Dubai: The UAE’s official car dealerships are getting hit with grey market imports from neighbouring markets all over again, and in some cases impacting on their volumes by as much as 20 per cent.
There has been a sharp spike in such activity in the last three months, and has prompted some of the mainline dealerships to take out ads highlighting the sanctity of the Commercial Agency Law in the country as well as warning/informing possible car buyers of the downsides to buying a parallel import.
“Until the recent flare-up, grey imports of cars into this market was under control,” said Mohammad Khader, president of Al Majid Motors and the Kia dealer for the UAE. “What’s happening is that distributors in some of the other markets in the region or even further are bringing in their unsold stocks into the UAE and selling them here. Such volumes have been increasing as their domestic economies could be under stress while the UAE’s own new car sales track higher growth.
More brands hit
“Those dealerships are only interested in liquidating their stocks at the earliest and are willing to do so by even sacrificing their margins.”
In the past, Toyota was the principal brand when it came to grey imports, but that has since expanded to take in more automotive brands. The bottom-line for grey importers is to make available any model that has a ready acceptance here.
Khader reckons that Al Majid Motor’s sales could have been hit by 20 per cent over the recent period. “There’s always some way these importers can explain off these shipments — stating these are for re-exports is the most frequently quoted one,” said Khader. “But, somehow, many of these vehicles end up getting registered locally.
“There was one new car showroom that opened very near ours in Dubai just the other week - I went there and was told by the salesperson that I only needed to bring cash to register an imported model in my name.”
Al Habtoor Motors recently issued a strongly worded ad in the local media stating categorically, “The company hereby warns anyone who imports, markets and sells” Mitsubishi models into the local market other than through its facilities. Moreover, it “requests everyone who has bought products under the ‘Mitsubishi Motors’ trademark to approach it and disclose what has been imported.
“If the company identifies any infringement on the rights of the agent inside the UAE territory or any violation of the provisions of the commercial law, it shall take all legal proceedings necessary to secure its rights.”
But some market sources insist that the menace is not a recent occurrence. According to a spokesperson at Al-Futtaim Motors, the Toyota importer, “We don’t believe that there are unusually new concerns regarding parallel imports. We thrive to educate UAE motorists about the importance of buying vehicles and parts from our company being the exclusive distributor for Toyota and Lexus in the UAE, for a number of reasons:
“Warranty: while our customers can benefit from the extended five years unlimited mileage warranty offered by Al-Futtaim Motors, those who buy their vehicles through dealers outside the UAE do not enjoy the same advantage.
“Specification: Optional equipment on parallel imports may not be to the same standard as vehicles sold through our network in the UAE
“Avoiding the risks of buying counterfeit parts, as there is no guarantee of the originality of the parts outside our network.”