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Grex Cars Item 134: Iraq Attacked by Used Car Dealers
Entered by keesan on Mon Jun 21 16:50:16 UTC 2004:
   The Bulletin of the
   Institute for Transportation & Development Policy ([13]ITDP)
     _________________________________________________________________


   Iraqi Flooded with Cars in Occupation's Wake [24]top
   In addition to the country's more pressing concerns, the
   administrative chaos following U.S. occupation of Iraq has led to a
   rapid influx of used cars.

   Under Saddam Hussein, automobiles carried an import tariff of close to
   100%. Combined with little free capital, this led to very low levels
   of motorization, despite the low price of gasoline. In the 12 months
   since the U.S. invasion of Iraq, tariffs have not been enforced. This
   has lead to well over half a billion dollars worth of car purchases
   coming in from one port alone, according to people familiar with these
   shipments interviewed by ITDP.
   A Dutch car, with no plates,
   on the way to the Iraq border

   Initially, adjacent countries like Jordan and Saudi Arabia emptied out
   their used cars into Iraq. Remaining demand for higher quality
   vehicles then created a supply chain that brings used cars from
   Europe, Japan and elsewhere into Iraq through ports in Jordan and
   Saudi Arabia. One port became so full of cars that all other shipments
   were disrupted. To clear the way, the shippers bought empty land
   nearby to use as storage.

   The remains of a used car shipment into Aqaba (Jordan) awaiting
   transfer into Iraq

   The mid-nineties models sell for about $3000 in Iraq. Receiving ports
   earn about $20-30 a car, and the shipper gets $100 a car. The vehicles
   come in on container ships with 2,000-3,000 cars, which are emptied
   within 48 hours, creating a convoy of cars and car trailers from the
   port to Iraq.

   Since last April, over 250,000 cars are estimated as having gone into
   Iraq from Aqaba. Minivans are particularly popular.

   The resulting motorization has already led to congestion in Baghdad's
   streets, but the consequences of this rapid influx of cars are
   potentially far-reaching. As Iraq rebuilds, traffic jams will likely
   lead to pressure to spend scarce public resources on road building.
   Because these are older vehicles, and no emissions controls are in
   place, Iraq's car fleet will be far more polluting than its western
   counterparts.

   Motor vehicles are a poor investment, especially in a weak economy.
   Economic growth rates are lower in countries with higher levels of
   elite consumption (which includes non-essential car ownership),
   because it leaves less for investment and savings. Meanwhile, though
   profits are made all along the supply chain stretching from European
   used car dealers to the Iraqi end user, the Iraqi government is too
   much in disarray to capture any taxes and import duties. Iraq will be
   paying for this year of chaos for decades to come.

   For further details on the rapid motorization of Iraq and its
   consequences,
   contact ITDP at [25]iraqcars@itdp.org 
   3. http://www.itdp.org/index.html
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