ERBIL, Kurdistan Region - Chinese car imports have surged by 75 percent in Iraq, transforming the country’s auto market and sparking intense competition, according to an Iraqi economic studies and consultations organization.
Manar al-Obaidy, head of the Iraqi Future Foundation, stated on Monday that direct vehicle imports from China, Japan, and South Korea reached “39,500 units in the first half of the year,” marking a 17.8 percent increase compared to the same period last year. Chinese vehicles accounted for the largest share of this growth, with 18,000 units imported.
Obaidy attributed the growing demand to Iraq’s expanding population, which increases by “roughly one million people annually.” He emphasized that the affordability of Chinese vehicles - many of which are modeled after well-known American and Japanese brands - “has made their ownership more achievable for different income brackets.”
The average price of an imported Chinese car is roughly $13,300, a stark contrast to the average price of a Japanese car at $34,500. This price competition is forcing other brands to adjust, Obaidy explained.
He also pointed to a peculiar trend in the import of large-engine Korean vehicles, which are not in high demand locally.
“A considerable number of Korean cars with engines of 3,000cc or more have entered the market, even though demand for such vehicles is limited,” he said, suggesting that these imports are likely intended for re-export “to benefit from the dollar price gap between the official rate and the free market.”
This re-export scheme allows traders to benefit from the difference between the official and black-market dollar exchange rates. By using inflated or fake import invoices, traders can obtain US dollars at the official rate from the Central Bank of Iraq (CBI), then sell them on the black market for substantial profit.
In the Kurdistan Region, local car dealers are witnessing the transformation firsthand.
Hemin Ali, a car dealership owner in Erbil, told Rudaw on Monday that the market has been completely transformed. “If we divide the import market into three parts, two-thirds are now Chinese cars,” said Ali, adding that “for over eight months, the market has been dominated by Chinese brands. I now exclusively buy and sell Chinese vehicles.”
Ali added that the influx of cheaper Chinese models has forced other brands to lower their prices. “A Nissan that used to be priced at $16,000 is now selling for $12,500 to $13,000 because of Chinese competition.”
Another significant trend noted by the Iraqi Future Foundation is a 45 percent increase in demand for hybrid vehicles, which use both gasoline and electricity.
Ali highlighted the growing appeal of eco-friendly technology stating, “Last month alone, I imported 104 hybrid cars - and sold all of them in just 18 days.”
Of note, the Kurdistan Regional Government (KRG) has introduced several measures to promote the adoption of hybrid and electric vehicles, aimed at reducing air pollution and modernizing the region’s transportation system.
One of the most impactful steps is the full waiver of customs duties on electric vehicles. In September, the KRG eliminated import taxes on EVs as part of its push for cleaner energy.
Additionally, the KRG has removed registration and annual environmental fees for electric cars. A directive signed by Interior Minister Rebar Ahmad in February made first-time registration of EVs free and exempted owners from recurring environmental fees.
The ministry then-said the decision was in line with the directives of KRG Prime Minister Masrour Barzani, aimed at “combating environmental pollution and promoting sustainable transportation.”
