Car dealers in UAE positive on stock clearance

Despite the slump in exports of Japanese cars globally, dealers in the UAE are buoyant as they strive to clear the overstocks of 2009 models, by adopting on aggressive marketing strategy.

According to figures released by the Japanese Automobile Manufacturers' Association (Jama), as of May 2009, worldwide export of Japanese cars had fallen by 61 per cent compared to the last year.

Compared to May 2008, the export of Japanese cars had come down by 55.9 per cent in May 2009 – from 528,617 cars to 233,217.

Year to date figures until May 2009 showed that Japanese car exports were only 1,113,840, compared to 2,911,121 cars for the same period in 2008 – a fall of 61.7 per cent. Jama is a Tokyo-based trade association representing 14 Japanese car, truck, bus and motorcycle manufacturers.

However, Michel Ayat, CEO, Arabian Automobiles, an AW Rostamani Group company which is the exclusive dealer for Nissan, Infiniti and Renault in Dubai and the Northern Emirates, said Nissan imports had not been stopped.

"Our company is active in the day-to-day management of current inventory and in the forward ordering of new stock. In fact, Arabian Automobiles will be among the first distributors in the UAE to launch the new 2010 Model product range. We are also pleased to say our company has increased its market share in the first half of 2009 in comparison to 2008."

Ayat said the firm has achieved these results "through prudent management of inventories and by clearly offering our customers some outstanding offers throughout the recessionary period since
Q4 2008".

"Moreover, our Ramadan campaign has just been launched in the marketplace. We can clearly see some early indicators of a recovery taking place in our local economy and we see a positive outlook for the rest of 2009 with increasing confidence," he said.

Under Arabian Automobiles' special Ramadan promotion, its customers can save up to Dh10,000 on the purchase of a new Nissan. Purchases of Nissan vehicles can be made with no down payments and at an interest rate of 4.5 per cent, with monthly installments stretching for a period of up to six years. Finance is available through banks for customers with a minimum salary of Dh5,000 per month, said the dealer.

Other car companies are also offering special Ramadan deals to clear off inventories. Among other things, a strong currency has been affecting the competitiveness of Japanese cars in the international market.

An official from the Al Futtaim Group, dealers of Toyota and other leading Japanese brands in the UAE, said the sales of Toyota cars have started picking up, especially in recent weeks, due to special offers. "Toyota consignments used to come regularly, but due to the slowdown, the number of cars imported into the UAE market came down. Toyota is the market leader in the UAE and our consignments come regularly."

He added that efforts are on to complete the sale of 2009 model cars, as all the cars imported in the past could not be sold as per the projected demands.

Cars are imported according to demand forecasts and once an order is placed the parent company in Japan will not cancel it. The official said export figures released by Jama is an indication of the state of the market.

Industry sources said many automobile dealers were caught out by the financial crisis. The import of cars into the market continued as per earlier orders and projected demand, while sales continued to fall.

"The parent company takes orders in advance and will start production only after getting confirmed orders. It is not easy to cancel an order and therefore car dealers were in a tight situation. After the orders had been placed and the invoices signed, car sales suddenly declined," said an official.

The next logical step was to stop or drastically reduce subsequent import orders. Many car dealerships had to pay heavy penalties at the ports for not clearing their consignments on time as both their warehouses and showrooms were full.

Faced with this situation the dealers created new open parking spaces in locations such as Al Qouz and Jebel Ali.

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