bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 16.07.2018 | Name days: Hermīne, Estere

Opinion: what is the fate of used cars in Latvia?

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvia and the entire Baltic region has been a very popular market for used cars dealers from Western Europe since the restoration of independence. The used cars market was rather lucrative in the ‘90s. Even though the inflow of used cars has reduced over the years, imports of used cars in Latvia remain higher than imports of new cars.

«We began actively dealing in used cars set for import to Africa in 2004, when many dealers coursed on the Switzerland-Antwerp –Switzerland route, collecting used cars for exports in Switzerland and new models in Antwerp,» – says head of Kurbads logistical department Kristine Rimene.

In 2009, re-exports of new cars became popular. In 2012, when purchasing power recovered on the local market, this trend dried out. However, the volume of exported cars remained. According to information from Kurbads, exports of used cars from the largest European ports lead to Africa. The lion’s share of those cars is carried to Nigeria.

The used cars export scheme

«Once a week, the big Ro-Ro ferry with 1,000 used cars gathered from all over Europe departs from Antwerp, Rotterdam or Hamburg to the western coast of Africa. The cars carried by this ferry are provided by many different suppliers,» – says one anonymous business individual.

«It is important to make sure the ferry is 100% full. Otherwise the shipping company suffers losses. Because of that, companies often buy additional used cars to fill up storage. Later these cars are realized in Africa at the same prices, which create dumping on the market. It is a big obstacle in this kind of business.»

The Nigerian government has instituted a National Automobile Industry Development Plan, which provides for stimulating local car manufacture industry. The current situation with large imports of cars is considered problematic. This is why the Nigerian government has decided to increase import tax for used cars by 70%.

«It is because of customs that car exports end up in Nigeria’s neighbouring states – Togo, Ghana and Benin. From there, locals deliver these cars to Nigeria.»

«Other popular destinations for used European cars include Libya and Senegal,» – adds Kristine Rimene.

The fate of Latvian cars

«Africans know used cars well. This is why they would rather not buy cars from Latvia or other post-Soviet countries, because technical state of cars from this region is significantly worse than that of cars from Western Europe. This is why it is a lot harder for us to sell cars, so we are forced to draw in potential buyers using lower prices.»

Exports of cars from post-Soviet countries has its specific nuances: «Usually vehicles from Latvian and Estonia are in a poor technical state and/or are filled with all kinds of items. This causes additional problems for us in ports due to additional weight,» – Rimene describes the situation.

«We receive orders from European network members to bring specific cars to one of some of the largest ports in Western Europe. Then these cars are shipped to different destinations.»

Nigeria’s growing car market

Nigeria had a fairly well-developed car manufacture industry in 1970-1985. This was largely due to the country’s declared independence and oil price surge at the time. Unfortunately, the industry gradually declined into nothing.

Used cars that are shipped to Nigeria’s largest ports currently dominate the market. According to information compiled by the Nigerian National Automotive Council, approximately 150,000 used cars are imported, mainly from Europe, every year. With customs and spare parts, this market reaches USD 3.5 billion in value. Only 50,000 new cars are shipped to Nigeria annually.

«If we do not adopt a new policy, pressure on state economy will become unbearable, because even now we are too reliant on imports – it is not the way we want to use foreign currency,» – said Nigerian Industry, Trade and Investment Minister Olusegun Aganga.

Larger economy in Western Africa

Nigeria is the largest economy in Africa with its GDP worth USD 594 billion. In 2012, it took the lead from the previous economic leader – South African Republic.

More than 170 million people live in West Africa, including 15,700 millionaires.

Oil and gas exports (98% of all exports) form the foundation of the economy. What is interesting is the fact that residents of the largest exporter of oil in Africa are forced to wait in long queues at petrol stations…because of fuel deficit.

Notable economic growth is currently registered only in the south east of the country, especially in Lagos, which is the region’s business centre. The north is more under control of by Boko Haram terrorist organization than it is under control by the federal government.

Logistical comparison

According to results of the World Bank’s Logistics Performance Index study, Nigeria was on the 75th place in the world and Latvia was on the 36th place in 2014. This index is meant to help countries identify challenges and options in logistics in order to improve their results.

Nigeria’s largest problems, as mentioned in the study, lie in customs and infrastructure. The same applies to Latvia. However, low logistical performance is only one of multiple reasons why the oil country’s economy does not develop quicker.

Development restrictions

Boko Haram terrorist organization, which stands against Western values, in based in the north of Nigeria. They frequently partake in armed attacks and kidnappings in the region keeping the local populace in a constant state of fear. The Nigerian government seems unable to find resources to combat these terrorists.

Corruption remains one of the most wide-spread problems in Africa. Nigeria is no exception. Corruption is found even on highest level of the government. It is also one of the reasons why the oil superpower has to import fuel in order to satisfy demand. State orders are entrusted to people close to officials in power. Police, who are terribly underpaid, are unwilling to resolve these matters. Instead, they are more interested in making more money.

These are the obstacles that prevent the country from developing at a faster pace.

Ref: 103.109.109.3738


Leave a reply

Week in Lithuania. Lithuania's Tripartite Council fails to reach agreement

Lithuania's Tripartite Council on Tuesday, July 10, failed to reach agreement on raising the minimum wage. Employers are inclined to back the government's proposal to raise the minimum pay to 420 euros. Meanwhile, trade unions want it increased to 450 euros.

BNN summary of the week: NATO to increase and ABLV Bank loses its license

BNN offers a summary of this week’s topical news in a variety of categories: Future; Deal; Fight; Decline; Decision; Opinion.

SEB Bank to unite life insurance companies working in Baltic States

SEB Bank will unite life insurance companies working in Baltic States, BNN was told by SEB Bank’s representative Agnese Strazda.

Saeima deputy Askolds Kļaviņš becomes suspect in criminal case

Saeima deputy from the Union of Greens and Farmers Askolds Kļaviņš has been made a suspect in the criminal case regarding abuse of official power.

Minister: E-health system has stabilized, but improvements are still needed

Functionality of the E-health portal has stabilized. Disconnection errors have ceased. Nevertheless, we have to continue improving the system further, said Latvian Healthcare Minister Anda Čakša said in an interview to Rīta panorama programme of LTV.

Six to eight Finance and Capital Market Commission officials may work at ABLV Bank

Six to eight FCMC trusties may work at the liquidated ABLV Bank, says Finance and Capital Market Commission chairman Pēters Putniņš.

Latvia’s Cabinet of Ministers receives expanded draft on deposit system

Environment Protection and Regional Development Ministry has submitted to the Cabinet of Ministers an expanded legislative draft regarding amendments to the Packaging Law and Environment Protection Law for their review in the State Chancellery, as confirmed by the ministry’s representatives.

Latvia will not escape talks on increasing defence spending

It is necessary to develop Latvia’s defensive capabilities. Because of that, Latvia cannot escape talks on increasing defence spending to more than 2% of GDP, said Defence Minister Raimonds Bergmanis, who is participating in the NATO summit in Brussels.

Russia extends food product embargo until end of next year

On Thursday, 12 July, Russian President Vladimir Putin decided to extend the embargo on food product imports from countries of the European Union and other countries until the end of next year.

Heat in Latvia to remain for longer; thunderstorms and heavy rain expected, as well

Next week in Latvia will be appropriately hot for summer, as air temperature is expected to reach +30° C at times. Nevertheless, most of Latvia will experience rain and thunderstorms, as reported by State Environment, Geology and Meteorology Centre.

US President announces «tremendous amount of progress» in defence spending matter

On Thursday, 12 July, US President Donald Trump announced having achieved a great deal of progress in the NATO member states’ defence spending matter during the summit.

Providus: it is impossible for Latvian parties to attract large funding honestly

«If we look at political parties’ ability to attract funding from large companies, for example, conclusions are rather sad – there is no way for parties in Latvia to attract funding in an honest way,» Providus think tank researcher Iveta Kažoka said in an interview to BNN.

Study: Latvian residents rely on knowledge and hard work rather than luck

30% of Latvia’s residents believe company success formula relies on decade-long work and significant profits, as well as employee satisfaction, according to the latest Latvian Barometer study of Baltic International Bank.

Competition Council warned 34 persons for possible cartel agreements this year

In the first half-year of 2018 the Competition Council warned 34 persons about possible cartel agreements in six possible violation episodes. Affected companies work in three sectors – burial, security and driving school services.

European Commission predicts 9% lower wheat harvest for Latvia this year

According to estimates from the European Commission, Latvia’s wheat harvest is likely to be 9% below that of last year, according to information from Agriculture Ministry’s Market and Direct Support Department.

ECB revokes Latvian ABLV Bank’s credit institution license

European Central Bank has decided to revoke Latvian ABLV Bank’s license, as confirmed by Finance and Capital Market Commission.

US President asks allies to increase defence expenditures to 4% of GDP

During NATO summit in Brussels US President Donald Trump told leaders of participating member states that they have to increase their expenditures on defence to 4% of GDP.

NATO agrees to station multinational division North headquarters in Latvia

In accordance with an agreement reached by Denmark, Latvia and Estonia, it has been decided to station the headquarters of NATO’s multinational division North at Ādaži base, as confirmed by Latvia’s Foreign Affairs Minister Edgars Rinkēvičs.

President vetoes two bills over consecutive days, still enjoys high support

Lithuanian President Dalia Grybauskaitė has used her presidential powers in full swing this week, vetoing two bills over two consecutive days. First the head-of-state vetoed amendments paving the way for a far-reaching overhauling of the country‘s healthcare facilities. And the next day, on Wednesday, July 11, she scrapped amendments to the Referendum Law, which, if implemented, would have lowered the threshold for a dual citizenship referendum. President cautioned that the bill was potentially not in compliance with the Constitution.

Competition Council permits merging of two energy wholesale traders and producers

On 4 July, Latvia’s Competition Council decided to permit the merging deal as a result of which Enefit Green AS will gain decisive influence over Nelka Energia AS by purchasing 100% of the company’s shares. Permission was given because the merge is not expected to have a major impact on competition on the market, the council explains.

Riga mayor’s Ligo congratulation cost taxpayers more than EUR 15,000

The broadcast of Riga Mayor Nils Ušakovs’ Ligo congratulation by media cost EUR 15,211, as confirmed by Riga City Council deputy Vilnis Ķirsis.

Police requested prosecution for 50 insolvency administrators in past several years

Since 2016, Latvia’s State Police have received several hundred reports regarding possible illegalities during insolvency processes. Over the course of the last two years, police have asked the prosecutor’s office to commence criminal prosecution of 50 insolvency administrators.

External trade turnover in Latvia grew 9.6% in May

In May 2018 foreign trade turnover of Latvia amounted to EUR 2.32 billion, at current prices constituting 9.6 % more than in May 2017, of which exports value of goods rose by 8.5 % and imports value of goods by 10.4 %.

Will funding volumes remain the same for culture after Latvia’s centenary?

Latvia should continue investments in Song and Dance Celebration infrastructure, said Culture Minister Dace Melbārde in an interview to LNT.

Prosecutor’s office ends case on OCMA official’s involvement in fictive marriage organization

The Prosecutor General’s Office has ended the case launched against and official of the Office of Citizenship and Migration Affairs, who was allegedly involved in organization of fictive marriages, as reported by LNT News on Tuesday, 10 July.