A decade ago if you wanted to buy a car, you needed to come to Phnom Penh, and even then you probably wouldn’t have found many dealerships or showrooms in town.
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Fast-forward a few years and the situation has radically changed: almost every main street in the city now boasts its own car shop.
“You can see it everywhere, there are lots of vehicles, which means people can now afford to buy cars,” said Sok Channy, the owner of a used-car dealership in Sangkat Wat Phnom.
With rising living standards, Cambodians are buying vehicles that fit their new lifestyles. As a result, a considerable number of luxury carmakers have opened authorised dealerships in Phnom Penh and in a number of other provinces. However, they are finding that demand for brand-new cars in the kingdom lags far behind demand for pre-owned vehicles.
“Customers prefer used cars because they are more affordable. This is definitely aiding the rise of the grey market,” said Mr Channy. “New cars are only for the rich. Along the road, you can see that the majority of cars are second-hand; only a few are new.”
According to dealers, most second-hand vehicles are imported from the US.
“The government does not intend to ban the entry of second-hand vehicles into the country anytime soon, but it has plans to increase taxes levied on these vehicles to reduce the price gap between new and second-hand cars,” said Soeng Sophary, a spokeswoman at the Ministry of Commerce.
Ms Sophary added that the government might ban the sale of imported second-hand vehicles with old identification numbers, but she could not confirm it.
Seng Visak, another dealer working at a used-car shop in Phnom Penh, said the price of used cars has already gone up significantly during the past year due to rising levels of taxation.
“Before used cars were easy to sell, but this year we cannot sell them at the same price as last year because taxes on imported used cars have increased,” Mr Visak said.
Fortunately, demand for used cars remains high, according to Mr Visak, whose shop sells an average of seven vehicles a month.
Mr Visak and Mr Channy agree that the rising number of sales in the sector is, to an extent, the result of better access to funding, with banks and microfinance institutions disbursing more loans used to purchase cars.
“Most customers still pay in cash, but a few are asking for loans to pay for their vehicles,” Mr Visak said.
Ms Sophary said that as income levels increase across the country, she expected Cambodians to start prioritising safety when buying a vehicle, which will lead to higher sales of new cars.
Ly Bunhay, the general manager of Toyota Cambodia, said sales for both new cars and used cars are up this year, and expected growth in the sector to remain strong in the years to come due to the country’s robust economic performance.
“Customers favour vehicles imported from developed countries like the US, thinking that they are of high-quality, but they often don’t know that the condition of these cars by the time they reach Cambodia is not the same as when they were manufactured,” Mr Bunhay explained, adding that he hopes more customers will understand the importance of buying new vehicles.