Starting from July 1, 2006, the Republic of Armenia will no longer import cars that don’t have neutralizers for exhaustions. It’s obvious that this resolution was made for ecological purposes. But does Armenia really need such a resolution now?
Before moving on, allow me to state a couple of facts. Almost all foreign cars are equipped with that. So, we’re mainly talking about cars produced in Russia. According to chief specialist of the Surrounding Environment Protection department of the Ministry of Ecology of Armenia, Martin Tsarukyan, this resolution was supposed to be in effect starting from January 1 of this year, but the Russians asked for some time to make the exported cars correspond to Armenia’s standards.
It is worth mentioning that this has to do with imported cars and not the cars already registered in Armenia. In response to the question as to whether or not it was possible to make the demand to have neutralizers in all cars, M. Tsarukyan said:
“We are working on installing neutralizers in the cars through different mechanisms. There may be some privileges for drivers who have their cars reequipped. But we won’t be taking steps right away.”
As already mentioned, almost all foreign brand name cars have the neutralizer, besides the cars filled with diesel. The neutralizer is made up of a spongy body and is put on the top of the muffler. It sucks in the dangerous exhausts and obviously, after a while, it “fills up” and it’s time to change it. For example, after driving 1500 kilometers in the territories near the European Union, drivers change the neutralizer. The price ranges from 100-150 dollars, which is not too expensive for the European driver.
What’s going on in Armenia? According to specialists, even the new neutralizer only lasts for 2-3 months in Armenia. This has to do with the low quality of the petroleum and oil. After that, the drivers simply take out the neutralizer because it has an influence on the engine. It contains gold and palladium and a “filled” neutralizer is sold at a rather expensive price.
Let’s get back to Russian cars. The factory producing the 2107 brand name car has installed this piece of equipment, but has only placed it 5 cm above the ground. They were practically taken out when brought to Armenia. Later on, the factory started producing the cars without neutralizers. The new cars-Vaz 21010, 015 and “Niva”-are imported in Armenia with a new neutralizer, but they wear out quickly. In a word, drivers and specialists consider that a waste of money, especially in Armenia’s conditions. Many drivers free themselves from neutralizers even before purchasing the car.
It is also worth mentioning supervision. The border customs body must check up on whether or not there is a neutralizer in the car before importing. Won’t that become another reason for corruption?
“In general, there is a risk for corruption in any similar case, but that demand was necessary,” says M. Tsarukyan.
It turns out that Russians care more about this than Armenians. I don’t really think that this decision will have a major influence on the car pricing, but there’s more to this.
According to the resolution passed by the Russian Federative Customs Service, starting from September 1, 2006, there will be stricter requirements for importing cars to Russia. Of course, Russia claims that the reasons for that are based on ecological issues. As for 10-year old European cars, as well as 11-year old American and 6-year old Korean cars, they will not be permitted to enter Russia.
Russians don’t really pay any attention to neutralizers. They care more about local car production. The price of a foreign car produced a couple of years ago is equal to that of a newly produced Russian car and competes with the Russian one. More than 300,000 brand name cars were exported to Russia in 2005 alone.
According to analyst for the “Finam” investment corporation Kochetkov, as a result of this resolution, prices for foreign, used cars will increase by 15-20%. This, of course, is in the interest of Russian car producers. However, according to the analyst, Russian car prices will also go up.
As for Armenia, it is most probable that the same thing will continue starting from the end. Russia has a large market for used cars from Europe, but that market will close on September 1. It’s clear to see that with the low demand of old cars, prices will go down in the European Union. So, they should become more affordable for Armenian consumers.
But it’s quite possible that the prices for those cars will also go up in the Armenian market because the demand for them will go up what with the rise in the prices for Russian cars. As a rule, prices don’t go down, especially if we take into account the fact that the Euro continues to be evaluated compared to the dollar and the European cars, which are worth in dollars, are becoming expensive in Armenia.