Due to the recent record high in international shipping costs, a large number of Algeria agents and importers have been forced to freeze or suspend plans to ship cars from China...

According to a recent report by the Arab media Al-Araby Al-Jadeed, the Algeria automobile market has been in an anxious wait-and-see state recently. Previously, as the local government liberalized the import of "second-hand cars within three years of age," the cost-effective source of China cars once exploded the market. However, due to the recent record high of international shipping costs, a large number of Algeria agents and importers have been forced to freeze or suspend plans to ship cars from China.

For China used car exporters who are looking at the North African market, the logic behind this market anomaly is worth exploring.

Freight costs tripled and penetrated profit margins, forcing importers to "tighten their pockets"

The report pointed out that in the past few months, shipping prices from China to Algeria have more than tripled. Several local traders confirmed that the sea freight for a container carrying two or more vehicles was usually between US$3000 and US$4500; but now, this figure has soared to around US$9500, and the quotations on some non-direct routes have even exceeded the US$10,000 mark.

An authorized agent who imported cars from China, who declined to be named, admitted to the media that the current increase is unprecedented. He said the suspension was "to protect the principal of agents and importers." If shipments continue to be delivered at current freight rates, the logistics costs shared equally to each vehicle will significantly push up the final retail price, which completely exceeds the purchasing power of the vast majority of ordinary Algeria consumers.

Another importer in the capital Algiers is not hopeful that freight rates will fall in the short term. He pointed out that due to continued tensions in the Red Sea, merchant ships were forced to detour through the Cape of Good Hope in Africa, and the increase in fuel consumption, insurance premiums and transportation cycles was directly passed on to sea freight. Before shipping in the Red Sea returns to normal, many importers would rather wait and see than take the risk of taking orders at a high level.

The gap between supply and demand is still huge, and China's "quasi-new cars" were once a lifeline for the market

The reason why this logistics crisis has attracted great attention is that it has cut off one of the most important "blood transfusion channels" in the current Algeria automobile market.

Economic expert Suleiman Nasser analyzed in an interview that the real annual demand for cars in the Algeria market is between 250,000 and 300,000 vehicles. Due to import restrictions and insufficient production capacity of local assembly plants in the past few years, the gap between supply and demand has continued to widen, causing local used car prices to rise to extremely outrageous levels.

Nasser emphasized that it is the import policy of "second-hand cars within three years of age," especially a large number of vehicles from China (including China's own brands and joint venture brands made in China), which has greatly alleviated the local auto market crisis in the near future with very reasonable prices and reliable quality.

It is worth noting that such imports of used cars within three years are settled by private individuals using their own foreign exchange funds and do not consume the country's official foreign exchange reserves. Therefore, the policy side has not been tightened. It is purely the high freight rate that presses the pause button. Nasser warned that as the import of car sources from China stagnates, the contradiction between supply and demand in the market will deteriorate again, and the price of local used cars is likely to usher in a new round of crazy increases.

written in the end

Through this report, we need to send a clear signal to domestic used car exporters: the real demand in the Algeria market for China used cars (especially those that are expected to be new in three years) is extremely strong, and the product power and price power have been fully verified by the local market, but the core pain point at present is stuck at the "logistics end."

The fact that freight prices are upside down has caused local car dealers to "dare not take over goods" does not mean that the market has abandoned China cars. This poses a new test for China exporters:

First, adjust delivery expectations and quotation strategies. When negotiating with Algeria customers recently, it is necessary to pay close attention to the risks of CF or CIF quotations, minimize the validity period of the quotations, or clarify the sharing mechanism for sea freight fluctuations in the contract.

Second, explore diversified logistics solutions. Against the backdrop of soaring containers, powerful export companies can pay attention to changes in the cabin and route of Ro-Ro ships and find alternatives to dilute the cost of single vehicle logistics.

Third, prepare for the "reservoir". Once the geopolitical situation eases or shipping prices turn downward, Algeria's pent-up procurement demand will surely usher in a retaliatory rebound. Domestic car dealers should use this "cooling-off period" to sort out the source of vehicles (especially economic cars and SUVs that meet local preferences), consolidate cooperative relationships with local importers, and be ready to seize the first wave of dividends after freight rates fall.

Source: Guangdong Good Car

[Disclaimer] The content of this website (including pictures and texts) originates from the Internet, and the copyright belongs to the original author. Respect the rights and interests of originality, and select content is only used for information sharing. If copyright disputes are involved, please contact us to handle them in a timely manner