17.1.2008 Ekonom
The Russian market with used cars is so far paralyzed by the transfer fee. However this is programmed to end during the year.
AAA Auto Group N. V. (the parent company of the AAA Auto group, which trades with the used cars) obtained EUR 32 million from the last year´s issue of shares. These funds will be used to expand to new countries. In the horizon the company foresees expansion in countries of the Balkan Peninsula, however it values greater potential in the Russia Federation.
The managing director Anthony James Denny said, he counts on start the sale of used cars in Russia this summer. Although in the Czech Republic the company also trades imported cars, in Russia it will not be allowed to do so . In Russian, trading imported used vehicles is not legal. Individuals may import used cars for their own use and need, but a business may not.
»It seems clear our only chance is therefore trade local cars previously owner by leasing companies, banks and individuals,« Denny said. In Russia, a "regular" used car market is not very common for the transfer of ownership is burdened with a 23% total tax. » We think this year this fee will be cancelled« Denny noted. The change will in his opinion be pushed through by the pressure of dealers of new cars.
More and more automobile producers come to Russia. All of them want to sell. But if the used cars market is paralyzed, this considerably restricts also the sale of new ones.
»Someone relatively rich with a three-year-old car,« Denny says. »could sell it, and buy a new model.
When he cannot sell an older car practically, he continues using it and forgets about a new one.« Faraway from the borders. However, if the transfer ownership fee is abolished, used cars from other countries could flood the Russian market in no time. Because of the law, which prohibits trading import of used cars, then will be easier to circumvent – no car will be officially transported cross the border by a company, but once Volodya the other time Sergey take it, and the trader remains in the background.
Denny admits that this risk exists, after all this law is bypassed all the time. This however occurs only in a negligible number of transactions. AAAs bets, that if new cars dealers will apply greater pressure, the ban on the trading import will not be circumvented, because they could lose the clients.
Russia will soon become the second largest automobile market in Europe, right after Germany, and dealers vote will therefore be strong enough.
» Also the offices will try to stop black market,« Denny says. This would mean a large burden on the environment. The first used cars center of AAA will be based in Moscow, that is a rich area and at the same time also far from the national borders. The director presumes that the Moscow used cars center will sell first 200 cars per month, later 300.
The used cars center will grow in North-West of Moscow, or in the way to Petrograd. There the company also wants to open a second used cars center the following year for it needs easy and quick logistics transport.
No Siberia. The operations in Russia will be controlled by Martin Emes. Welshman, has worked a number of years for AAA Auto in Prague and has been dealing used cars for a quarter of century. Other members of the top management of the Russian branch will be four Czechs first. The company wants to avoid troubles experienced with local management in Romania where AAA AUTO suspected one of the directors was conducting his own business to the company expenses. After developing the branches in Moscow and Petrograd, the company would consider Niznij Novgorod, however, it does not intend to cross Ural. »It is too far, the infrastructure in Siberia is not adequate and we do not expect a strong interest there anyway, « Denny said. In eastern regions of Russia, the demand for used cars is satisfied for about 70% by cars from Japan that have steering wheel on the right side.
The foreign expansion of AAA Auto is unique. Auto Esa, the second largest used cars dealer in the Czech Republic, does not operate abroad.
The same applies to new cars. AAA Auto was founded fifteen years ago. At present, the company has a network of 45 branches in five countries: Czech Republic, Slovakia, Romania, Hungary and Poland. The number of employees is about 3,750. The group does not deal only with used cars for when it bought HK Partners became the largest Oepl dealer of new cars in Czech Republic. It also considers the sale of new Škoda cars. »If a Chinese product comes in the perspective of two to four years, which will have the right combination of the price and the technical standard, then we think that for the Chinese partners, our established network of branches – around that time we will have around 90 branches in five to seven countries – will be very interesting,« Denny outlines a further perspective of activities.
This year should however bring achievements mainly in the sale of used cars. The tax changes should cause, according to the director, that a larger number of people, who hesitate whether to buy a new or a used car will finally end up in used cars centers.
