Hike in fuel price unsettles auto market

Automobile traders expect demand for large-engine cars to drop sharply due to the recent hike in fuel price. Nabil Rumman, president of the Jordan Free Zone Investors Association (JFZIA), predicted demand for vehicles whose engine size is over 3,000 CC to go down by 60 to 70 per cent after the government decided to increase the prices of 95-Octane gasoline from JD0.795 per litre to JD1 per litre. He told The Jordan Times on Monday that the anticipated decline in demand would bring down the prices of large cars and also be a boon to small-engine autos, “There will be large supply versus low demand in the auto market,” he said, indicating that demand for smaller cars has already picked up recently. Rumman challenged decision makers on remarks that the 95-Octane petrol is mainly used by well-offs, with JFZIA data showing that 70 per cent of owners of large-engine cars are medium-income people. Large-engine cars, imported mainly from the US, cost around JD20,000 per car, making it affordable to the vast majority of medium-income Jordanians, according to Rumman. He pointed out that industry players expect the entire auto market in the Kingdom to see slower activity in the coming weeks, noting that the government plans to increase the special tax imposed on imported motors. Currently imported cars are subject to a special tax calculated at 81 per cent of a vehicle’s  value. If the government raises the special tax rate this will shrink car imports, depriving the treasury from more revenues, according to Rumman, who noted that the auto sector is the second after the real estate in terms of generating revenue to the state treasury. Annual revenues from the auto sector are around JD550 million as the average number of cars imported to the local market stand near 75,000 vehicles, he indicated. The businessman remarked that rumours about government plans to increase taxes on imported cars have prompted traders in the free zone to make customs clearance on cars, saying that between 200 and 300 motors are cleared every day from the zone to the local market. By The Jordan Times