The used car sector in Lebanon enters a new phase of contraction, amid the intertwining of economic and monetary pressures with rising import, fuel, and shipping costs, while demand continues to decline. While cars were previously considered a basic need for families, the deteriorating living conditions and ongoing war have pushed a wide segment of Lebanese people to rearrange their spending priorities, making cars, according to industry workers, closer to luxuries for an increasing number of families.

The repercussions of the decline in sales are not limited to car showrooms and importers, but extend to a wide network of sectors linked to this activity, from mechanics and metalworking to glass and upholstery, reaching workers and employees who depend directly or indirectly on the movement of the car market. With the number of imported cars declining from about 40,000 previously to between 15,000 and 20,000 today, the pressures on a sector that was part of the economic cycle deepen, while, according to the Syndicate of Used Car Importers, official remedies capable of mitigating losses are absent.

From a Basic Sector to a "Luxury"

The head of the Syndicate of Used Car Importers, Eli Qazzi, describes the reality of the sector as not "different from the reality of other economic sectors, except that the pressures it faces seem more severe, amid rising customs fees on one hand, and soaring fuel prices and shipping costs on the other." He points out to "Nidaa al-Watan" that "the war has been the most influential factor in market movement, as citizens prioritize securing their families' basic needs over buying a car."

Qazzi notes that "the car sector has become treated as if it were a luxury, even though it is fundamentally one of the basic sectors," considering that "the decline in purchasing power has directly reflected on the volume of demand, while the costs of operating showrooms, their rents, and other operational expenses increasingly pressure traders."

Decline in Imports…

In light of the market contraction, importers have been forced, according to Qazzi, to "reduce shipping operations, and at times to halt them, amid rising fuel prices and transportation and shipping costs, which are interconnected burdens pushing the sector further into decline."

He points out that "the car sector used to import about 40,000 cars into Lebanon, while the number today ranges between 15,000 and 20,000," considering that this "significant decline does not receive adequate attention." He says that "no one is asking about this point," at a time when he does not see the state prioritizing traders and economic sectors, as its focus, according to his expression, is on politics and its centers.

Qazzi confirms that the result is that the car sector has reached a "very miserable state," as traders bear a large part of their burdens from their capital, sometimes reaching the inability to pay rents on time, while he does not see a clear solution to this crisis in the foreseeable future.

Losses Beyond Showrooms

The impact of the car crisis does not stop at importers and traders, as Qazzi points out that "a wide range of sectors are directly linked to the movement of the car market." He explains that "the decline in activity has also reflected on employment, as a trader who used to employ five employees may now have to settle for two or even one employee."

Sectors such as metalworking, mechanics, car upholstery, glass, and other industrial and service activities linked to this sector have also been affected. Qazzi emphasizes that "these professions used to contribute to stimulating the economic cycle, and thus the decline in cars does not only affect traders, but also impacts "thousands of families" whose incomes are directly or indirectly linked to this activity.

He sees that "the failure to view the car sector from a comprehensive economic perspective, and the lack of steps to alleviate customs burdens, have exacerbated these repercussions, at a time when the sector could have been supported in a way that helps keep the economic movement going."

The Solution Begins with Stopping the War

Regarding possible solutions, Qazzi places stopping the war at the top of the priorities, considering that stability is the essential gateway to any economic recovery." He also calls for "a state capable of supporting economic sectors, opening the door to investments and encouraging them, alongside restructuring the banking sector and opening channels for loans and installments for citizens."

Qazzi does not limit the "installment demand to car purchases, but sees it as necessary for various goods and services, as the absence of financing restricts purchasing power and paralyzes market movement." He also calls for restructuring the public sector, considering that "the decline in the purchasing power of state employees has reflected on the entire market, as employees have become unable, as he describes, to buy a car for their son from their salary."

Customs and Registration… Additional Burdens

Qazzi places reducing consumption tax and customs duties on cars at the core of demands, considering that "the fees imposed on cars have, in some cases, exceeded their value, raising their price and limiting the ability to purchase them."

He also points to the "problem of car registration," explaining that "the cost of registration has become between 2000 and 3000 dollars, a fee collected each time a car is sold to a new person, adding another burden on a market already suffering from declining purchasing power."

"Eating Hand to Mouth Since 2019"

As for sales, he confirms that "the sector has been on a continuous downward trajectory since 2019," saying: "Since 2019, we have been eating hand to mouth." He clarifies that "last summer saw a relative improvement, with sales levels ranging between zero and 60 percent, before returning to zero with the second war, then later improving to about 20 percent."

According to Qazzi, "sales today have declined by about 70 percent, while the current sales rate does not exceed about 20 to 30 percent, an indicator reflecting the depth of the contraction that has hit the market."

The crisis of used cars does not seem separate from the overall economic scene, but directly reflects the decline in purchasing power, the contraction of financing, the rise in import and operational costs, in addition to the repercussions of the war. While the sector demands a reduction in fees, the reactivation of loans and installments, and the improvement of the investment environment, the recovery of the market remains linked to the ability of the Lebanese economy to regain at least a minimum of stability and to reactivate demand, investment, and financing.