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BusinessBan on car imports triggers rapid price increases

Ban on car imports triggers rapid price increases

One week after ban, import-dependent auto sector faces uncertainty over costs

Ethiopia’s budding automobile market is facing turbulence in the wake of the government slapping unforeseen constraints on imported vehicles. 

The Ethiopian Customs Commission introduced a new rule eliminating a long-standing exemption that allowed Ethiopian citizens returning permanently from overseas to import their vehicles.

In almost two weeks since the announcement, prices skyrocketed to unprecedented levels, leaving dealerships scrambling to adapt to the dramatic changes.

The unexpected consequences of the ban have effectively brought the car market to a grinding halt, leaving both sellers and buyers in limbo about what comes next.

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“Many car shops are now being forced to shutter their businesses in an effort to sell off their existing inventory at inflated prices, hoping to get a better future in the weeks or months ahead,” said car sale agent Abenet Kernesa.

Faced with dwindling options after the central bank prohibited the use of foreign exchange reserves to import 38 items last October, the automotive sector has relied on exception permits granted to allow returning citizens to bring vehicles into the country.

The permits provided an important lifeline for importers struggling to source automobiles from overseas in the wake of the currency ban, according to market insiders.

“The sector has been crippled by the new rule,” observed Abnet.

For months prior, car prices in Ethiopia had remained relatively stable, fluctuating modestly with supply and demand. But the new import restrictions have upended this delicate balance, sparking a price surge that has blindsided the industry.

Daniel Gebeyhu, a salesperson at Atm Cars Sale, shed light on shifting marketplace dynamics. “Before the ban, the popular Suzuki Desire sold for 2.2 million birr, but within a week its price leapt to 2.5 million birr,” he said.

Daniel worries prices may continue climbing if restrictions persist.

Experienced broker Abenezer Zelalem highlighted the substantial markups on sought-after models like the Suzuki Desire and Swift, which shot up approximately 200,000-300,000 birr in just one week.

In contrast, the price of the electric Volkswagen ID4—recently barred from Chinese imports over safety concerns—rose a more modest 50,000 birr to around 6 million birr in the past month.

Speaking on condition of anonymity, Ethio Car Dealership representative recognized benefits for legal operators but also downsides.

“The ban has halted financing options for buyers, limiting choices,” the representative said.

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