BAGHDAD — By the time Ibrahim Khaled Mohammed turned to a car dealer looking for an offer, his 1983 Volkswagen Passat could barely move.
But here in the Iraqi capital, the bald tires, balky engine and three decades of wear weren't much of a problem. What the buyer really wanted was the old white license plate, a commodity far more valuable than the rusting clunker itself.
The dealer paid Mohammed $3,800, counted out in U.S. hundred-dollar bills.
“Without the plate, it wouldn't have been worth more than $500,” Mohammed said.
Demand for new cars is soaring in Iraq as salaries rise and the level of violence creeps lower. That is good news for automakers such as General Motors Co. and Kia Motors Corp., which are reporting a big jump in sales here.
The boom is proving lucrative too for dealers of recycled license plates, who profit from a quintessentially Iraqi conundrum: In many cases, the government will not issue new plates on vehicles bought from private deal
As a result, many new car buyers pay middlemen for plates salvaged from old vehicles. That can add thousands of dollars to the price of a new car — effectively imposing a tax on first-time buyers that ends up in the hands of savvy businessmen rather than government coffers.
“Go to a car dealer, and they'll say: Do you want it with a plate or without?” said a businessman.
Prices for popular Baghdad tags have skyrocketed past $4000, up from just a few hundred dollars in 2005, according to Jamil and others in the trade. Those looking for plates often turn to extended family or friends, and even knock on the doors of strangers with a broken-down car parked outside.
A surge in new car sales is driving up demand for auto plates.
General Motors says it sold 32,000 vehicles in Iraq last year. That is up from 19,000 in 2010 and fewer than 1,500 just five years ago.
Iraq recently became GM's second biggest regional market after Saudi Arabia, said John Stadwick, the company's Mideast president and managing director.
Ford and Chrysler are reporting gains too. So are European and Asian automakers.
The government does issue new plates in some cases.
One is if you buy a new car from the state-run dealer or through infrequent government auctions.