Car dealers against cutting prices

Most car dealerships in the UAE have decided against cutting prices in response to the financial slowdown, but many are launching special offers to attract buyers. "The prices of Mercedes-Benz cars will remain unchanged though customers will find we are offering more deals such as extended warranties, service agreements and free insurance," said Wassim Derbi, Marketing Manager of distributor Gargash Enterprises. "This way the advantage to customers is increased during this period. Customers in the region recognise they already get a good deal on a German car, which is why prices for Mercedes-Benz vehicles have not fallen here. The cars are still relatively affordable compared with the European market, where a considerable amount of tax has to be paid on vehicles. "Demand for Mercedes-Benz vehicles has not fallen. There are still drivers in the UAE who want to buy a Mercedes-Benz because it is one of the top luxury German brands. And demand increased during the first quarter for approved used cars. "Regarding sales figures, Gargash Enterprises achieved another record in 2008 with 4,800 cars sold across Dubai, Sharjah and the Northern Emirates, while 4,250 were sold in 2007, around 11 per cent increase in sales volume. "In Q4 2008, there was a slight drop of five per cent compared to Q4 2007. The main reason behind the drop was the economic crisis and the number of holidays in December, where showrooms were operational for 14 days only. Derbi said Gargash's showrooms were offering a number of promotions for new and used cars and would continue to do so until the end of the second quarter. "The offers are mainly focused on value-added packages. The way forward is to enhance the attractiveness of the product to the customer as now is the best time to buy a new or approved used Mercedes-Benz. "For the GCC and Middle East, Mercedes-Benz achieved a market share of 45 per cent in Q1 2009 compared to 46 per cent in Q1 2008. This market share is only towards BMW and Aud (luxury car market). "Gargash Enterprises is not affected by exchange rates as it prices Mercedes-Benz cars in local currency. This allows distributors to plan ahead with pricing policies as they are not affected by constant price changes. Hugh Dickerson, Sales and Marketing General Manager at Toyota distributor Al Futtaim Motors, said: "We have not reduced nor increased, the prices of our vehicles during this crisis. We have, however, improved the offers on our vehicles to ensure that we provide the best possible value for our customers. "We have a very attractive range of offers on both the Toyota and Lexus ranges that make our cars very affordable. It is important to note that our costs have in fact greatly increased as the Japanese yen is so strong, but we have not passed these increases on to our customers. "Of course, like all manufacturers we have been affected by the economic difficulties in recent months. While consumer demand has dipped due to a lack of confidence, the real issue has been the lack of financing for vehicle purchases in both the retail and corporate sectors. "However Al Futtaim Motors has a very close working relationship with its banking partners. As a result the provision of funding for a Toyota is perhaps more easily available than with some other brands." Al Futtaim is offering buyers a year's free insurance, two years' free servicing and a free three-year warranty. Lexus customers receive a year's free insurance and three years' free servicing. "Under a new offer financing is available to those with salaries of Dh4,000 – the current minimum levels in the market are typically Dh8,000 to 10,000. The interest rate is a low 5.5 per cent and we are not asking for a deposit – typically banks are asking for a down-payment of between 10 and 40 per cent. "We are confident this offer will stimulate the large part of the market where customers are still keen to purchase a new vehicle but have, until now, not been able to obtain bank funding. "While we do not disclose sales figures I can confirm that, unsurprisingly, our overall sales were down in Q1 2009 compared with Q1 2008 as the market contracted. We have, however, seen our sales improve during the first quarter and our March 2009 sales were 47 per cent up on January." He said sales in March had been boosted by special offers as well as the launch of the new Toyota Sequoia and Lexus RX350 SUV. "These launches and the new models that are scheduled for the rest of 2009 are a clear demonstration of the strong level of support we are getting from Toyota, which has continued its high level of investment in product development despite the global economic downturn. "We at Al Futtaim Motors are lucky to be partnered with probably the strongest car company in the world. Toyota has been very supportive during the crisis and most importantly has not cut back its research and development plans. "Regarding the market share in 2007, Toyota held 33 per cent of the UAE market and Lexus 16 per