The Cambodian car market has been increasing in recent years. According to a Focus2move market report, light vehicle sales in 2018 were 10,086, then hit a record high of 26,355 in 2019. The pandemic reduced sales in 2020 to 18,718, but they increased again in 2021 to 23,143.
Car sales, and therefore also import figures, are on the rise. However, the vast majority of cars imported are used cars — estimated by the Cambodia Automotive Industry Federation (CAIF) to be around 70% of the total market in 2021. This makes the new vehicle market quite small.
Together with Laos, Cambodia is the only country in ASEAN without a clear policy against the import of pre-owned, old, high-polluting, and low-safety vehicles. The tax reform applied in 2017, which increased the duties for new vehicle imports, has penalised local distributors. This has increased prices, freezing a potentially high demand and creating a wide space for trading from Japan or other ASEAN countries.
Allowing the import of used cars is an important factor in ensuring that the lower class can afford cars for businesses, consumption, and other general means of travel. However, countries around the world have been imposing requirements to curb the import of used cars. For example, Vietnam bans the import of cars older than five years from the manufacturing date. These requirements are being imposed to promote the importation of cleaner and more fuel-efficient vehicles, while discouraging the transfer of obsolete and polluting vehicle technology from the manufacturing country.
Impact on business
The use of used cars in Cambodia poses several road safety and environmental hazards. The country has a high rate of road accidents (1,548 road accidents nationwide, with 2,072 injuries and 756 fatalities, reported for the first half of 2023) and many of these accidents can be attributed to the poor condition of the vehicles on the road. Used cars are imported from other countries, and they may not meet the safety standards set by the Royal Government of Cambodia. This can result in faulty brakes, tires, and other mechanical issues that increase the risk of accidents.
In addition to road safety hazards, second-hand cars in Cambodia can also have negative environmental impacts. Many of these vehicles are older models that do not meet modern emissions standards. This can lead to increased air pollution in cities and contribute to climate change. Furthermore, older cars often have lower fuel efficiency, which means they consume more gasoline and produce more greenhouse gas emissions. Cities around the world, such as Beijing, have introduced strict emissions standards and other measures for vehicles, which has led to a significant reduction in local air pollution.
- Set restrictive requirements and other measures to encourage the use of new vehicles.
We respectfully recommend that the Royal Government of Cambodia consider setting requirements to ban the import of cars over three years old from the manufacturing date and implement other measures to encourage the use of new vehicles, such as tax credits for buyers of new vehicles and the institution of vehicle scrappage programmes.
Overall, restricting second-hand car imports would have beneficial impacts for the environment and road safety in Cambodia. It would reduce the number of older, polluting vehicles on the road, which would lead to cleaner air and a healthier environment. It would also ensure that all vehicles on the road meet modern safety standards, which would reduce the risk of accidents. Finally, the measure would promote the importation of newer, more fuel-efficient vehicles, which would reduce greenhouse gas emissions and help to mitigate climate change.
Royal government of Cambodia
Initiative from Eurocham: The issue has been raised by Automotive Committee within The White Book edition 2024 in the Recommendation No. 14. The committee advocate for a definition based on the production date or the current model year.
The question of the definition of the “New vehicles” was also raised during the courtesy meeting between EuroCham Cambodia and Her Excellency Mrs. Cham Nimul on the Friday 3rd of November.
The Ministry of Commerce organized a meeting to discuss on the definition of ” New Cars” with relevant stakeholders on the Friday 17th of November. The new cars would be defined by the kilometerstand.
Mr. Chhoeurn Makara