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29 March 2024

Weak yen driving UAE motorists' Japanese car obsession

According to figures released by Japanese trade body Jetro, imports of Japanese passenger cars in the UAE in the medium range, between 1,500cc to 3,000cc rose by nearly 31 per cent. (File)

Published
By Waheed Abbas

The UAE has jumped two rankings to become Japan’s 5th largest passenger car market in the world with the rising UAE dirham against the yen making Japanese products cheaper.

According to figures released by Japanese trade body Jetro, imports of Japanese passenger cars in the UAE in the medium range between 1,500cc to 3,000cc rose by nearly 31 per cent to Dh2.8 billion ($762.8 million) in 2014 from Dh2.13 billion ($582.7 million) in the previous year.

The figures showed that imports of high-end luxury were three times higher than the medium engine vehicles.

The higher imports are attributed to the stronger US dollar – and the UAE dirham as it’s pegged to the greenback – against the Japanese yen making the Asian country’s products cheaper for importing nations. The dollar has strengthened against the Japanese yen over the last one year, rising nearly 19 per cent. The greenback was trading in the range of 101 against the yen and on Thursday, April 23, 2015, it was hovering around 120 against the Japanese currency.

Similarly, against the UAE dirham, it has risen from 27.5 in May last year to 32.6 on April 23.

With the rising dirham and yen making Japanese cars cheaper, the prices have not come down substantially in the UAE as the distributors here offer freebies such as fee insurance, free servicing and other add-ons rather than cutting the prices.

Jon Williams, Managing Director of Al-Futtaim Motors – the distributor of Toyota in the UAE, said: “Quality, durability and reliability have always played a major role in the Toyota brand appeal. Besides, Toyota boasts the lowest total cost of ownership in the market, which, when combined with the highest resale value… Last year was excellent as we retained pole position in the market by adding more fun to the brand, creating a deeper, more meaningful and highly emotional connection with our diverse audiences.”

Jetro figures showed that imports of luxury cars with over 3,000cc engine power, which cover more than 70 per cent of the passenger car segment, increased by 6.8 per cent to Dh8.8 billion ($2.4 billion).

Led by Toyota, Nissan, Honda, Mitsubishi, Lexus and Infiniti, Japanese automakers lead the UAE automobile industry compared to their European, American and Korean peers.

Jetro figures showed that the export of motor trucks in different capacities, however, decline by nearly 13 per cent to Dh2.53 billion ($689.6 million) in 2014 from Dh2.9 billion ($791.9 million) in 2013.

UAE industry players expect to close this year above 400,000 cars this year as compared to 380,000 vehicles in 2014.

Research firm Business Monitor International in its Q2 2015 report forecast 5.1 per cent car sales growth to around 425,000 units.

“BMI is targeting 33 per cent growth in new vehicle sales over our newly extended forecast period to 2019, to reach around 539,000 units. Our positive view on the medium-term outlook for the UAE economy continues to underpin our upbeat stance. Despite the recent fall in the global oil price, we believe that the UAE can continue to record impressive rates of growth over the coming years,” it said.

Japan’ trade deficit with UAE narrows

Japan’s trade deficit with the UAE narrowed by over five per cent last year to Dh118.4 billion due to drop in the crude prices, Jetro said.

Bilateral trade between the UAE and Japan marginally increased to Dh188.23 billion ($51.29 billion) in 2014 as compared to Dh187.24 billion ($51.02 billion) in the previous year.

Japan’s exports to the UAE, which constitute 18.6 per cent of the bilateral trade, grew by 12 per cent to $9.52 billion while imports – that cover 81.4 per cent of the total trade – grew 1.75 per cent to $41.78 billion.

Due to the combined effect of the increase in exports and decrease in imports, Japan’s trade deficit with the UAE reduced by 5.18 per cent to Dh118.4 billion ($32.26 billion).