Market Brief for Egypt
The Egyptian 3.2 million vehicles market is experiencing a steady increase of an average 150,000 units per year, resulting in an average total spares and equipment imports of $ 150 million per year. The U.S. products did not witness a major change in the Egyptian market share at 6-8 % over the last three years.
The local market is generally characterized by being very price sensitive, accordingly, many South-Asian brands and parts were introduced into the market and managed to earn a considerable market share; However, high quality U.S. products are still valued by high end consumers who appreciate quality, technology, innovations and value added.
Laws and regulations in Egypt does not permit used parts in the market, on the other hand replacement parts exist in the market. In some cases and since scrap is allowed, some importers brings to Egypt scraped cars and resell parts to end-users at there own risk and obviously with no manufacturers warranty.
Unlike the exaggerated customs imposed on cars reaching above 150 %, automotive parts and accessories range between 10 and 40 percent, in addition to a 10 percent sales tax added on top making this business attractive to many dealers to operate in this profitable business, and being scattered across the country. It is worth mentioning that international oil companies such as Mobil, Caltex and Esso have established workshops in 80 percent of their gas stations and are ideal end-users of spare parts, whether original parts or from any other source on the condition that parts will be of good quality.
For additional information related to the Egyptian market please contact, Commercial Specialist Essam Tabarak, Tel +20(2) 797-3485, Fax: +20(2) 795-8368, E-mail: Essam.Tabarak@mail.doc.gov
Market Brief for Israel
Market Overview The automotive aftermarket sector in Israel is made up of the Original Equipment Manufacturer (OEM) parts and their substitute. Industry source predict sales of $1 billion at the end of 2004. There are about 2.3 million cars on the roads of which 4.8% are from the U.S. and the balance from Europe and Asia. In 2003 total imports amounted to $155 million, of which $17million was from the U.S., $34 million from Germany and Japan $18 million.
There are presently between 600–700 importers and around 20 local manufacturers of aftermarket parts and accessories in Israel. The main source of imports is from Europe and the Far East. About six years ago new legislation was passed by the Anti-Trust Authority to stop car importers from forcing garages and car owners to use only OEM parts.
American spare parts are recognized for their high quality although over the years Israel has progressively adopted European standards due to the bulk of cars being imported from Europe and the Far East. The Asian parts are more attuned to the European standard. Israeli consumers have no choice other than to purchase spare parts from Europe and the Far East.
Opportunities for U.S. Exporters of aftermarket products and services Israeli importers are always on the look out for quality products at competitive prices – usually in that order. The Israeli shekel’s devaluation against the euro creates an opportunity for U.S. companies to do business with price conscious importers.
Best Prospects:
- Car Security and Anti-Theft devices: anti-theft electronic systems, locking devices
- Car body: bumpers, radiator grills, hood and trunk lids, wings, front and rear lamps (i.e. the parts most vulnerable in car accidents).
- Service parts: disc break pads, shock absorbers, front suspension parts, filters for oil and lubrication, air conditioning parts.
- Replacement service parts: tires, fan belts, water hoses, water pumps, brake components, engine and transmission components, electrical components, undercarriage items that need replacing at the end of the warranty period.
- Vehicle accessories: car care products, polish, wax, upholstery spray
- Water-cooling (Glycol) for radiators
- Electronic Accessories: TV screens for the rear seats, GPS systems, sound systems etc.
- Universal lubricants: well known brand names of high-grade oils, lubricating, glycol, wax. The market demands well-known brand names.
For further information on the topic, please contact Commercial Specialist, Alan Wielunski at alan.wielunski@mail.doc.gov
Market Brief for Jordan
In Jordan there are 568,000 registered cars, this figure is growing 2-3% annually. While American vehicles represent only 4% of market share in Jordan, this is expected to rise due to the entry of new small-engine cars which are popular among local buyers. European and Asian vehicles dominate the rest of the market.
The Jordanian vehicle market is sensitive to price and after-sale-service particularly spare parts and repair services. Customs imposed on vehicles depend on engine size that becomes disadvantage for large American cars.
On the other hand, American vehicles and pick-ups enjoy an advantage under the U.S.-Jordan Free Trade Agreement (FTA) which reduced the custom duties only on American manufactured vehicles from 30% to 25% for cars and to 18% for pick-ups.
Additional two taxes are added, the special tax that depend on engine size and this again is a disadvantage for large American cars, and the sales tax that is 16%. For pick-ups only the sales tax is added.
At the same time the Jordanian law permits the importation of used cars under the same custom duties and taxes regulations.
| Brand | No. of new cars sold 2003-2004-2005 | Market Share 2003-2004-2005 |
|---|---|---|
| Jeep | 28 | 0.27% |
| Cadillac | 48 | 0.47% |
| Ford | 16 | 0.16% |
| Chevrolet | 265 | 2.6% |
| GMC | 37 | 0.36% |
| Hummer | 19 | 0.19% |
| Total | 413 | 4.05% |
Regarding spare parts, American-made parts have a 3-5% share of the market, and the Europeans and Asians dominate the rest. New and used parts exist in the market, with customs reaching 30% and an additional 16% sales tax. Again the FTA is giving an advantage for some American manufactured spare parts, which reduced the custom duties to 15%.
New spare parts imported to Jordan:
| H.C. codes | Spare parts |
|---|---|
| 4010-991 | Belts |
| 8421-391 | Filters |
| 8482-10 | Balls & Bearings |
| 8482-10 | Gaskets & Links |
| 8539-10 | Filament lamps |
| 8708-99 | New parts |
| 4011-20 | Tires |
Said this, the Jordanian Automotive market is growing and is looking for new sources for vehicles, spare parts and services.
For additional information please contact Commercial Specialist Fareedon Hartoqa, Tel: (+962)(6) 590-6053, Fax: (+962)(6) 592-0146, E-mail: Fareedon.Hartoqa@mail.doc.gov
Market Brief for Lebanon
The Lebanese 1.7 million vehicles market experiences a steady increase of 2 to 3 % per year, resulting in an average total spares and equipment imports of $ 30 million per year.
The local market is generally characterized by being price sensitive, accordingly, many Japanese and South-Asian brands and parts were introduced into the market and managed to earn a considerable market share; However, high quality U.S. products are still valued by high end consumers who appreciate quality, technology, innovations and value added. The U.S. products did not witness a major change in the Lebanese market share at 35 % over the last three years.
Laws and regulations in Lebanon permits used cars and parts in the market. The customs duties imposed on cars vary between 22 to 26 %. The duties on automotive parts and accessories are 20 percent, in addition to a 10 percent sales tax added on top. It is worth mentioning that international oil companies such as Mobil, Caltex and Esso, Penzoil are present in Lebanon.
For additional information related to the Lebanese market please contact, Senior Commercial Specialist Naaman Tayyar, Tel +961-4-544860, Fax: +961-4-544794, E-mail: Naaman.Tayyar@mail.doc.gov
Market Brief for Morocco -- (Optional Market)
Moroccan roads were used by l.85 million vehicles in 2003 , which have shown a steady 4% increase over the last 5 years The automotive market (49, 617 units in 2003) is largely dominated by European brands. Car imports from Asia are growing quickly, accounting for 15% of the 2003 market, whereas US market share remains under 1%. While 45% of the vehicles in use were introduced between 1991 and 2003, more than 50 percent of circulating cars have an average life of 17 years. This translated into a spare parts and equipment market of $541 million for the year 2002, which represents an annual expenditure of $293 per car. US imports for 2003 remain insignificant at 0.25% of total imports and a value of $953,000.
With 500 points of sale, 13 local spare parts manufacturers are responsible for the distribution over 20% of the market. Importers are divided in two categories, 20 importers of well-known brands, made by Original Equipment Manufacturers (OEM), with a market share of 13%, and more than 200 importers of adaptable products, with a market share of 46%. Their retail prices generally run 20 percent below the OEM distributors. Car manufacturers with assembly plants in Morocco also have a distribution network of 150 points of sale and represent 12 % of the total sales. Car scraps provide most of the remaining market. As for the end user retail channels, which account for 1500 points of sale, it is largely dominated by neighborhood repair shops, auto parts retailers, specialized garages, manufacturers network, and gas stations.
Although the local market is fairly price sensitive, the increased access to new cars (6% annual growth), thanks to better financing solutions, is pushing the end user to demand high quality parts for a longer maintenance of their vehicles. However, the complete absence of quality and safety standards, and control mechanisms at the entry, makes it easy for some low quality and counterfeited Asian products to access the market thanks to their low prices.
The Moroccan market offers a large growth potential for US products due to the following:
- Improved retail prices as a result of the elimination of import reference prices in 2003, following the different bilateral agreements that Morocco signed with WTO, and with the EU. The list fixed the minimum import prices for duties declaration.
- Suppression of different controlling government agencies which led to a complete deregulation of the sector
- Improving purchase power in an under-equipped population (1 car per 15 persons), supported by competitive financing offered by the local banks.
While Moroccan regulations do not allow import of used parts, customs duties imposed on automotive parts and accessories rang from a minimum of 2.5% to 50% depending on whether the product originates from a country with whom Morocco has a Trade Agreement.
Market Brief for Turkey
I. Statistical Information
A) Total Market Size (US $ millions):
2002: $3,565
2003: $5,490
2004: $6,500 (estimated)
B) Est. Avg. Annual Growth Rate of Market 2002-2004: 35%
C) Imports, total (US $ millions):
2002: 2,300
2003: 3,600
2004: 3,900 (estimated)
D) Est. Avg. Annual Growth Rate (2002-2004) of total imports: 30%
E) Imports from the U.S. (US $ millions):
2002: 275
2003: 350
2004: 430 (estimated)
F) Est. Avg. Annual Growth Rate (2002-2004) of U.S imports: 25%
II. Evaluation of Sector -- Automotive Parts & Equipment
G) Priority for Automotive Parts & Equipment Sectors:
(Rank from 1 (low) to 5 (high) the priority given in your country by the public and private sectors to the development or improvement of the following sectors.)
| Development & Improvement | Receptivity to U.S. Exports | Domestic Competition | Third-Country Competition | Overall Receptivity | |
|---|---|---|---|---|---|
| Bearings | 4 | 2 | 5 | 5 | 1 |
| Batteries | 4 | 2 | 5 | 3 | 1 |
| Garage Equip. (General) | 2 | 2 | 3 | 3 | 2 |
| (Diagnostic) | 3 | 3 | 2 | 3 | 2 |
| (Emission Control) | 3 | 2 | 2 | 3 | 2 |
| Engines and Parts | 4 | 2 | 5 | 4 | 1 |
| Gears/Gear Boxes | 4 | 2 | 5 | 4 | 1 |
| (HVAC Equipment) | 3 | 3 | 3 | 4 | 1 |
| (Transmission Parts) | 4 | 2 | 5 | 4 | 1 |
| (Tubes and Tires) | 4 | 2 | 5 | 3 | 1 |
| (Accessories) | 3 | 3 | 5 | 3 | 1 |
III. Narrative Information:
Increased consumer demand in the 1990s and Turkey’s Customs Union agreement with the EU drove rapid growth of automotive production in Turkey. The growing local market and promising neighboring export markets (the CIS, Central and Eastern Europe and the Middle East), in addition to Turkey’s strategic proximity to the EU, cheap but qualified workforce and other productivity-related cost advantages attracted foreign direct investment to Turkey. Most international vehicle producers, presently, there are 19 vehicle producers in the Turkish market, have already started production in Turkey. Some of the existing ones, like Ford, Renault, Fiat, and Toyota, with their local partners, have gone further and either are planning to increase their capacities, or have already started investments to do so.
The Turkish automotive parts/service equipment industry has expanded as Turkish automotive production and imports have increased. Today approximately 700 firms, of which 185 are with foreign partners, produce spark plugs, carburetors, fuel injection systems, and several transmission parts. The sector provides parts to the new vehicles as well as the existing automobile fleet of 7.6 million units (2003). Of these, nearly 38.4 percent are commercial vehicles.
Turkey has gone through an economic bottleneck in 2001 and 2002, and automotive industry has been one of the loss leaders. The industry, extremely sensitive to economic developments, hit the bottom. However, positive trend in both local and export demand resulted in a quick recovery in the industry. Dealers could offer favorable payment plans that were as a result of recovery of the Turkish economy to customers. These plans and the strong lira against US dollar helped customers to turn their postponed demand into an effective one. The vehicle and auto parts industry ended the year of 2003 as Turkey's second largest manufacturing export sector, following textiles & apparel. Industry specialists are optimistic that it will be the largest one by 2005.
Spare parts producers and importers have experienced similar slow downs. Utilization of domestically produced parts in the exported automobiles decreased, and the production capacities fell to 29% of production capacity in the last few years, however, currently the capacity reached 59% again, and 40% of locally manufactured parts goes to the production of OEMs.
Tires, brake linings, gearboxes, and clutches are the major imported items in the parts industry. Generally, imported parts are used in supplying imported vehicles, to OEMs for vehicles to be exported, or where there is no local production, such as for CV driveshafts, catalytic converters and tapered roller bearings. Imports are also found where production shortages occur. Examples include power steering hydraulic systems, bearings, and v-belts. Parts, which need to be replaced frequently because of poorly maintained roads, heavy traffic, traffic accidents, and poor fuel quality, can also be considered as "best prospects." Examples include: shock absorbers, brakes, clutches, rings, filters, bumpers, lights, and signaling equipment to name but a few.
IV. Major Procurements on the Horizon (next 18-36 months):
None due to the economic crisis the country is facing.
V. Country's Methods of Procurement:
Major procurements are realized by private business. There is a remarkable size of a vehicles fleet owned by the local managements and the central government, however, private part plays a larger role to define the sector.
Suppliers’ agents play an essential role in marketing and sales. In fact, in view of complicated import procedures, it is almost impossible to sell without a competent agent in the country. In Turkey, agency/representation/distributor agreements are private contracts between agents and their foreign suppliers. There are no unusual regulations, which govern commission rates, termination, etc. However, in the automotive aftermarket sector, a commission rate of 5-10 percent is most common application. Representatives provide proforma invoices to the importers, including their commission in the price, and expect the foreign supplier to reimburse the commission amount to their account after the sale is realized.
In the service equipment sector, distribution channel is made up of three points: supplier, agent, and the end user. There are no others in the line. Usually, it is the agents, which imports the equipment. However, if the company wants to import it itself, then the agent only provides the proforma invoice.
VI. Means of Financing Procurements:
Aftermarket parts: The most common payment method is by letter of credit, when importing. Especially, when a new business relation is starting, an irrevocable and confirmed L/C is suggested. After both parties, supplier and local representative, get acquainted with each other, cash against documents becomes more common. Turkish suppliers, who receive payments from their customers in installments, however, might eventually need supportive payment terms from the foreign suppliers in order to increase sales. Local producers provide longer terms of payment to the wholesalers, and the wholesalers reflect similar payment terms to the retailers. However, consumers usually pay in cash.
Service equipment: Companies usually prefer to have long term back payments. Local producers are more flexible in providing longer terms. U.S. firms are found not as flexible as European companies. While most U.S. suppliers prefer to work on a letter-of-credit basis with short payment terms, European firms generally agree on open account arrangements with longer payment terms with their distributors. Many distributors enjoy a 4-months pay back period from their foreign suppliers, which are mostly European, and they provide 6-months pay back periods to their end users on Turkish Liras.
In conjunction with its January1, 1996 accession to the European Union’s Customs Union, Turkey has adopted a new import regime. The new regime applies the EU’s common external tariff for the third country imports and provides zero duty rates for non-agricultural items of EU/EFTA origin. Therefore, U.S suppliers have an additional customs duty as well as additional freight costs disadvantages compared to European competitors. There is an additional 18 percent Value Added Tax (VAT) on sale of these equipment and spare parts.
VII. Points of Contact:
U.S. Commercial Service
Ataturk Cad. 126/5 Pasaport 35210 Izmir, Turkey
Phone: [90] (232) 441-2446
Fax: [90] (232) 489-0267
Commercial Counselor: Mr. Amer Kayani
Commercial Attache: Mr. Erik Hunt
Commercial Specialist: Ms. Berrin Erturk
berrin.erturk@mail.doc.gov
Market Brief for West Bank and Gaza
Market Overview The automotive aftermarket sector in the West Bank and Gaza is made up of the Original Equipment Manufacturer (OEM) parts and their substitute. According to figures released by the Palestinian Central Bureau of Statistics (PCBS) imports of auto parts totaled $17 million in 2002. It is estimated that the total number of vehicles in WB/G is 150,000 including trucks, buses and other commercial vehicles and only 2% are from the U.S. and the rest from Europe and Asia.
There are ten authorized importers of new cars in the WB/G and they use OEM parts. They import European, Asian and American vehicles. Leading the list of new car imports is VW, followed by Audi and then Peugeot.
Because of generally lower incomes, there is considerable demand for competitively priced auto parts and used cars in the Palestinian market. Imports of three years old cars are allowed and they come mostly from Israel and used car markets in Germany. Used and refurbished auto parts however cannot be imported and expensive parts are refurbished locally. Demand for refurbished and competitively priced new parts has increased in the last three years due to the prevailing economic conditions.
The city of Nablus in the West Bank is considered the hub for importers and distributors of auto spare parts of European and Japanese make especially Mercedes Benz and VW/Audi. All commercial and transport vehicles like buses and minivans for passengers transport run by diesel fuel and the majority of passenger cars run on gas.
Imports of auto spare parts come mostly from Europe and the Far East yet American made parts are recognized for their high quality and are now more competitive with the rise in the value of the Euro versus the U.S. dollar.
Opportunities for U.S. Exporters of aftermarket products and services The Palestinian market is currently price sensitive and Palestinian importers look for competitively priced products.
Best Prospects:
- Service parts: disk brake pads, shock absorbers, front suspension parts, filters for oil lubrication, air conditioning parts.
- Car body: front and rear lamps, bumpers, radiator grills, hood and trunk lids
- Replacement service parts: tires, fan belts, water hoses, water pumps, brake components, engine and transmission components, electrical components
- Vehicle accessories: car care products, polish, wax, upholstery spray
- Water-cooling (Glycol) for radiators
- Universal lubricants: lubricating oils, wax, glycol
For further information on the topic, please contact Commercial Specialist, Issa Noursi at issa.noursi@mail.doc.gov