168 Hours: From January, Old Cars Will Become More Expensive Compared to New Ones

168 Hours newspaper reports: “Customs duties have been reduced from 17% to 15% and from 22% to 20% at the EAEU scale, but it is not accurate to say that customs duties will not increase. Starting from January, citizens will not pay value-added tax and customs clearance will be at a unified rate. The current 32% customs fee for cars up to three years old will increase to 48%, while older cars’ rates will be even higher, depending on the engine size,” said Hovhannes Azizyan, adviser to the Deputy Prime Minister of Armenia, in an interview with Public Television.

He noted that there will be a 15% duty for new cars up to 7 years old with engine volumes up to 1800 cm³, which will have a minimum tariff of €0.36 per cm³. For car engines between 1800 and 3000 cm³, the duty is 20% with a minimum of €0.44 per cm³; for engines over 3000 cm³, the rate remains at 20% with a minimum of €0.80 per cm³.

A different customs clearance scheme will apply for legal entities, including individual entrepreneurs.

“As I understand it, the prices are at the EAEU level, which is very bad for Armenia. Currently, Armenia benefits as customs clearance is cheaper compared to the EAEU, making cars more affordable. However, if everything equalizes, then buyers from EAEU countries, like Kazakhstan and Russia, will no longer come to Armenia to buy cars. Everyone will bring their own cars,” said Davit Gasparyan, who is engaged in car imports, in an interview with 168.am.

“Thus, old cars, unlike new ones, are becoming more expensive. Mainly older cars were brought in from Japan because new ones are very expensive, while both new and old cars come from the USA. However, there is a problem here. A person who wants a car costing between $4,000 and $6,000 can no longer order and import it from the USA or Japan, as the customs clearance for newly imported cars is becoming more expensive. So if a person previously had $6,000 and could buy, say, a 2010 model car, now just the customs clearance of that car will be so expensive that it won't be worth importing.”

“For those in the upper-middle class who were buying $18,000 cars, the price will rise to $20,000, while for the lower-middle class, cars are becoming much more expensive. Regarding the rates, as I understand, for cars up to 5 years old, the customs fee rises from 32% to 48%, which means that the customs clearance cost will increase by 10%, but for cars older than 5 years, it depends on the engine's working volume,” he added.

Davit Gasparyan remarked that the market is completely collapsing, and everything will have to start from scratch. “Time will tell if people from Kazakhstan will come to buy cars or not. It was a miracle that our people made some money over the last couple of years, but now that it is equalized, customs clearance will be done at a unified rate, I believe they will no longer come from EAEU countries. They were bringing so many cars because they were coming and going; if it were only for the Armenian market, there wouldn’t have been this many cars because the demand is not that high,” noted Davit Gasparyan.

According to him, old cars produced in Russia cannot compete with those brought in from Japan. “You cannot compare a 2004 Japanese car with a Russian-made 2004 car. The 2004 Russian car has left only its skin and bones, which cannot be said for the Japanese case,” he concluded.

For more details, refer to the newspaper's current issue.