free Zones Investors Association(JFZIA) Jihad Abu Nasser, who stated that vehicleprices in Jordan would rise at the beginning of next year.اضافة اعلان

Used car imports account for close to 75 percent of Jordan’s vehicle imports, leaving less than 25 percent to new vehicle imports, according to numbers published in the Drivers and Vehicles Licensing Department’s annual report.

Abu Nasser told Jordan News that the rise would be the result of high demand for vehicles and the weak supply due to the scarcity of used cars on offer in international markets. This combination will negatively affect the prices of cars brought to Jordan by used car traders, at rates varying from 20 percent to 30 percent.

The main cause of this significant increase is the unprecedented rise in the demand for used cars in the US, which is the main source of used car imports to the Jordanian market.

A UN Environmental agency report recently revealed Jordan “is among the top 10 markets for exports of used passenger cars from the United States, with an exports value of about $447 million, ranking third.”

The rate of increase in used car prices in the US is the highest since 1953, i.e. since the records of these prices began. The jump in used car prices alone contributed a third of the monthly inflation rise in the US in June 2021.

These rocket rises resulted from several sources, the most important of which was the high demand for used cars, associated with the beginning of the travel and road-trip season.

Other factors include a disrupted global supply of new cars due to the closure of factories as a result of the COVID-19 pandemic and a global shortage of electronic chips used in car manufacturing. As a result, US consumers are suffering, having to wait up to two months to receive their new car, forcing them to rely on the used car market.

The US is not alone, as the EU — Germany in particular — and South Korea have also seen used car prices increase 5–10 percent in 2021.

These markets also represent major sources of Jordan’s used car imports.

The JFZIA representative noted that the COVID-19 pandemic caused fear among traders, who accordingly decided to import vehicles, as the epidemiological indicators are linked to purchasing dynamics. He added that the rise in global freight rates did not affect car prices significantly.

Abu Nasser explained that hybrid cars specifically had received two blows; first, the rise of prices globally, and second, the government’s increase of the tariff on them at the beginning of next year by 10 percent.

He stressed that the automotive sector witnessed greater losses in 2020 compared to 2021, but called on the government to postpone raising the planned and preannounced 10 percent rate on customs duties for hybrid vehicles until the pandemic situation stabilizes.

Abu Nasser contended that this will significantly affect the market, in which hybrid sales take a lion’s share — close to 45 percent of the total of used cars sales annually.

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