Iraq New Vehicle and used Vehicle Market Outlook to 2028

Iraq New Vehicle and Used Vehicle Market Overview

The Iraq new vehicle and used vehicle market is valued at USD 3.5 billion, based on a five-year historical analysis. The market is primarily driven by increasing urbanization and population growth, with a rising middle class that is eager to own vehicles, both new and used. Post-war reconstruction and the need for reliable transportation are major factors contributing to the demand for vehicles in the country.

In the Iraq market, Baghdad, Basra, and Erbil are the dominant regions for vehicle sales, driven by their larger populations, higher economic activity, and better road infrastructure. Baghdad leads the market due to its role as the capital and its significant urban population, while Basra benefits from its position as the country's oil hub.

To reduce dependency on imports, the Iraq government has partnered with foreign automakers to establish vehicle assembly plants in the country. In 2024, the first phase of these assembly plants was launched in Basra, with a production capacity of 20,000 vehicles annually. This initiative is aimed at fostering domestic vehicle production and creating job opportunities, thereby supporting the growth of the automotive sector.

Iraq New Vehicle and Used Vehicle Market Segmentation

By Vehicle Type: The market is segmented by vehicle type into passenger cars, commercial vehicles, heavy-duty trucks, and motorcycles. Passenger cars have held a dominant market share in Iraq under the segmentation by vehicle type. This dominance is due to the growing preference for personal mobility in urban centers, where public transportation systems are underdeveloped. Additionally, with the rise in disposable income, there has been a notable increase in the demand for affordable new and used passenger vehicles.

By Sales Channel: The market is segmented by sales channel into OEM dealerships, independent dealers, online marketplaces, and auctions. OEM dealerships dominate this segment, primarily due to their reliability and post-sales service offerings, which attract customers seeking new vehicles. Moreover, OEMs are expanding their dealer networks to meet the growing demand for new cars, particularly in urban regions such as Baghdad and Basra. The rising demand for certified used vehicles through authorized dealerships further strengthens this channel's position.

Iraq New Vehicle and Used Vehicle Competitive Landscape

The market is characterized by several prominent players, including both global and regional brands. The market is dominated by major automotive manufacturers such as Toyota, Hyundai, and Nissan, alongside a few key domestic importers who play a significant role in the distribution and retail of vehicles.

Company Name

Established Year

Headquarters

Dealership Network

Product Range

Market Presence

Service Centers

Sales Volume

Imports

Local Assembly

Toyota Motor Corporation

1937

Toyota City, Japan

Hyundai Motor Company

1967

Seoul, South Korea

Nissan Motor Co., Ltd.

1933

Yokohama, Japan

Ford Motor Company

1903

Dearborn, USA

General Motors

1908

Detroit, USA

Iraq New Vehicle and Used Vehicle Market Analysis

Market Growth Drivers

Increase in Private Sector Involvement in Automotive Sales: The Iraq government has relaxed import regulations, encouraging more private dealerships and showrooms to enter the market. In 2024, it is estimated that over 500 private dealerships are operating across Iraq, which is facilitating easier access to both new and used vehicles. This influx of private players is stimulating competition, increasing consumer options, and driving market growth.

Population Growth Leading to Vehicle Demand: Iraq's population has reached 43 million in 2024, as reported by the Ministry of Planning. A rapidly growing population, especially in urban centers like Baghdad and Basra, is driving demand for personal vehicles. The demographic shift towards a younger population, with over 60% under the age of 30, is increasing demand for both new and used vehicles as more individuals enter the workforce and look for reliable means of transport.

Rise in Employment Levels Enhancing Purchasing Power: Employment levels have improved in Iraq as the country sees growth in non-oil sectors. According to Iraq’s Ministry of Labor, 2024 witnessed the creation of over 200,000 new jobs, particularly in construction, retail, and services. This rise in employment is boosting purchasing power and enabling more individuals to invest in vehicles, stimulating both the new and used vehicle markets.

Market Challenges

Lack of Financing Options for Vehicle Purchases: One of the challenges in Iraq's automotive market is the limited availability of financing options. In 2024, only 25% of car buyers are able to access formal financing through banks or financial institutions, according to the Central Bank of Iraq. This lack of vehicle loan options is constraining potential buyers from acquiring new or used vehicles, impacting the market’s growth.

Fluctuating Fuel Prices Affecting Vehicle Affordability: Iraq's heavy reliance on oil exports makes it vulnerable to fluctuations in fuel prices. In 2024, average fuel prices have fluctuated between 1,200 and 1,500 IQD per liter due to instability in global oil markets. This variability in fuel costs increases the total cost of vehicle ownership, particularly for low- and middle-income consumers, dampening the demand for both new and used vehicles.

Iraq New Vehicle and Used Vehicle Future Outlook

Over the next five years, the Iraq new vehicle and used vehicle industry is expected to show growth driven by increasing economic stability, post-war reconstruction projects, and growing demand for personal and commercial transportation solutions.

Market Future Opportunities

Increased Demand for Hybrid and Electric Vehicles: By 2029, the demand for hybrid and electric vehicles in Iraq is expected to grow as the government plans to install over 1,000 EV charging stations across major cities. As more consumers become environmentally conscious and fuel prices continue to fluctuate, the adoption of hybrid and electric vehicles will likely increase, transforming the vehicle landscape.

Expansion of Vehicle Financing Options: In the next five years, Iraq’s financial institutions are expected to develop more vehicle financing options, with at least five new banks entering the auto loan market by 2026. The Central Bank of Iraq has plans to introduce new guidelines for auto loans to make financing more accessible to middle-income earners. This is likely to spur increased sales, particularly in the new vehicle segment.
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