Car prices in UAE unlikely to go down: Survey

A third of the UAE's car dealers believe vehicle prices will have to be cut because of the economic downturn.

However, the remaining two-thirds think prices will not go down, an exclusive survey of the automobile sector by Emirates Business has revealed.

The majority of dealers across the country – 65 per cent – said they did not expect consumer confidence to fall further in the coming months. "It is probably at rock bottom," said one dealer, who handles a luxury brand. However, 35 per cent of respondents believe confidence might dip further – which would have a knock-on effect on sales. Those quizzed said the state of the economy was the biggest threat to the industry.

Of the surveyed dealers, 100 per cent said economic factors could affect their operations in a major way. Some said a fall in the number of customers was also a potential threat. Personnel issues, on the other hand, were not in the picture as none of the dealers pointed to this factor.

Many dealers were more optimistic about the coming months. Factoring in first quarter 2009 sales figures, the majority of those surveyed were hopeful about the business situation in the coming months.

Sixty-five per cent said they were somewhat more optimistic, while 35 per cent were somewhat more pessimistic. "We remain optimistically cautious," said Len Hunt, Group Director of Al Futtaim Automotive.

"Al Futtaim has seen a steady increase in sales volumes over the past few months. Our group has worked hard to ensure we have competitive offers in the market and that customer service remains a key driver for Al Futtaim Automotive."

The dealers gave a mixed response when asked about their profit expectations for the first half of 2009. While 50 per cent of the respondents did not wish to disclose their figures, 35 per cent said they expected a decline of more than 10 per cent. However, 15 per cent were hoping for an increase of more than 10 per cent.

As far as sales were concerned, 55 per cent said they would not return to 2008 sales levels until 2012. Fifteen per cent said that should happen in 2010, 15 per cent said 2011 and an equal percentage believed they would not see last year's sales figures repeated until 2014, when the economy would hopefully be in much better shape.

Despite the bad economic situation around the world, 50 per cent said they expected to see annual growth of between one and 10 per cent in the next five years. The other 50 per cent forecast annual growth in the range of 11 to 25 per cent over the same period.

As far as the gloomiest and the most promising regions for the automobile sector are concerned, all the respondents said China looked the least affected by the economic downturn. Some were also optimistic about the Middle East and Africa, and opted for these regions alongside China.

When asked which regions had been affected most by the global crisis, 85 per cent said the Americas – particularly North America – were the worst hit. Surprisingly, some also said Middle East had been affected in a major way.

The dealers differed over the best strategies to offset losses. Suggestions included entering new businesses both within the automobile industry and in other sectors, going overseas to new markets and moderate restructuring of existing businesses
Others favoured maximising opportunities in the

UAE by offering "added value" packages and developing service and parts outlets/packages to support the existing market or focusing more on other states in the region rather than the UAE.

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