Life & Style | Motoring
Banks rejecting more vehicle loan applications in region
The impact of the global financial crisis is spreading to the Middle East auto industry as there has been a surge in the number of vehicle loan applications being rejected by banks.
- By Shakir Husain, Staff Reporter
- Published: 00:02 November 27, 2008
Dubai: The impact of the global financial crisis is spreading to the Middle East auto industry as there has been a surge in the number of vehicle loan applications being rejected by banks.
A senior General Motors official told reporters in a conference call yesterday that the rate of rejections has risen from five per cent to more than 20 per cent.
The UAE and Qatar are among the markets that have seen a significant rise in these cases.
The situation is different in Saudi Arabia, where there are more cash buyers than customers purchasing cars through bank financing, General Motors Middle East operations president Mike Devereux said.
In the UAE, 70 per cent of the company's cars are sold through bank financing.
"We used to have rejection rates throughout the Middle East of about five per cent.
"Now all manufacturers are seeing rejection rates in the range of 20 to 30 per cent," he said.
Devereux said the company and its dealers are talking to banks in the region to ease credit for car purchases.
General Motors, which has approached the US government along with Ford and Chrysler for funds to overcome a credit freeze, sees the Middle East, Russia, China, Brazil and Turkey as future growth markets amid falling vehicle sales at home.
No plan to cut workforce
Sixty per cent of the company's sales come from outside the US.
The company aims to double its sales in the Middle East over the next five years, Devereux said.
It sold 122,000 cars in the region during the first 10 months of 2008 compared with 108,000 during the same period last year.
Its car sales in the UAE grew 28 per cent to 19,500 from January to October.
Devereux said despite slowing cars sales General Motors has no plan to cut its regional workforce or reduce its marketing and promotional budget.
The industry has been hit by a "double whammy" of the credit squeeze and falling sales, he said.
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