BAGHDAD (AP) – Business, not bombs, is booming at Baghdad car dealerships, as well-heeled Iraqis are indulging in a passion long out of reach – spiffy, new cars.

BMWs, Nissans, Hyundais and even military-style Hummers are now weaving around the shabby, smoke-belching wrecks and donkey carts that have clogged the streets over two decades of sanctions and war.

That may make Baghdad one of the few cities worldwide where the auto industry is doing relatively well – at least compared to the worst of the war, when sales were stagnant. With its limited banking system, Iraq has largely avoided the global financial meltdown.

And unlike elsewhere in the world, gas prices – about $1.52 a gallon – aren’t much of a deterrent to those Iraqis eager and able to catch up with the good life behind the wheel of a new car.

Not so long ago, cruising the capital in a new car was asking for trouble. Carjackers were seemingly everywhere – either envious militiamen or kidnappers on the lookout for victims with enough cash to pay fat ransoms.

Those bad days are not entirely over. But with violence ebbing, Iraqis who can afford it are eager to live large and bask in the status that only a nice new car can bring.

“Despite the high price, driving a new car gives me a great sense of happiness and comfort,” said Muhannad Khazim as he cruised an upscale neighborhood with three friends in a 2007 Hyundai Elantra he’d bought two days earlier.

The city traffic department refused to say how many new cars were registered over the last year.

But showrooms are popping up in safer neighborhoods around town to meet the demand. They are offering selections from sleek sports cars to four-wheel-drive behemoths, most imported from Amman, Jordan, or Dubai in the United Arab Emirates.

Imad Hassan said sales at his Aqaba Dealership in east Baghdad soared about 90 percent in 2008 over the previous year, when fighting in the city peaked.

Last year, he said he sold about three cars a day. So far this year he’s selling only about three cars per week, a slump which he says has little to do with the global downturn.

Hassan expects sales to rebound now that the Iraqi government has finally approved a new budget after a drop in oil prices forced several revisions. Many of his customers for expensive cars are Iraqi businessmen with government contracts. They had to wait for the new budget to get their money.

Gasoline prices throughout the Middle East are lower than in the U.S. and Western Europe. Iraq lifted fuel subsidies in 2004 and hiked gasoline prices 19-fold. Since then, prices at the pump have been fairly stable. Security – not fuel prices or conservation – had kept motorists off the streets.

Hassan Saleh, who sells Japanese and South Korean four-wheel-drive vehicles and American-made Hummers at another east Baghdad dealership, attributes the boom to better security, which has given Iraqis the confidence to treat themselves to luxuries.

“Nowadays, most people are not afraid of driving fancy new cars in the streets. Two years ago, that meant imminent danger of being kidnapped for ransom,” said Saleh, who sells about 10 cars a month from his dealership – up 50 percent over 2007.

That’s not to say Iraqis don’t face problems with a new car.

For one thing, there is no auto insurance offered in Iraq. Owners have to shell out in full for any repairs or maintenance.

And although the risks of violent trouble are less than they used to be, they haven’t disappeared entirely.

Ali Habib, a businessman from east Baghdad, bought a new Hyundai last month to spruce up his image. But he’s afraid to drive the car outside his neighborhood and won’t give his younger brothers a lift for fear they may all get kidnapped or killed.

“The security situation is still fragile and gangs can hit anytime,” he said. “When I want to go somewhere in Baghdad, I make sure that at least three friends of mine are with me in the car as a kind of protection against bandits.”

But that’s not enough to discourage Iraqis from shelling out $27,000 for a 2006 Mustang, $80,000 for a four-wheel-drive BMW or $55,000 for an Infiniti – some of the cars on offer during a recent tour of dealerships. Tastes range from sedans to SUVs. The compact Nissan Sunny model is also popular.

During Saddam Hussein’s rule, the most popular brands were Toyota Coronas, which the government imported in early 1980s, followed by Brazilian-made Volkswagen Passats, which the regime bought as part of an arms deals between Iraq and Brazil.

But Saddam’s invasion of Kuwait in 1990 brought international sanctions – and a cutoff in the flow of new cars. For the next 13 years until the U.S.-led invasion in 2003, Iraqis were constantly repairing flimsy vehicles that aged fast in the fierce heat, dust and potholed streets.

“I’m fed up with old, broken cars,” Muhannad Akram said as he inspected cars at a showroom in the Jadiriyah district. He had his eye on a 2007 gray Mitsubishi sedan and was bargaining over the price with the salesman.

“Despite the world economic crisis, Iraq is still the land of big opportunities and flourishing business,” said Hassan, the dealer in east Baghdad. “And more and more people are getting rich.”

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