Tunisian automotive professionals were not expecting it, but are certainly both pleased with this decision and worried about its consequences. On December 13, at a Cabinet meeting chaired by Ahmed Hachani, the ministerial decree of June 22, 2016 on licenses for car dealers was repealed.
A decision which, incidentally, has not displeased the 25 dealerships for 55 brands in Tunisia, in a market with more than 50,000 registrations, where the European brands are losing ground, caught up and even overtaken by the Asians, and where Hyundai is beating everyone in 2023 (6,182 vehicles sold at the end of November last year).
Dealers applaud, assembly workers less so
For the record, the government’s decision was based on the hegemony of European brands until 2010. At that time, Asian brands were only allowed on the Tunisian market in the form of pick-ups or 4×4s. After 2011, dealers exerted pressure and more or less succeeded in opening up the import market for cars and LCVs to anyone with a car dealership in good standing. At that time, various Chinese brands of all types entered the market.
In June 2016, on what advice and for what reason, the Tunisian authorities closed the car market, stopped authorizing new dealerships and decided that any new car brand wishing to have a commercial presence in Tunisia must do so through brands that agree to be assembled by Tunisian manufacturers.
However, car assembly is proving to be more expensive, simply because of the cost of importing CKDs (Complete Knock Down, the term used to describe all the spare parts needed to completely assemble a vehicle).
The Tunisian authorities have finally realized this and put an end to this obligation by repealing the ministerial decree of June 2016, which was the subject of the last Cabinet meeting chaired by Ahmed Hachani on Wednesday and which the Tunisian dealer microcosm applauded with both hands.
In our view, however, this decision now threatens to wipe out the car assembly industry, which the Tunisian public had applauded as a job creator and entrepreneurs who made this breakthrough were proud and had highlighted as a value-added investment, but now seems under threat.
A wait-and-see attitude and a dilemma
The joy of some Tunisian car dealers, who have long been calling for the market to be opened up (see Brahim Dabbech’s statement in Arabic for AM at the JES), may be short-lived. The Cabinet meeting of December 13, 2023 had also “decided to instruct the Ministry of Trade and Export Development to revise the specifications for the marketing of locally manufactured or imported road transport equipment”.
This decision came as a surprise to the dealers, including the union chamber, which for the time being is content to remain silent with a half-smile and has so far refused to comment on the Cabinet meeting’s decisions, worried about what Kalthoum Ben Rjeb’s ministry will do and what it will include in the new specifications, and waiting with bated breath for the minister’s next meeting.
The first risk of Hachani’s decision is that the assemblers of certain Asian brands will close their CKD plants, where they pay 9% import duty on top of the excise duty on sales, which varies from 20 to 110% depending on the brand, and start selling in CBU (completely built unit), which is more profitable.
With CKD, they had no quota and imports were unlimited, unlike traditional dealers who were limited by the annual quota they had to ‘fight’ for every year. With CBU, on the other hand, they will have to join the quota system set up by the Directorate-General for Foreign Trade.
– So what will Kalthoum Ben Rjeb do?
Will the Minister of Trade take the risk of granting the same quotas to former industrialists turned car dealers, at the risk of an explosion in car imports, much to the displeasure of the BCT? Or will she grant them a small quota to supplement their production?
In this case, CKD manufacturers will have to sell two identical products at different prices. Unless their excise duties are reduced to encourage them to keep their assembly industries and the jobs that go with them!
This is a major dilemma for a government that treats dealers as rentiers and is concerned about the state of the country’s trade and balance of payments, as well as preserving jobs in a country where unemployment is already at 15.8%!
