bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

paywallTypes

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

A VICIOUS price war has erupted in Hong Hong's car market following the introduction of a Government registration tax, according to Christer Agell, chairman of Ankor Group.

Ankor saw its profits savaged in the first half of this year as a result of fierce competition and the cost of launching a new franchise.

  Mr Agell said the war was initiated primarily by dealers in Japanese brands, which dominated the non-luxury family car market in Hong Kong.

'The old tax law was very loosely written and basically you could get round it,' he said.

 'Dealers in Japanese cars would set up firms in Japan to buy the cars from makers and sell them to the Hong Kong company.' The advent of the new tax on August 1 was presaged by a price war.

 'It hurt everybody,' said Mr Agell.

 Car dealers cut prices and offered deals which included free insurance and other perks.

  For Mr Agell, the battle could not have come at a worse time. In March last year, Ankor was granted exclusive distribution rights by General Motors Asia to sell Opel cars in Hong Kong.

  As Hans-Eric Almeback, managing director of Ankor, said: 'With Opel, we are competing with the Japanese head on.' Japanese cars, especially older stock, were forced out of the showroom doors, said Mr Agell.

 'The dealers' new prices would have to go up, so they cleared old stock. The best way to get the new prices in was on new models,' he said.

 Prices were to go up by between five per cent and 10 per cent, Mr Agell said.

 'In some cases it will be more. They are also squeezed by the dollar-yen,' he said.

 Meanwhile, Ankor had to open two show rooms and invest in setting up a service network.

The group's main line, Saab cars from Sweden, is in a tight niche, with the luxury car market is dominated by Mercedes and BMW.

 Mercedes was the first European car to be heavily sold in Southeast Asia and has become an important status symbol.

 Last year, Mercedes took 29.4 per cent of the European car market in Hong Kong, with BMW taking 21.4 per cent.

 Mercedes' position as top car still looks hard for even BMW to approach.

Saab was in third position with 13.5 per cent of the European-made segment of the market, or 3.32 per cent of the total market.

 'Mercedes sell themselves in Hong Kong,' said Mr Almeback. 'A Mercedes salesman is just an order taker.

'You actually have to sell Saabs. People buy them because they really want a Saab, but you have to sell them one by one.'  By the end of last year Opel had four per cent of the European market on sales of 392 cars.

  It had a one per cent share of all cars sold last year.

 Just under 40,000 cars were sold last year , but it looks as if that was the top of the market.

  In the first nine months of this year, Ankor's Opel business sold 220 cars, 0.88 per cent of all cars sold in the period.

  Toyota fell to 24.8 per cent of market share from 28.6 per cent for the whole of last year.

 Honda jumped from 15.97 per cent of market share last year to 24.32 per cent for the first eight months of this year.

  It sold 4,257 cars to August compared with 4,759 in the whole of last year.

  Sales of all makes for the first eight months were 24,915 compared with 39,535 last year. Normally, dealers sell more cars in the second half of the year because this is when the new models arrive.

  Sales always grow dramatically just after a new model is brought in.

 This is not happening now.

  'August was a pretty rotten month for car dealers,' said Mr Agell, although he said Saab sales in China made steady progress.

    Ankor has the only China Saab franchise, a rare situation for car dealers.

 Mr Agell is hoping Ankor's car business will be helped by tightened regulation on dealers of Japanese cars and that the truck business will benefit from the introduction of European emission standards in Hong Kong.

  Iveco trucks already meet the standard, while Japanese trucks often do not.

 Despite these positive factors, the Hong Kong car market looks capped at 40,000 sales a year and there is a potential downside in that the Government may act in a number of ways to prevent road pollution.



Hong Kong's car dealers fight competition, congestion and Government peril