Dubai: Turn up at a car showroom, choose the model you want – and come back in two months to ride off in it. Or, more likely, in three months.
The UAE’s automotive market is recording some of the highest demand in the last five years, but there aren’t just enough units available to meet all of that. On certain high-demand luxury models, the waiting period for a shipment to come in has even touched six months. (Of course, the buyer could demand and get a priority shipment, but he or she will need to pay a high premium for allotment. Many UAE car buyers are willing to pay that premium.)
The first fortnight of Ramadan has always been a slow period for car sales – not this year, as buyers want to put up the booking amount and keep waiting for the earliest delivery date.
“Honestly, I’ve never seen anything like this,” said Suliman AlZaben, Director at Hyundai and Genesis UAE. “The market is growing at 10 per cent, but could have been hitting the high 20 if only there were enough models with distributors in the UAE.
“Worldwide chip delays are the cause for the delays happening, and it’s been there since last year. But then, you didn’t have this kind of demand. Everyone seems to be in the mood to buy a new car for themselves. In part years, it was always the other way round – high supply and low demand.
“Earlier, dealerships had three months’ of stocks with them at any given time. Now, with the chip-created production and shipment delays, stocks are down to one-month’s cover.”
Slows down delivery
That’s why car owners in the UAE are invariably caught in the ‘buy now, take delivery later’ tangle. Leading dealerships say that demand for new – and pre-owned – vehicles started the shift into a higher gear from last September onwards. Some of that was heavy bookings by fleet operators ahead of the Expo, which opened October. Even then, there was sufficient demand from individual owners as they started to take a clean break from COVID-19 created anxieties and started spending. Spending big.
“UAE dealerships were reporting medium-to-heavy demand right from September/October, and many were caught unprepared for the sudden return of car buyers,” said Sandeep Ganediwalla, regional Partner at the retail consultancy RedSeer.
Auto industry sources talk about demand and supply starting to smoothen itself out towards the fourth quarter. Even here, this is said more in hope than actual belief that more deliveries will begin to feed through to showrooms – and owners’ garages.
Some of the European luxury carmakers are relatively confident that they will have a handle on the situation by October timeframe, in good time for the local arrivals of the 2023 model year versions.
As for AlZaben, his take is that “Dealerships and car manufacturers are in the same boat. We realise that there needs to be a higher urgency to supply all the market needs. We need to bring down delivery times. If every step dealerships take fall into place, by Q4-22, the UAE new car sales could be looking at a 15 per cent growth.”