As new vehicle sales slowdown to a crawl in the UAE Automobile dealerships in the Gulf could be in line for their worst first-half performance since 2009. In Bahrain, sales continue to be under extreme pressure as the retail sector reels from the recent upheaval.
Saudi Arabia, in contrast, provides the sole silver lining and auto industry sources are hopeful that the second half of June will see heightened activity in the wake of the government’s recent cash bonus payments for nationals.
If that happens, new vehicle sales in the Gulf during the first six months could end near the 500,000 unit mark, according to industry sources.
But others are less optimistic: they believe the total will only be just over the 400,000 mark, and that too would require a major push in the last weeks of June.
“May was exceptionally slow for car sales in the UAE, and the first ten days of June have not been too hot either with the financing being quite tight,” said a sales manager with a leading Japanese manufacturer based in the Jebel Ali Free Zone. “Saudi Arabia has been the only consistent performer during the whole of the first half, while Kuwait saw spurts of activity helped on by the government’s social support programmes.”
In contrast, the automotive market is down by 50 to 70 per cent in Bahrain compared with the first half of last year, according to auto and insurance industry sources. Meanwhile, Oman and Qatar saw gains of between 5 and 10 per cent during the same period.
While events unique to the region exerted their own influence on the auto market, there was also an impact from delivery constraints — and consumer concerns — over Japanese makes following the March earthquake. According to a leading Japanese brand, this resulted in a drop of nearly 15 per cent in its first-half sales.
“This is based on our internal assessment and of our regional dealers that new car buyers shifted their preference to another brand, most likely a non-Japanese one, in the immediate aftermath of the quake,” said a senior official with the company. “But the biggest impact was felt on our brand’s fleet sales.”
All of which leaves a mixed picture for the automobile market in the Gulf. During 2009, when the economic downturn was at its peak, industry estimates suggest that the six markets accounted for volumes of one million units, with the first six months making up around 400,000 to 425,000 units.
If these markets do not perk up sufficiently during the rest of this month, automobile makers and dealerships may yet find that volumes in the first half of this year may turn out to be even lower. Now that would be a real speed-breaker.
