A combination of demographic and economic elements mean that domestic demand for new vehicles in Cambodia’s nascent auto market is set to rise, according to H.E. Nut Unvoanra, deputy secretary of the Cambodian Investment Board (CIB).
He was speaking at an inaugural breakfast briefing on the country’s automotive sector, hosted by the European Chamber of Commerce (EuroCham) on Thursday. Attendees heard that the Council for the Development of Cambodia (CDC), which the CIB is part of, predicts that new registrations for cars will hit 50,000 next year, versus just 7,000 in 2016, and are set to rise further.
High demand for automotives in Cambodia
“I see a high demand for automotives due to a number of different factors, such as: improving infrastructure, the rise of the middle income family in Cambodia, and a young population who aspire for a better life, a better job and of course a better car,” H.E. Nut Unvoanra said.
According to the deputy secretary, the rise of electric vehicles (EVs) also offered investors the opportunity to tap the potential demand for EVs from Cambodian consumers by supporting the roll-out of related technology across the Kingdom.
“From the CDC perspective, the rise of EVs is another opportunity for investors, the private sector, and the automotive industry as well. Not just to import the cars themselves, but also to create the infrastructure that enables EVs to run, such as building charging stations or importing the necessary spare parts,” he said.
Demand for cars inline with economy
His view was backed by fellow panellist Roberto Da Silva, CEO of auto firm HGB Group, which imports 20 international brands in Cambodia, including marquee names such as Rolls Royce and Lamborghini as well as more esoteric vehicles such as jet skis.
Mr. Da Silva told the audience that use of passenger motor vehicles in Cambodia was still at a very low level. He said that European countries with a similar population size to typically saw new vehicle registrations figures of around 500,000 a year – ten times the amount slated for Cambodia in 2023.
The World Bank recently said that Cambodia’s economy was rebounding and would see close to 5% growth in 2023 – versus the IMF’s expectation of a 0.6% contraction in the UK economy over the same period – and Mr Da Silva said this macro picture meant it is now an “interesting” time to invest in the Cambodian auto sector.
“We can really expect that as the economy, and GDP per capita of Cambodia grows, the demand for cars will be very closely tied to this and increase also. So now is a very interesting time to be investing in Cambodia. There are challenges, but what better time to come to a market than when it’s young, and growing fast and which has growth potential for a long time,” he said.
“Investors who come in now with the right approach and strategy, and which can contribute to the economy and society, can enjoy very strong growth in the business,” Mr Da Silva added.
Lack of public transport infrastructure
Mr Kong Sophal, deputy director of land transport at the Ministry of Public Works and Transport, said that increased private vehicle use was likely because of the poor state of Cambodia’s public transport infrastructure and the long time frame needed to address this.
“Cambodia doesn’t have good public transport and to achieve a system which is reliable and affordable will take at least 10 years, and by that time it is predicted that demand for transport will have risen further,” said Mr Kong.
He also pointed to the cost involved in developing such a system and said that this was another area that EVs could have a role to play in Cambodian by providing an alternative to mass transport. “Promoting the use of EVs could be a second option”, Mr Kong said.