UAE vehicle sales decline 40% as loans dwindle

Dubai: Car sales nationwide fell more than 40 per cent in January and February amid tightening bank conditions for automobile loans and low consumer confidence, the head of a leading car dealership said on Thursday.

If banks continue to impose strict criteria for car loans, sales are unlikely to improve anytime soon, said Michel Ayat, chief executive officer of Arabian Automobiles Company (AAC), the Nissan, Infiniti and Renault dealer in Dubai and the Northern Emirates.

"Indications are that there was a drop of 40 per cent to 45 per cent in sales as a whole in the UAE in the first two months. The numbers for March are still not available," he told Gulf News, citing data from leading global car manufacturers with a strong local presence.

Al Futtaim Automotive, which represents several global brands, including Toyota, in the UAE, said sales have fallen back to the 2007 level.

"The global crisis has brought sales down from the unusual peaks of 2008 to 2007 levels, but we are optimistic the UAE's resilience will see auto sales bounce back significantly," an Al Futtaim spokesperson said and noted that there was "a positive growth in both enquiries and car sales" for new and old vehicles between January and March.

More than 80 per cent of individual car purchases locally are through bank financing, and potential buyers are discovering that conditions of loan eligibility have become stricter in the economic downturn.

People working in real estate, financial and hospitality companies, are more likely to face stringent bank scrutiny even with their relatively higher salaries, as those sectors are seen more at risk of shedding jobs if an economic recovery is delayed.

During the recent boom times, car loans were often approved on the spot once a buyer had selected a vehicle.

These days a loan approval can take between 10 to 15 days, Ayat said, adding, "We never experienced this earlier."

"They are very selective. We hope banks will be more flexible in approving loans," he said, hoping that the second half of this year will not be "as severe as it is now."

AAC, which claims 23 per cent share of the car markets of Dubai and the Northern Emirates, last year achieved record sales of more than 40,000 units.

Ayat gave no estimate for this year, but said the company is improving its market share despite weak sales.

"The Infiniti is the best-selling luxury Japanese car in the local market. AAC is growing faster than the average market growth. We gained market share in the first quarter," he added.