German car brand Audi has announced it will enter Cambodia’s luxury market next year with a new showroom on Monivong Boulevard, the latest in a host of major car companies to break into the country’s small but growing industry for new automobiles.
The carmaker follows in the footsteps of fellow German company BMW, which opened a showroom in August, and Porsche, which plans to open a showroom in the coming months.
“The premium automotive market in Cambodia is a niche market sizeable enough to allow an investment in the proper facilities with a reasonable profit return,” Laurent Genet, chairman of Automotive Asia, Audi’s official distributor in Southeast Asia, said in an email.
“The market will grow for new cars as Cambodian elites realize that the Audi official Dealer will deliver cars with warranty, dependable service and spare parts, staff fully trained with access to the latest technologies…. The market will grow as Cambodia economic fundamentals continue to develop favorably,” he added.
Audi cars start at about $33,800, according to its website, and go up to $174,000 for the R8 Spyder sports vehicle.
Pily Wong, CEO of the Mercedes Benz dealership Hung Hiep (Cambodia) Co. Ltd., which sells between 20 and 30 cars per year in the price range of $100,000 to $150,000, said that another luxury car brand would be beneficial to the new car industry.
“I think the market will get stronger with the official distributer because so far it’s divided into the gray market and official distributers. Having more official players will increase the awareness of official distributers,” he said. “Their move is a good sign because it shows confidence in the industry and is a good indication that the market is growing.”
Official dealerships in Cambodia complain that sales are hurt by the gray market, which consists of cars being imported through channels other than official distributors.
Peter Brongers, CEO of BMW Cambodia, which opened its showroom this month, says the industry is growing at about 20 percent per year and total luxury car sales in Cambodia are about 1,000 per year.
“In the past, Cambodians didn’t think to buy new cars. Now they are because of the benefits of having warranty, safety, service and the right parts,” he said.
Despite hopes for a growing industry among those in the market, Neou Seiha, an independent economist and former senior researcher at the Economic Institute of Cambodia, said Cambodia’s new car market is still too small to sustain large numbers of purchases of brand new luxury automobiles.
“I think the luxury market is still small and most Cambodian people still prefer second hand cars. It is not substantial. The luxury car market is not big enough because there is little domestic demand.”
Srey Chanty, acting president of the Cambodia Economic Association, also expressed concern about the industry and said that unless wealthy classes grow, the market will remain lackluster.
“The prospects of the car market are still good but at the rate that companies are moving in I think it will be saturated in the next five years,” he said.
© 2013, All rights reserved.