Western Automakers Vying for Share of Emerging Iraqi Market

As violence wanes and Iraqi’s incomes begin to rise, Western automakers including Ford Motor Company, General Motors Company, Chrysler Group and Volkswagen AG have begun responding to the growing demand for automobiles. Among the most popular Western models with Iraqi’s is the Dodge Charger, which they have given the nickname “Obama.”

Iraq’s oil-driven economy is expected to grow by more than 10 percent this year. According to Daubai-based Standard Chartered Bank economist Philippe Dauba-Pantanacce, the country’s economic growth rate will outpace all of its neighbors in the Middle East and North Africa and fuel consumer spending on big-ticket items and durable goods, including automobiles.

Iraqi’s like Sarmad Khalid have seen their incomes grow exponentially over the last decade. The country’s minimum wage now stands at about $400 per month compared to the equivalent of $2.60 per month just a decade ago.

Khalid, a 54-year-old former government worker, recently purchased an Iraqi-made Samand sedan which has allowed him to begin working as a taxi driver.  Khalid said, “I can now make a living and feed my family of three kids and a wife, after losing my job following the invasion.”

Volkswagen AG’s managing director for the Middle East Stefan Mecha said the Iraqi resurgence presents a “huge potential” and expects industry-wide sales in the country to increase to 120,000 vehicles this year. Demand, he says, could be even higher.

Ford’s managing director for the Middle East Larry Prein echoes Mecha’s optimism. He predicts that Ford will double its sales in Iraq this year. Last year the company’s Iraq sales tripled to 2,000 units.

Ford’s Iraq dealer, Niva Car Ltd. plans to invest $200 million on new outlets over the next three years. Niva Car Ltd. chief Mohammad Fuad Alanaswah admits, “It’s a tough market to be in,” but adds, “It is growing. We believe in our market. That’s why we are expanding.”

According to IHS Automotive, Saudi Arabia has a slightly smaller population than Iraq’s 30 million and 6.5 million registered vehicles.

General Motors Company has already established a foothold in Iraq. In 2003, the automaker entered the market, selling vehicles to U.S. forces and NGOs, and to the Iraqi government.

GM’s chief of Middle East operations John Stadwick says the company sold 32,000 vehicles in the Iraq market in 2011, making it the second-largest market in the region behind Saudi Arabia.

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