InFocus | Automobiles
In the fast lane
When it comes to cars in the UAE we are spoilt for choice. There's a car for everyone - from the dreamer to the doer. If money is not the issue, there are the big four-wheel drives that guzzle fuel faster than you can fill them.
- By Esha Nag, Staff Writer
- Published: 00:00 November 19, 2006
- Image Credit:
The passenger car market in the UAE is one of the most advanced and dynamic in the Middle East
When it comes to cars in the UAE we are spoilt for choice. There's a car for everyone - from the dreamer to the doer. If money is not the issue, there are the big four-wheel drives that guzzle fuel faster than you can fill them.
If you're on a budget, dozens of brands offer inexpensive, fuel-efficient vehicles, both old and new. And if you crave that ultimate thrill, there are the sports cars - they aren't one of life's necessities, but in a world filled with worries they can be the ultimate escape.
The passenger car market in the UAE is one of the most advanced and dynamic in the Middle East. According to industry statistics, about 160,000 cars were sold last year in the UAE.
In a recent online consumer poll conducted by ACNeilson, it was found that the number of vehicles per capita in the UAE was among the highest in the world.
And interestingly no one in the region was willing to change his or her car for a motorcycle, a scooter or a bicycle. Neither were they ready to give up their vehicles altogether while, for example, in Brazil 13 per cent of the people interviewed claimed that high fuel prices had urged them to do so.
According to media reports, there has been a 650 per cent increase in the number of cars in Abu Dhabi from 2001 to 2006, and police sources have pointed to the issuance of an estimated 24,000 driving licences in the last three years.
As a popular saying goes, there are few greater luxuries in life than driving the car of your dreams. So in a region where customers want to have the best and are prepared to pay for the best, it's only natural for the automobile industry to flourish.
As one of the industry experts pointed out, "Customers in this region have discerning tastes, high disposable incomes and a passion for innovative technologies. Arab consumers want phenomenal performance and control at their fingertips... they enjoy the sense of exclusivity..."
In the UAE dozens of great brands are competing for market share and the hearts and imaginations of consumers. Luxury carmaker BMW has reported a 26 per cent increase in the sale of the BMW 7 Series saloons in the first half of 2006.
Even the compact car segment is witnessing tremendous growth. Buyers of compact cars are usually between 20 and 30 (a segment in the UAE population that is growing). For this section it's important that their first car is affordable and fuel efficient, besides being stylish and fun to drive.
As one of the UAE's fastest growing sectors, the automobile industry gets the impetus from the economic growth, an increase in population, cheap petrol and easy access to financial facilities in the region.
As world leader in Islamic finance products, Dubai has driven consumer credit for buying cars.
As Tayeb Al Rais, Managing Director, Liberty Automobiles Company, says, "The jump in fuel prices has lead to a drastic growth in per capita GDP. This phenomenon has resulted in major infrastructure development and a growth in the net disposable income. This coupled with easy loan availability has propelled the growth of the automobile segment."
Top players
According to Al Rais, the automobile industry in 2006 is expected to grow by 28 per cent. Dilu John of Al Yousuf Motors, says, "In the all-category group, the Toyota, Chevrolet and the Nissan are major players and the top three brands. In the luxury category, it's the Mercedes, the BMW and the Lexus." Adds Al Rais, "Among the GM brands we deal in, Chevrolet happens to be the most popular with sales of about 67,000 units till September 2006 in the Middle East."
With more than 50 per cent of the national population still below the driving age, countries such as the UAE present enormous and untapped opportunities for automobile manufacturers.
Besides, the region is liquid with petrodollars. Manufacturers such as General Motors celebrated a historical milestone in the region last year by surpassing 100,000 unit sales for 2005 by the end of November. Its outlook for 2006 is equally positive with 12 major launches planned.
For the Ford Motor Company, 2005 has been a landmark year as well with record sales, new product launches and an expanding dealership network.
As Jim Benintende, MD, Ford Middle East, told Gulf News a few months back that "the Middle East is a growth market... a young market... and this represents an opportunity for Ford and its youth-focused product line up."
Nibal Sim, Marketing Manager of Nissan Middle East, says, "The rapid growth of the young-generation driver is creating and leading to a new trend in the market."
Sports car
Market observers predict that the sports car is the car of the future. The Porsche 911 is the best selling model in this category - fast, dependable and easy on the eye. Traditionally, the sports car is regarded as a two-door vehicle designed for performance - a mix of speed, manoeuvrability and acceleration.
Today the boundaries of what constitutes a sports car have stretched. Sports drivers still expect speed, a thrilling ride and great handling - but they also demand comfort and practicality.
John says, "People who were so far going in for the four wheel drives are now going to shift preferences to the SUVs."
Andy Gawthorpe, Middle East Managing Director for Jaguar and Land Rover, says, "Drivers wishing to explore the full potential of their sports vehicles may soon make use of facilities such as the Dubai Autodrome, which is under construction in the emirate."
The Dubai Autodrome will be available to manufacturers and racing teams for winter testing, vehicle demonstrations, product launches, as well as hot weather car research for international manufacturers.
Says Gawthorpe, "The Middle East is an exciting market that is growing at a phenomenal rate, in particular in the car industry. New car growth is expected to grow around 50 per cent over the next decade."
Manufacturing hub
The UAE has also been identified as a possible new location for manufacturing automotive components because of its lower costs. The region offers favourable energy prices to car companies interested in moving their production here.
It is also a cheap supplier of raw materials, such as aluminium. Another attraction is the region's development zones. Many of the seven emirates have free trade zones where companies can own and operate their businesses without any form of taxation or local involvement.
Dubai is also well placed with one of the world's largest container ports (Jebel Ali), offering all forms of logistical support. Built 25 years ago, the port is the regional home to numerous automotive manufacturers, from Chrysler to Toyota.
The booming automobile industry in the UAE has spawned auto loans with longer terms and alternative financing. All leading car dealerships in the UAE have representatives from major banks in their showrooms, offering a range of financing and insurance options to customers.
Automotive loans are the most significant and visible components of retail banking in the UAE. Almost 80 per cent of the cars on UAE roads are bank-financed, thus proving the significance and success of auto loans in the retail-banking sector.
Raza Fehmi, assistant vice-president for Retail Products, Auto and Mortgages, Dubai Islamic Bank, says, "We offer various financing schemes for new and used vehicles... various payment terms of up to 72 months, as well as deferred payment offers. The Flexi Drive Balloon Payment option is one such example.
"Our direct sales representatives are present in all major car dealerships across the UAE. We also have strategic alliances with Aman and Salama insurances. Their representatives are placed in our branches to help customers get their preferred insurance rates."
Attractive offers
Luring customers with similar offers is the Commercial Bank International, which offers a 3.75 per cent flat interest on car loans for a maximum of 72 months, as well as a free lifetime credit card with every auto loan.
Going by recent media reports, the BMW Group and American Express have launched a new co-branded automotive credit card called the BMW Credit Card.
This is the region's first co-branded credit card in the automobile sector, which has the following features: reduced prices on BMW genuine parts, BMW servicing, free flights, hotel nights and shopping sprees through membership rewards, up to nine free supplementary cards for friends and family and other freebies.
The new programme launched by Citibank offers car loans with a down payment of 25 per cent and a reduced balance rate of nine per cent. Citibank aims to provide a car loan approval within 30 minutes on a best-effort basis.
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