After the dollar flew and on August 4, how was the auto market affected?

Leah Al-Azzi writes in the Al-Akhbar newspaper under the headline “The car market: the end of the luxury model”: “Cars are one of the most important signs of the“ illusion ”of the Lebanese economic system. Naturally, “that all members of a family of five adults have a car! This is not common in various countries of the world, especially if the area of ​​the country is small like Lebanon, and it is possible, through simple planning, to connect their cities and towns by public transport. The absence of the state and its inability to guarantee this “right They compensated it with an attractive” trick “that consisted of allowing different social classes to acquire the” car of their dreams “and facilitating the financing of this “Luxury” through a bank loan, a trick that came with “benefits” marketed by banks: a free electronic payment card, an insurance policy. Life is free, easy to pay …

The main driver of this pattern was the fixation of the exchange rate at 1507.5 pounds on average against the dollar. This facility allowed a $ 1,500 fee employee to install a European car with a recent manufacturing history. In other words, the stabilization of the exchange rate perpetuated a pattern in which consumers who had not only bought a car to cover the necessary need, but also to cover their well-being, were drowning. This pattern included buying new and used cars. According to Lebanese customs statistics, between the beginning of 2017 and the end of July 2020, Lebanon imported around 216,408 new and used cars, with a total value of $ 3.3 billion. As for the spare parts associated with transport vehicles, their annual value ranged between $ 230 and $ 260 million. Revenue from the car trade to the public purse was also high, amounting to 1085 billion pounds in 2018, but the drop in imports and sales was also reflected in tariffs (import duties, registration, traffic, driving) , which registered around 755 billion pounds in 2019, that is, a decrease of 30.4%. There are also job losses that will force the new car import companies to restructure their structure and reduce the number of their salaries to less than 10,000 workers now.
Since the summer of 2019, with the onset of exchange rate changes and the devaluation of the Lebanese pound against the dollar, society has been forced to change its behavior and renounce false “privileges”: importing cars is one of them. This market is prone to shrinking to the maximum in line with the fall in sales resulting from the collapse of the purchasing power of rents. At first, the imported automotive sector tried to “coexist” with financial and monetary developments by selling through “dollar checks”, but the value of dollars issued by bank checks began to decrease (the price of the dollar issued by check is equivalent to 37% of the (real) price of the paper dollar. Importers need real dollars to finance auto imports, stop selling cars with checks. ”Read the full article Press here.