Cambodia’s automotive market is a fascinating reflection of the country’s economic development and cultural preferences.
While new cars have their appeal, used cars remain the dominant choice for many Cambodians. To understand why, we need to explore the current state of vehicle imports, the number of used cars on the road, and the ongoing demand for these vehicles.
Cambodia’s Vehicle Import Data and the Used Car Market
Cambodia imports thousands of vehicles every year, with a significant portion being used cars. According to the latest reports from the Ministry of Public Works and Transport, over 70% of the cars on Cambodian roads are used vehicles. This trend has persisted for years, reflecting the preferences of a large segment of the population.
In 2023, Cambodia imported over 60,000 vehicles, and about 80% of these were used cars, mainly from countries like Japan, the United States, and South Korea. This data highlights a strong market for used cars, which continues to thrive despite the availability of new vehicles. The demand for used cars is not just a temporary trend but a deeply ingrained preference that aligns with the financial and practical realities of Cambodian society.
According to Phnom Penh, in response to the proposed ban on used cars in Cambodia, Prime Minister Hun Manet addressed the issue during the groundbreaking ceremony for the construction of the twin flyovers at the intersection of Hun Sen Boulevard and National Road 2 on June 17, 2024, stating that:
Rejection of Ban on Used Car Imports: Prime Minister Hun Manet stated that Cambodia does not need to ban the import of used vehicles, rejecting a suggestion to impose age restrictions on automobile imports.
Proposal for Enhanced Vehicle Inspections: Instead of banning older cars, Manet recommended strengthening the technical automotive inspection system to ensure vehicles meet safety and environmental standards.
Environmental Concerns: Deputy Prime Minister Aun Pornmoniroth had suggested banning the import of cars older than ten years by 2024 and those older than five years by 2030 to address environmental concerns. Manet, however, dismissed this idea.
Economic Considerations: Manet emphasized that many people, including taxi drivers, cannot afford new cars, making used vehicles an essential option. He highlighted the need to balance environmental concerns with economic realities.
Global Practices: The prime minister acknowledged that some countries have banned the import of used cars to boost their automobile industries, but he argued that Cambodia does not need to follow this approach.
Encouragement for Local Automobile Manufacturing: The government encourages foreign companies to build cars in Cambodia, but these companies must offer affordable and reliable vehicles to compete with used car imports.
No Restrictions on Car Ownership: Manet noted that Cambodia does not restrict the number of cars a household can own and is working on transportation solutions that benefit the population.
Demand for Used Cars in Cambodia
The demand for used cars in Cambodia is driven by several factors, including affordability, availability of spare parts, and cultural perceptions. The country’s middle class is growing, but many still find it more practical and economical to buy a used car rather than a new one. This demand is also fueled by the increasing number of roads and infrastructure improvements, making car ownership more accessible and desirable.
Reasons Why Used Cars Remain Popular
1. Affordability: The Economic Reality for Many Cambodians
One of the primary reasons used cars remain popular in Cambodia is their affordability. The average Cambodian’s income level makes purchasing a new car a significant financial burden. According to the National Institute of Statistics, the average monthly income in Cambodia is around $200-$300, which makes the high cost of new vehicles prohibitive for many.
Used cars, on the other hand, offer a more affordable alternative. A reliable used car can be purchased for a fraction of the price of a new one. This affordability makes car ownership possible for a broader segment of the population, enabling many to enjoy the benefits of personal transportation without overextending financially.
2. Availability of Spare Parts at Cheap Prices
Another critical factor contributing to the popularity of used cars is the availability of spare parts at affordable prices. Cambodia has a well-established market for used car parts, with many shops and dealers specializing in importing and selling these parts. The availability of spare parts ensures that maintaining a used car is not only possible but also cost-effective.
This thriving spare parts market is largely driven by the high volume of used car imports. Many of these cars come from countries with stringent vehicle regulations, meaning they are often well-maintained and have parts that are still in good condition. As a result, Cambodian car owners can easily find the parts they need to keep their vehicles running smoothly, further enhancing the appeal of used cars.
3. Perception of Used Cars: A Practical Choice
Cultural perceptions play a significant role in the preference for used cars in Cambodia. Many Cambodians believe that purchasing a used car is a more practical and financially savvy decision. This belief is rooted in the idea that a used car depreciates less quickly than a new one, making it easier to sell later without incurring a significant loss.
For many, the decision to buy a used car is also influenced by the knowledge that they can recoup a substantial portion of their investment when they choose to sell it. This resale value is particularly important in a market where cars are seen as valuable assets that can be liquidated if necessary.
4. High Costs of New Cars: Import Taxes and Service Fees
The high cost of new cars in Cambodia is another reason why used cars remain popular. Vehicle import taxes and service fees significantly increase the price of new cars, making them less accessible to the average consumer.
As of the latest data, the import tax on new cars in Cambodia can range from 30% to 50% of the car’s value, depending on the engine size and type of vehicle. This is compounded by other fees, such as VAT (Value Added Tax), which adds an additional 10% to the cost. These taxes and fees can make a new car almost double the price of its original value when it arrives in Cambodia.
In contrast, used cars, especially those with smaller engines or older models, are subject to lower taxes, making them more affordable. This significant price difference between new and used cars strongly influences consumer behavior, with many opting for the more economical choice.
5. Limited Availability and High Cost of New Car Spare Parts
Another challenge with owning a new car in Cambodia is the limited availability and high cost of spare parts. New car spare parts are often exclusively available through the car’s official dealership or import company, which can make them expensive. The monopoly on these parts by exclusive importers means that consumers have fewer choices and must often pay a premium for genuine parts.
In contrast, the used car market offers a wider range of spare parts at more competitive prices. Many of these parts are available through independent dealers who import them directly from countries like Japan, where they can be sourced at a lower cost. This accessibility and affordability of spare parts make maintaining a used car more practical and cost-effective for many Cambodians.
Conclusion
The popularity of used cars in Cambodia is driven by a combination of economic factors, cultural perceptions, and practical considerations. For many Cambodians, used cars represent an affordable, reliable, and financially sound investment. The availability of spare parts, the perception of value retention, and the high costs associated with new cars further reinforce this preference.
As Cambodia continues to develop and its economy grows, the demand for used cars is likely to remain strong. The affordability and practicality of used cars make them a sensible choice for many, ensuring their continued dominance in the Cambodian automotive market.
We’d love to hear your thoughts! Do you prefer used or new cars? Share your experiences and opinions in the comments below!