Growing Iraqi Car Market has “Huge Potential”

Bloomberg reports that Iraq is attracting the attention of global automakers including General Motors, Ford and Volkswagen.

Western cars were shut out of the Iraqi market by sanctions during the Saddam Hussein era, and even today there are many old VW Passats that were shipped to Iraq from Brazil between 1983 and 1990 in exchange for oil.

Now rising incomes and safer streets are fueling demand for new cars such as Chrysler‘s Dodge Charger (pictured), nicknamed “Obama” after the U.S. president by Iraqis.

Another car popular among Iraqis is the Samand, a sedan manufactured by Iran Khodro Company.

With a population of more than 30 million people and a growing economy, Iraq’s auto market has “huge potential,” said Stefan Mecha, VW’s managing director for the Middle East, projecting industrywide sales to rise by a third this year to 120,000 vehicles. Demand could get much bigger.

In neighboring Saudi Arabia, which has a population slightly smaller than Iraq’s, there are about 6.5 million registered cars, according to IHS Automotive. That’s about five times the 1.35 million vehicles in Iraq, according to Hamid Algharbawi, owner of a high-end car dealership in Baghdad. Official data aren’t available.

Iraq holds “a lot of promise,” said Larry Prein, Ford’s managing director for the Middle East. Ford expects sales to double this year after tripling to 2,000 in 2011.

Niva Car Ltd., Ford’s dealer in Iraq, plans to invest $200 million over the next three years to open new outlets to tap the rising demand, said Mohammad Fuad Alanaswah, the dealer’s chief. “It’s a tough market to be in, but it is growing,” said Alanaswah. “We believe in our market. That’s why we are expanding.”

GM plans to invest in new showrooms and service centers in Iraq after initially entering the market in 2003 by selling to the government, U.S. forces and aid organizations, said John Stadwick, head of GM’s Middle East operations.

Last year, GM’s sales surged 68 percent to 32,000 cars, making Iraq its second- largest market in the region after Saudi Arabia.

(Sources: Bloomberg, Digital Trends)

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