AZE.US
In many countries, a new car begins to lose value almost immediately after leaving the dealership. In markets such as Germany, the United States, South Korea, Japan and China, this is seen as normal: once a car has been driven, it is no longer priced like a brand-new vehicle.
Market participants say a new car can lose around 20 percent of its value after the first year. After two or three years of use, the decline may reach 50 percent.
In Azerbaijan, however, the picture often looks very different.
Cars that have long lost much of their value abroad, and in some cases would already be headed for recycling, are still being offered on Azerbaijan’s secondary market at prices close to newer models.
Auto dealers say some vehicles that sold for 15,000 to 20,000 manats, or roughly $8,800 to $11,800, several years ago are still being offered at nearly the same price today. The trend is especially visible in the used-car segment between 15,000 and 30,000 manats.
“There are 10-year-old Korean models that people still want to sell for 20,000 manats. There are cars that should already be going to recycling, but sellers are still trying to get 15,000 manats for them,” market participants say.
Economist Natig Jafarli says prices in Azerbaijan’s auto market are not being formed artificially by any single group. Rather, they reflect the current structure of the market itself.
According to him, in many countries, several factors push used-car prices lower. Buyers can often purchase new vehicles through affordable financing, low interest rates and favorable tax conditions. After one or two years, they can sell the car, recover much of their initial payment and buy a newer model.
That keeps the secondary market active and pushes down prices for older cars.
In Azerbaijan, affordable car loans have not yet become a mass tool for renewing the national vehicle fleet. At the same time, weak interest in vehicle recycling keeps demand alive for older cars with high mileage and long years of use.
Jafarli believes that if Azerbaijan creates more favorable financing conditions for new vehicles and makes recycling more attractive, more buyers would choose zero-mileage cars. That could gradually create a new price logic in the market.
In that case, demand would decline for old, damaged and heavily used imported vehicles that are already considered economically unattractive abroad but still sell at high prices in Azerbaijan.
AZE.US