Competition among global automakers to establish their brands in Myanmar is intensifying with Nissan and Mercedes joining the race to take advantage of the market’s long-term growth prospects.

Although used cars currently comprise up to 99 percent of annual domestic sales, industry insiders say automakers are staking out territory with an eye to future market share.

Nissan Motor Company of Japan is the latest entrant to begin sales in Myanmar, launching a showroom and service department in Yangon on July 31.

“If we don’t step in here now, it is my judgment that it is going to be too late,” Nissan executive vice president Hiroto Saikawa said at the launch event. “We are determined to be here and to grow.”

Malaysian firm Tan Chong Motor Holdings will have the exclusive right to distribute Nissan vehicles in Myanmar for a renewable period of five years. Tan Chong will invest US$2.5 million over three years to begin operations, and expects sales of 300 vehicles annually, according to an announcement submitted to Bursa Malaysia, the stock exchange the company is listed on, last week.

Still, Myanmar will remain largely a two-wheeler and used-car market in the short to medium term, according to Dushyant Sinha, principal consultant of automotive practice Asia Pacific at Singapore-based analysts Frost and Sullivan.

“On the whole the market is on a growth path, but the next few years are going to be crucial to carry on the momentum,” he said.

Myanmar’s automobile buyers are extremely price-sensitive and customer awareness and exposure quite limited, he said, adding that a number of regulatory issues also needed addressing.

Nissan follows other recent entrants, such as Ford which has opened a showroom and Suzuki which restarted assembling trucks in Myanmar in May.

“The [new car] industry is starting out,” said U Khin Tun, managing director of Capital Automotive, the Myanmar distributor of US-based Ford.

Increased domestic production of vehicles would follow an improved regulatory climate, he added. “We need a little time for the industry to be going smoothly.”

He said import taxes made used cars preferable to new cars, but this could be adjusted to promote sales of new cars.

Carriage and Cycle Automobile Myanmar aims to complete its Mercedes showroom by the beginning of 2014 but has already started promoting its mid- and upper-range vehicles in the country.

“We’re thinking very positively,” said head of sales and marketing U Aung Thet Lwin. “Myanmar has much bigger potential than many other markets.”