Spare parts market in a bind following new car import policy

Concerns of falling demand are mounting among vehicle spare parts traders following the government’s new import policy announced in January, which permits only imports of new left-hand-drive vehicles

The new policy has dealt a blow to the once thriving industry, which had catered mainly to owners of second hand, right-hand-drive Japanese cars.

In Myanmar, spare parts for vehicles, including everything from car doors to gearboxes, are typically sourced from older Japanese vehicles bound for the scrap yard. Such parts are cheap and easily available in Yangon and Mandalay.

As most car owners tended to prefer second hand Japanese-made vehicles, the spare parts market catering to these drivers had expanded quickly, overtaking demand for original Japanese parts, which are more expensive and take a longer time to deliver, as well as lower quality parts produced in China and Malaysia.

That could all change now that imports of used, right-hand-drive vehicles are no longer permitted.

Car owners in Myanmar have always preferred used, Japanese cars. As such, the spare parts market has evolved to cater to this market. Many business owners import only spare parts for Japanese right-hand-drive cars, said Ko Beik Thar, who runs a spare parts business in Yangon.

“But now that drivers can only import left-hand drive cars made elsewhere, the spare parts market will have to undergo a major inventory overhaul,” he said.

As the industry adjusts to the new demand trend, some businesses fear they may not survive the change. “Our business will be impacted if there is a rise in demand for left-hand-drive cars and parts. Now, we are still selling spare parts for right-hand-drive cars,” said Ko Zaw Min Tun, who runs AJF Trading.

It won’t be easy for local businesses to build up new spare part inventories for left-hand-drive vehicles. As most left-hand-drive cars are not from Japan but made in Europe, China, Korea and other countries, it will take time and additional investments to build up new inventories.

“We sell only Japanese spare parts. Now that demand trends are changing, we are worried about the future of our business,” said Ko Htin Kyaw Oo, a spare parts trader from Mingaladon township.

U Aung Than Win, chair of Myanmar Car Trading Association, said the government should consider the consequences of its new vehicle import policy.

“For the past 60 years, car owners in Myanmar have been buying right-hand-drive cars. So the supply chain including the spare parts market will need time to adjust to the new policy,” he said.

Source : Myanmar Times

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