The majority of cars imported into the Kurdistan Region are sold on to Iraqis. Photo: AFP
ERBIL, Kurdistan Region – Kurdistan Region’s car import industry is rebounding this year because of high demand for Iraq.
According to figures from the KRG Ministry of Trade and Industry, 75,648 cars were imported into the Kurdistan Region through its border ports over the last 11 months, more than doubling last year’s numbers.
“Differences in customs tax and facilitations made in issuing licenses, plate numbers and registration for traders is the reason why the Kurdistan Region has become a center for vehicle trade, according to our investigation into this increase in vehicle importation,” Nawzad Adham, general manager at the Ministry of Trade and Industry, told Rudaw.
“Iraqi cities depend on Kurdistan for cars.”
Some 70 percent of the vehicles imported into the Kurdistan Region this year have been sold to Arabs, he said. This is because there is a $2,000 price difference between the Kurdistan Region and Iraqi cities.
The price difference has made the Kurdistan Region a preferred route for importing vehicles into Iraq, over places like Dubai, creating good opportunities for local traders.
Hadar Company sells to Iraqi traders 90 percent of the vehicles it imports.
“Because of the ongoing financial crisis, our sales inside Kurdistan have declined by 70 percent compared to last year,” Hadar general manager Debar Khasraw Smail told Rudaw. “However, our sales to Iraqi cities have increased by nearly 50 percent. This year, we have sold nearly 1,500 cars to Arab traders.”
There is big demand in Iraq for modern Korean cars with Erbil plates. Used American cars are the second most popular in Iraq. There is little demand in Iraq for modern Japanese and German cars.
The activity of Kurdistan Region’s car market is “due to importations to Iraqi cities,” Smail explained. Should regulations change, the market will suffer.
“Our sales will go down if the Kurdistan Region’s officials increase customs tax for vehicle importations just like Baghdad,” Smail said.
Iraq increased its customs taxation by 25 percent.
Muthana Hasan al-Rawi had a car dealership in the Syrian city of Darha. He opened a branch of his company in Erbil after civil war broke out in his home country. He imports cars from Dubai and then sells them to Iraqi traders at retail price.
“Our sales have increased compared to last year. We sold nearly 1,250 cars last year, but have sold 2,500 cars this year,” Rawi said.
“The Iraqi government takes 25 percent of the price of the car as customs tax, whereas the Kurdistan Region takes only 5 percent. This has made a difference in price. For example, a car with its plate number costs $30,000 [in the Kurdistan Region], but $33,000 in Iraq. That is why Iraqi traders turn to the Kurdistan Region to buy cars,” he explained.
The Iraqi government doesn’t allow cars with temporary plate numbers to enter its cities so cars exported to Iraq come with Kurdistan Region plate numbers, mainly Erbil.
“Cars with Erbil plate numbers in cities of Basra, Najaf, Karbala and Hila have increased. You feel like you are in Erbil when you stop at a traffic light,” said Rawi.
Hunar Abdul-Latif, general manager of Cihan Company for Toyota Trade in Erbil, said their sales have fluctuated due to recent political events.
“Our sales were good until before the referendum. They were higher by 20 percent compared to last year. But our sales declined a lot after the referendum,” he explained.
“Nearly 15 to 20 percent of Japanese cars in Kurdistan are exported to Iraqi cities, which is not a high rate. But this has injected some activity into the sale of these vehicles and has an impact on Kurdistan’s economy,” Abdul-Latif added.
Car imports, which were at 126,430 in 2013, dropped year over year throughout the financial crisis, reaching their lowest level, 35,643, in 2016. The market has rebounded this year, with so far 75,648 cars imported.