Tunisia - Automotive Parts/Services/Equipment Tunisia - Automotive Industry
Automotive sales and services represent one of Tunisia’s major economic sectors. Vehicles are not fully manufactured locally, but Tunisia does have a small car assembly industry. The GOT utilizes a strict quota system that caps the number of vehicles allowed into the country annually. The quota thresholds take into consideration Tunisia’s trade deficit, market demand for new vehicles, and investment arrangements among foreign carmakers and domestic parts manufacturers. All vehicles older than five years, including heavy trucks, are prohibited entry. Tunisian customs applies a graduated tax on all vehicle imports that rises with vehicle age up to the five-year limit.
The total number of passenger cars in circulation is around 2 million. In 2018, sales of new passenger cars and pick-up trucks reached 51,348 vehicles, a 19.45% decrease compared to 2017, but the number of vehicles sold in the market is actually much higher, due to imports by private individuals that reached 14,493 vehicles in 2018. The Tunisian automobile market is heavily dominated by European brands. Both GM and Ford are present, though market share for U.S. manufactured cars remains under 10%. Meanwhile, Toyota, Kia, Hyundai, and other Asian manufacturers have started to establish a significant foothold in Tunisia. The market for hybrid powertrain vehicles is still undeveloped, and electrical cars are not yet available. However, the GOT is considering importing a pilot of up to 1,000 electrical vehicles in the next two years for government agencies’ use.
Automobiles with large-capacity engines carry a higher consumption tax, with rates up to 277% for gasoline engines and 360% for diesel-fueled engines. The government reduces these rates to 67% and 88%, respectively, if imported via authorized distributors. The reduced tax scale is intended to allow the price of automobiles sold through authorized dealerships to be competitive with vehicles purchased privately overseas and shipped back to Tunisia.
The price of fuel to the consumer reflects both tax and subsidy components. As a result, the pump price for diesel and gasoline reflects global oil prices and is comparable to fuel costs in the United States. Tunisian drivers pay more than their counterparts in neighboring Libya and Algeria but substantially less than European drivers. Two grades of diesel and unleaded fuel are available. Many Tunisian drivers believe the lower-priced, domestically refined diesel fuel may contaminate injection systems in engines and necessitate more frequent part replacement and servicing, and that the quality of such fuel contributes to the buoyant Tunisian market for spare parts and accessories.
The Tunisian market presents opportunities for mid-sized U.S. model vehicles, including pickups and SUVs. Tunisian dealers express interest in representing U.S. auto manufacturers. Expansion of the market for U.S.-brand vehicles will contribute to higher demand for U.S. automotive parts and components. Dealer service departments will remain a potential profit center as well, despite the widespread availability of mechanic shops.
Post-revolution restructuring of the automotive sector has allowed for a more open market with more foreign brands. U.S. manufacturers should be sensitive not only to the current European-dominated market structure, but also to the potential of new market entrants, especially from Asia.
Attracting investment in the manufacture of automobile components for export is a priority for the GOT. Operations dedicated for export of automotive parts to European markets offer promise, and several U.S. companies have successfully invested in this sector. For domestic sales, Tunisians can be very price sensitive, and the price of spare parts often trumps quality.