Dubai: With more than a little help from the many dealership campaigns linked to the ongoing DSF, automotive sales during the first quarter are looking likely to be the highest in three years.
What is making it a particularly good run is that demand is geared towards the premium models and sports utility vehicles, thus having a telling impact on dealer margins.
Unless the upturn is temporary and borne of pent-up demand finally breaking through to the surface, the auto market could well be in for a strong first half.
If it does so, this would make the sector the first — certainly one of the first — to see a return to pre-recession sales numbers.
The recent sales gains tie in neatly with the slew of new models that have been introduced into the market since late last year, while for prospective buyers access to financing has just become a lot easier.
So much so, they now even have a chance to weigh up competitive offers from lending institutions, something that was unthinkable during the worst phase of the recession.
"Auto financing has most definitely witnessed a recovery what with the marked approval rates [being] up year-on-year, while the rate spread is there or thereabouts on the comparative period versus 2010," said Mark Kass, managing director at Trading Enterprises, the dealership for Honda and Chrysler.
Mature markets
"Financial institutions remain positive given the total car market grew 8 per cent year-on-year across the UAE, whereby innovative financing solutions are being drummed up familiar to [the] mature markets."
From a buyer's perspective, the impression is gaining ground that financing rates have gone as low as they possibly can.
Indeed, the 2010 results announced so far by leading local banks have been uniformly favourable and accompanied by a strong statement of intent that retail lending will be a priority this year. Given that lending against property buys will remain depressed for the foreseeable future, other sectors will come in for special attention.
That's a huge plus for the automotive market.
So is the perceived shift towards higher-margin models.
"Since mid-January, for every two units of our entry or mid-range models sold, we are seeing a sale of a premium model, including SUVs," said a marketing manager at the dealership for a US automobile brand. "Earlier the split was 3:1 and during the better part of the downturn it was 4:1 and even 5:1. Buyers are upgrading and they are doing so at levels seen in the best-performing months prior to 2009."
Marquee automotive brands concur with the general upbeat sentiments, and emphasised that this had a truly pan-regional feel to it.
"2011 has got off to a good start — our January sales increased 28 per cent [with] 1,599 cars sold across 14 markets," said Reiner Braun, director of sales and marketing, BMW Group Middle East.
"Our flagship 7 Series was, and remains, our bestselling model. We are still working with challenging market conditions, but feel confident 2011 will be another successful year."
Last year, the German manufacturer saw 3,898 units heading out of regional showrooms in the first three months. (But this tally is from 12 markets as Jordan and Iraq were added later in the year).
In the first three months of 2008, a record year for the region's automotive sector, BMW sold 3,802 units.
Meanwhile, in the UAE, SUV sales are an obvious beneficiary of this buyer preference, and manufacturers are topping up their models with a slew of features to tempt them even further.
Convinced buyer
"Satellite navigation has also proved to be very successful by way of factory fitment," said Kass.
"For Honda, within the M-class segment the all-new Odyssey has started extremely well following the launch in late January."
With the prospect of offering more for the buyer's buck, dealerships are playing the courting game well.
Offering free insurance and extended warranties and throw-in sops such as tinting and rust-proofing, they have just about done everything they can to turn a prospect into a convinced buyer.
Thankfully for buyers and dealerships, there have not been any significant changes in ex-showroom prices compared to the same time last year. This is true for all makes, irrespective of origin.
Now, the big question on the industry's mind is whether the second half will be similarly upbeat.
"I'm not the type to forecast indicative numbers; however, yes, the market appears to be calm and confident," said Kass.
"As major players compete for market share, [it's] happy days for all concerned."
Demand
- 28% increase in January 2011 BMW sales figures
- 1,599 BMW cars sold across 14 markets in January 2011
Are you thinking of buying a car? Are you weighing out the pros and cons? Tell us about your decision process below.
