Iraqi auto plate dealers benefit as new car sales soar

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 dealerships.

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.