Speed bumps ahead

The automotive sector drives through another slow year

Executive sat with Antoine Boukather, president of the Automobile Importers Association (AIA) of Lebanon, to discuss the industry and regulatory issues in the transport sector.

E   Has it been another difficult year for the sector?

Of course. Lebanon is in political turmoil and we urge the politicians to double their efforts to find a solution to the crisis. The sector is facing increased competition, tougher regulation for bank loan approvals (higher down payments), lower purchasing power of people and many other issues. By electing a president this will give more confidence to the public, and will increase investments as well as consumption.

E   Despite the economic situation, car sales are still up by 2 percent on 2014. Why is that? 

People are switching from the old fuel-hungry vehicles to smaller entry segment cars, while there is no real alternative such as a proper public transport system.

E   What has happened with the government plan for 250 new buses?

Plans are still pending. A good solution would be a PPP (public private partnership) that creates a proper and decent public transport solution.

E   But would 250 public buses really reduce car sales?

Public buses will reduce traffic and congestion and make your daily drive more comfortable with more parking spaces available.

E   What impact has the traffic law, implemented in April, had on the sector?

It is a good law, but has been implemented partially and without consistency until now. There are many factors to address. Look at the number of people paying the annual mechanic test; it is less than 70 percent. In most places in the world you wouldn’t find such a low rate of payment. The National Council for Road Safety that is supposed to follow the implementation of this law should be activated and empowered.

Do you foresee small car sales dominating in the foreseeable future?

Definitely, as people can’t afford more expensive cars because income has dropped. Hence 90 percent of sales in the compact category are at less than $15,000, while [sales] above $80,000 are only 3 percent of the market.

E   We are seeing many more sports utility vehicles (SUVs) on the roads. Is that because oil prices are low again?

No, it is mainly about safety, since there are too many accidents, and there is a perception of being better protected in bigger cars. There is also a global trend to move from sedans to SUVs, but those with smaller four-cylinder engines which are more environmentally friendly.

The European and Japanese brands have rebounded this year.

Yes, helped by the Japanese yen at 120 to the dollar and the euro at around 1.1. This has been due to Abenomics [economic policies advocated by Japanese prime minister Shinzō Abe] and quantitative easing in Europe, making their currencies more competitive.

Are the authorities still removing catalytic converters from imported used cars at the port?

Removing catalytic converters is really bad for the environment and should not be permitted. Reducing carbon emissions and creating a cleaner environment should be a priority.

E   What are the AIA’s major priorities right now?

The association’s role is to advocate sectoral, societal and legislative changes that would benefit both the consumer and the sector as a whole. Our priority is to work closely with all stakeholders, who are concerned with public safety, consumer rights and the preservation of high standards in automotive retail, because these strategic partnerships are the catalyst for continued regulatory progress within the country.

E   What is your outlook for 2016?

Let’s be positive and hope for the election of a president and fair elections.

Paul Cochrane

Paul Cochrane is the Middle East Correspondent for International News Services. He has lived in Beirut since 2002, and has written for some 70 publications worldwide, covering business, media, politics and culture in the Middle East, East Africa and the Indian subcontinent.