Car sales race ahead as Palestinian economy purrs

Palestinian new car sales numbers reflect growing prosperity and are one of the best measures to see how the economy is faring.

cars 311 (photo credit: Ariel Jerozolimski)
cars 311
(photo credit: Ariel Jerozolimski)
RAMALLAH -- On a blustery, winter day in Ramallah, new car sales are hot.
“You can see the numbers are escalating tremendously,” says Samech Masri, a Detroit-educated civil engineer and general manager of the United Motor Trade Co., the largest car dealership in Ramallah.  “It’s gone from about 1,000 cars to 20,000 cars within about 10 years and that is something to talk about.”
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Not nearly as high as the record 216,000 vehicles sold in nearby Israel last year, still, the Palestinian new car sales numbers reflect growing prosperity and are one of the best measures to see how the economy is faring.
Set among swank coffee shops and designer boutiques, Masri’s upscale automobile dealership is the sole importer of Volkswagen, Audi and Skoda vehicles. He accounts for a quarter of all car sales in the West Bank and counts among his clients Palestinian Authority Prime Minister Salam Fayyad.
While peace efforts between the Palestinians and Israelis may be stalled, Fayyad has been pushing ahead with plans to declare a Palestinian state by September. He believes a prospering economy is the best way to wean the Palestinian Authority off international aid, but, as an professional economist and former senior official at the International Monetary Fund (IMF), Fayyad sees a free market system as the best way to achieve this goal.
“We’re not in the business of picking winners when it comes to economic activity and what actually ends up being the locomotive of progress of moving forward. The private sector here is free, there are no restrictions here of any kind,” Fayyad told The Media Line. 
The IMF says the Palestinian economy grew a whopping 9% in the first half of last year. The boom is evident wherever one drives in Ramallah, the de facto Palestinian capital and commercial center. It’s easy to get lost amid the construction sites.
“If you go into Ramallah alone and you can generalize it to other cities in the West Bank, Ramallah is a construction site as you see it. Everybody is building,” Masri says. “Everybody believes in this country. We need to look into our future, and I believe as a Palestinian that we have a bright future because all the Palestinians are very well educated and we have a vision. All we need is just some stability in the political situation and we can do a lot more than other neighboring countries.”
Car sales topped $110 million last year, about half of which went to taxes. Masri’s dealership employs about 150 people. His was the first to go on line with the manufacturer in Germany where computers run diagnostic tests on the cars.
“You can see even the car is being fixed from Germany as we are just sitting and watching,” Masri says. “I believe a mechanic is not a mechanic anymore without an engineering degree.”
Masri says sales could reach over 30,000 cars but complains that he is shackled by Israeli import restrictions. He bemoans the need to get his vehicles through the Israeli ports where they can be held up for weeks due to security checks or by an employee going on vacations.
“One person is handling everything on the Israeli side, our licenses. Last summer, he was on vacation and our life was stopped, completely stopped, until he came back,” he says.
While Israelis slap an exorbitant 113% tax on new cars, the Palestinians were able to reduce their taxes from 75% to 50%, which makes them less than half the price. But Israelis customers are barred from his car lots.
“Actually, we cannot sell in Israel and they cannot sell here,” Masri says, adding that the new vehicles could only be imported through Israel and were subject to the same stringent emission controls. “This means we are getting the clean engines unlike other Arab countries.”
The growth has also been helped by more women getting behind the wheel.
“Women have no restrictions in buying or driving cars in Palestine. I would say something about 25% or 30% even in the market of cars are driven by women,” Masri said. “We are starting to have multiple cars in the drive ways.”
Masri had been the president of the Palestinian importers union for a decade. Even though he was voted unanimously to continue, he decided to step down and give others a chance. He says there are 16 automobile franchises in the Palestinian Authority. And his biggest competitor is … his brother.
“He was my partner actually and we decided to split. He is now representing Kia, our neck to neck competitor,” Masri says.