Local Toyota sales down almost 50pc as crisis hits Cambodia

Written by Nguon Sovan and Hor Hab

Thursday, 20 November 2008 Phnom Penh Post

More sales drops expected in coming year as a worsening economy keeps buyers from opening up their wallets for new cars 10% cut in outlet’s expenses Cambodia's sole Toyota distributor says it will not layoff staff but will cut expenses by a tenth after selling only 1,200 vehicles so far this – well short of the 2,000 previously anticipated. SALES of Toyota vehicles, among the most popular in Cambodia, have plummeted almost 50 percent since May, according to Kong Nuon, president of Cambodia's only Toyota distributor TTHK Co Ltd. "The real estate recession is the main cause for the sales decline because people are not earning extra cash from land sales," he said Monday. "Demand for cars has declined a lot." He said Toyota had hoped to sell about 2,000 cars this year, but has achieved sales of only 1,200 so far. He said he expected next year's sales to decline by another 20 to 30 percent. Despite the slump, the company expects to be able to withstand the tough economic climate, he said. "We ‘don't plan to lay off our staff, but we will cut expenses by about 10 percent," Kong Nuon said. Ngorn Saing, deputy general manager of RM Asia Co Ltd, the second largest automobile importer, said Tuesday that sales of Ford brand cars have declined about 10 percent within the last few months. "I think it is hard to say how bad the effect will be. Our sales normally fluctuate, so we will have to wait to see how bad we will be hit," Ngorn Saing said. "We have seen a 10 percent decline in our car sales over these last few months resulting from the recession in the land markets in Cambodia because some of our customers are from the provinces," said Ngorn Saing. Ngorn Saing said the company expected to sell 500 Ford cars in 2008, but has cut its forecast to 450. Despite the slower economy, he said his company hopes to sell 600 Ford vehicles next year. Ngorn Saing estimates that annual automobile demand in Cambodia stands at about 2,500 for new cars and 40,000 for secondhand cars. Chan Sophal, president of the Cambodia Economic Association, said Tuesday the decline in automobile sales is mainly due to the slow real estate market. "In the past, the auto demand has been high because people had money from selling their land and from speculation, but now the land market is in crisis. "People who bought can't sell it and land speculators have lost everything, so some of the first things they cut back on are new vehicle purchases," he added. He said that it is hard to predict when the sales will recover. "It could be six months, one year or longer - depending on whether the global financial crisis ends." Global declines The problems in Cambodia's auto market are being seen throughout the world, with car companies scrambling to adjust to the recession. In the US, Toyota recently announced its first sales drop in 13 years and a Christmas-New Year closure at its US and Canadian plants will be extended by two days, spokesman Mike Goss said in an interview Tuesday with Bloomberg. Toyota cut its annual profit forecasts by more than 50 percent. Ford reported a 30 percent drop in car and light-truck sales from a year earlier, and Toyota's declined 23 percent. ADDITIONAL REPORTING BY BLOOMBERG