AZE.US
Azerbaijan’s auto market is seeing weaker-than-expected activity this summer, with supply outpacing demand and some sellers cutting prices below cost.
Eyyub Aliyev, chairman of the Azerbaijan Automobile Dealers Association, said the market has not seen the traditional seasonal revival. According to him, problems that began last year are still affecting sales.
One of the main reasons was the cancellation of customs and tax benefits for environmentally friendly vehicles from the beginning of this year. Since it was already known in the third quarter of last year that the benefits would not be extended, parallel importers and investor-backed sellers rushed to bring record numbers of cars into the country.
At the time, vehicles were selling within five to ten days, allowing investors to make quick profits. But since the beginning of this year, sales have slowed sharply.
Aliyev said some importers have been unable to sell cars for months. That has created concern among investors and forced sellers to first offer vehicles at cost, and then below cost.
“As a result, there is a price war in the market. One seller reduces the price, and another is forced to do the same,” he said.
According to Aliyev, almost daily price changes have also affected buyer behavior. When buyers see a car offered for 32,000 manats, or about $18,800, later listed for 30,000 manats, or about $17,600, and then even 29,000 manats, or about $17,100, many delay their purchase and wait for further discounts.
This has added to uncertainty in the market. The number of cars imported last year exceeded real demand, creating a large stock of unsold vehicles.
Despite difficulties in the new car segment, the used car market is showing more positive dynamics. Aliyev said sales of vehicles from South Korea, Japan and Germany have started to increase. The trend does not apply to every brand and model, but demand has grown for cars that have earned buyer trust.
The current market situation has also affected official dealers. Aliyev said official importers have negotiated with manufacturers and started offering vehicles at more competitive prices. As a result, the price gap between official dealers and parallel importers has narrowed.
New rules on car exports from China are also influencing the market. According to Aliyev, restrictions on exporting vehicles from China within six months of production may help restore some balance. He said there are already some positive signals and expressed hope that the market will stabilize in the coming months.
Property and valuation expert Huseyn Talibov said summer is usually a more active period for car sales, but this year activity remains more limited than in previous years.
He said buyers are making decisions more cautiously because of inflation, high interest rates on consumer loans and greater sensitivity to household spending.
Still, interest in personal transport has not disappeared, and transactions have not stopped completely. The most in-demand vehicles are currently economy-class cars that are eight to twelve years old, in acceptable technical condition and have engine sizes of 1.5 to 2 liters.
Buyers are giving priority to models with low fuel consumption, available spare parts and reasonable maintenance costs. Interest in hybrid vehicles has also increased compared with previous years.
Talibov said supply currently exceeds demand, meaning there are more sellers than buyers. This has increased competition and expanded room for discounts. A significant share of used cars is being sold at prices 5% to 10% below the initial listing price.
According to the expert, highly liquid models find buyers faster. Cars with mass demand are usually sold within 20 to 40 days, while more expensive vehicles with larger engines and higher maintenance costs may remain on the market for several months.
Talibov also noted that Azerbaijan’s vehicle fleet continues to renew, but the share of older cars remains high. Official statistics show that a large part of passenger cars in the country are more than 10 years old. As a result, demand is gradually rising for more fuel-efficient and environmentally friendly vehicles.
At the same time, high prices for new cars are pushing many buyers toward the used car market.
Talibov does not expect sharp price changes before the end of the summer season. He said the market is relatively stable, and the high level of supply leaves little economic basis for serious price increases, except for certain liquid models.
For now, buyers have more options, while sellers are being forced to adopt more flexible pricing to complete deals faster./Report.az
AZE.US