Myanmar clunkers hit the scrap heap, as automakers set sights on new car market

The Associated Press

In this Aug. 22, 2012 photo, passengers get into a slowly moving Chevrolet bus in Yangon, Myanmar. These old Chevys, built on the Canadian made military personnel carriers that were left behind after Work war 11, were sent to the scrap heap at the end of 2012. Because of the abysmal state of public transport in Yangon, a city of 5 million, those who can afford to drive, do. Those who can’t cram into ancient buses perched precariously on huge tires or hitch rides on pickups outfitted with benches and makeshift roofs. (AP Photo/Khin Maung Win)

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By ELAINE KURTENBACH, AP Business Writer

YANGON, Myanmar (AP) — Mike Shwe Hlaing has a lot full of used SUVs and a potentially huge market to sell them to if Myanmar manages to spread some of the affluence blooming in its biggest city to a poor and still mostly road-less countryside.

One of the quaintest of many anachronisms in Yangon, a city of moldering colonial villas and gleaming golden pagodas, used to be the decades old Toyotas, Chevys and other clunkers wheezing down its mostly empty roads, a visible sign of sanctions and economic isolation. Now, the streets have filled with a flood of newer used cars, mostly from Japan.

As Myanmar's reform-minded leadership opens the economy after the former military rulers allowed elections in 2010, automakers are seeking pole positions in what might become one of the world's fastest growing markets for new and used cars.

Myanmar has only 2.3 million registered vehicles, nearly 2 million of which are motorcycles that are popular in the countryside but banned in Yangon. Most of the 300,000 registered cars are in Yangon and a few other cities.

Hlaing works at Big Boss Brothers Service Co., one of scores of companies that branched into auto sales after the government revised its regulations in 2011, allowing Myanmar citizens to sell 40 year-old junkers and get import licenses for newer, mostly used cars.

Yangon's streets are lined with used car lots. But Toyota Motor Corp., General Motors Co., Chinese and Korean automakers are among many that have opened showrooms and are setting up distributorships. They hope to cater to growing numbers of wealthy business people, international agencies and diplomats with the means to pay import and sales taxes that nearly double the sticker prices for imported vehicles.

Cars are still out of reach for most people in Myanmar, where annual incomes average $200. Even a modest used compact from Japan such as a Toyota Corolla costs over $10,000 once shipping, taxes and other costs are included.

"I'd like to have a car someday," said Shwei Hlaing, who at 22 is starting a career as a car salesman. "But I can't afford one now."

A short walk up bustling Kabar Aye Pagoda Road, Toyota's new showroom has just two vehicles on display: a shiny silver Prado Land Cruiser SUV and a sparkling white HiLux pickup. The dealership plans to eventually also offer Camrys and Corollas, said marketing manager Soe Mar Shwe.

A brand new Prado Land Cruiser costs $150,000, including the import license fee and taxes, said Soe. A HiLux pickup sells for $78,500. At Big Boss Brothers, a 1997 Prado sells for a still-hefty $35,000.

Across the parking lot, the Toyota service department is buzzing as staff rush to answer phone calls and deal with waiting customers. Toyota set up its service department in Myanmar in 1996 and only opened the Yangon dealership last month.

Though it's just emerging from a half century of economic stagnation, Myanmar is drawing intense interest from automakers: further down the street is an outlet for BAIC, or Beijing Automotive Industrial Co. Further out, a Mazda distributorship. Chevrolet also recently announced an exclusive local distributor.

Online car sales may also be booming. There's no official data, but over a dozen such websites are operating.

There's huge room for growth in a country of over 60 million with only 38 vehicles per 1,000 people. That's far less than the U.S., where the ratio is 800 per 1,000 people, or even China, where it's 60 per 1,000.

Soe, who has been with Toyota for 17 years, said she's ready to trade up from her Nissan sedan. Yangon's traffic is a hassle, she admits, but she still likes driving.

"We cannot afford to have a driver, so we have to drive anyway," she said.

Because of the abysmal state of public transport in Yangon, a city of 5 million, those who can afford to drive, do. Those who can't cram into ancient buses perched precariously on huge tires or hitch rides on pickups outfitted with benches and makeshift roofs.