Life & Style | Motoring
End of the road?
The global recession has hit. Already the investment and property landscapes in the UAE are changing. How will the spiralling global economic crisis change the cars you see on the road here?
- By Max Tuttle, Freelance Writer
- Published: 13:25 January 6, 2009
- Image Credit: Supplied photo
- Destined to go the way of the dinosaur?
The global recession has hit closer to home. Already the investment and property landscapes in the UAE are changing – though the silver lining of the cloud for many, lower rent prices, has yet to materialise – and it could well be that the automotive topography will follow suit.
Gulf News recently reported that prerequisite conditions for loans have been tightened considerably, with some lenders doubling the salary limit for loan applicants.
This could push buyers towards cash purchases, sending buyers from premium and larger models to the 'bread and butter' brands and smaller models.
The credit crunch may have also played a part in the recent decision to 'postpone' the ban on cars aged 20 years or more that was to have come into force on December 1.
It seems that the essential army of 1980s Corollas, Sunny Super Saloons will remain a familiar sight for a while yet.
But what may affect the future appearance of the UAE's roads to an even greater degree are the seismic shifts currently giving the automotive world a terrible shaking.
The financial crisis has rushed headlong to meet the car makers, who are quickly scaling back production, selling off shares in subsidiaries, closing plants and cancelling models to adjust to rapidly falling demand in almost every market across the globe.
Worse still for automakers, there is a sense that things are going to get much more difficult before any kind of upswing occurs.
The American giants – General Motors (GM), Ford and Chrysler – were at the time of going to press, resting their hopes on between $15-37 bn US-government-backed loans in order to safeguard their future.
The 'Big Three' have suffered more than other manufacturers, thanks to a heavy reliance on their now-struggling home market and fuel-greedy products that are not what the punters are looking for in cash-tight times.
Chairman and CEO of GM, Rick Wagoner, told the US government in mid-November that the US economy will face "disaster" without the bailout. Without government help, GM and Chrysler could run out of cash by January.
Ford is in better shape, though it will still motor through half of its $17 billion piggy-bank in 2009. "This is about much more than just Detroit," said Wagoner "It's about saving the US economy from a catastrophic collapse."
GM may send Buick, Saab and Saturn to the gallows, while up-for-sale-since-June Hummer has not yet found a buyer, so could also end its days at the same time as its stablemates.
Some of the UAE's favourite vehicles may no longer appear in neighbourhood new car showrooms.
The future roads of Dubai may also not include hybrid vehicles, unless the government is prepared to offer large subsidies. Hybrids are extremely expensive to produce (with rumours that even Toyota makes no money selling them) and their production numbers could drop quickly, as only profitable avenues are explored and development budgets are slashed.
In November, struggling Chrysler halted production of its two hybrid models.
Indeed, for now the best investment tip may be to buy a Chevrolet hybrid taxi from the RTA once it has completed its service, mothball it and sell it on as an object of fascination to a collector.
Shutdown, downtime and no-shows
Desperate times call for desperate measures
1. June-Oct: GM closes four car factories in the US, Ford announces two additional US factories will close and that it will mothball one plant in Canada and one in the US, while Chrysler brings forward by one year the closure of one of its American plants, Ford will also close a factory in Bordeaux, France – thousandslose their jobs.
2. Dec: Japanese car manufacturers slash 1.9 million units from their original output projections, Honda pulls out of F1.
3. June-Dec: Major manufacturers, including Porsche, Nissan, Honda, Tata, Holden (GM's Australian arm) announce temporary factory shutdowns across the globe.
4. Oct: Mitsubishi, Land Rover, Suzuki, Porsche, Ferrari and Rolls-Royce will not exhibit at January's North American International Auto Show in Detroit – one of the world's biggest car shows.
5. Nov: The European Commission approves a five billion euro (approx.Dhs23bn) package for the European automotive industry (which directly employs 2.3 million people; a further 10 million work in related sectors).
6. Nov: Jaguar Land Rover asks for a £1bn (approx. Dhs5.5bn) emergency loan from the UK government.
7. Aug-Nov: Forthcoming planned models get cancelled, such as the BMW X7 and CS (8 series); Cadillac CTS coupe; Chevrolet Camaro and Challenger convertible… and postponed, like the Saab 9-5.
8. Nov: The German government, backed by the EU, says it will bail out Opel (owned by GM) with up to 1 billion euros (approx. Dhs4.6bn) if necessary.
9. Nov: Ford sells its 20 per cent stake in Mazda, raising $538 million cash; at the same time, GM sells its last three percent stake in Suzuki for $230 million.
10. Nov: European parts suppliers to Ford and GM lose important credit insurance, removing protection against the car makers not paying them.
11. Dec: Volvo and Saab reportedly approach the Swedish government for aid, as Spanish car dealers say that a national 800 million euros (approx. Dhs3.7bn) is not enough.
Endangered species?
The brands and models whose time could soon be up:
1. Hummer
The bad boy of the road, the slab-sided and slab-ended Hummer H2 has long been the choice of anyone who doesn't want to be intimidated. Wide, heavily-chromed and with the thirst of a returning seaman, the H2 put Hummer on the map – and not just because it can be seen from space with the naked eye. The H3 is a more subtle interpretation of Hummer values but its more manageable size and fuel consumption may still not be enough to save the brand from extinction.
'Like Nothing Else' could prove to be Hummer's undoing. Sales slumped 60 per cent over the past year; though popular in the UAE, this market still brings in less than 4,000 sales a year.
- Which model numbers would not increase on the UAE's roads? H2, H2 SUT, H3 SUVs
2. Saab
From the start, Saab forged its own distinctive path, produced quirky cars with unique styling and mechanical features. From its first car, the beautiful 92, up to the 900 Turbo, it was easy to spot a Saab. Things changed when GM took over – re-engineered Opels were the order of the day, though the trademark interiors and turbo-heavy engine range remained.
Lack of interest and investment from GM has left sales targets an unfulfilled dream and hastily cobbled-together products like the 9-2X (a lightly fettled Subaru Impreza) and the 9-7X (a Chevrolet Trailblazer with Saab face and dashboard) have failed to capture the imagination of the public like the 'old school' product did. Despite some promising concepts, Saab has long been struggling to find its mojo, as well as its sales targets.
- Which model numbers would not increase on the UAE's roads? 9-3 sedan and convertible, 9-5 sedan, 9-7X SUV.
3. Jaguar
Inconceivable as it sounds, Jaguar could be in the danger zone soon. Just months after being bought from Ford by Tata Motors in India, Jaguar Land Rover finds itself asking the UK government for cash, and buyers across the world downsizing, as Jaguar's replacement for the X-Type is an uncertainty.
- Which model numbers would not increase on the UAE's roads? X-Type sedan, XF sedan, XJ sedan, XK sports coupe.
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