Quality trumps price amongst region's auto trading community

These are characterised by burgeoning regional markets led by Dubai's huge re-export trade.

Significantly, the statistics show that this is undergoing a shift towards manufacturers of guaranteed manufacturing quality. Detailed studies of Dubai's imports in automotive parts and accessories (excluding tyres and batteries) reveal that the purchasing behaviour of traders and workshops has retreated from a price-led factor in favour of quality-led factors.

While imports are increasing annually by more than 30% (2005: +39%; 2006: +35%), and have increased by 130% between 2003 and 2006, a strong bias towards the established automotive manufacturing countries is apparent.
In 2004, only 65% of all parts and accessories were imported from Germany, Japan and USA. In 2005, that figure rose to 72%, climbing further in 2006 to 73% (roughly US$600 million).

During the same time period, the market share of Chinese parts and accessories decreased from 5.5% in 2004 to 4.5% in 2006 (amounting to US$38 million). This divide is predicted to grow further in the year ahead.

Industry analysts point to a variety of reasons influencing this trend in purchasing patterns. The reliability and authenticity of replacement parts play a major role in the purchasing decision, and industrial manufacturing powerhouses like Germany, Japan and USA offer an influential 'comfort-factor' when it comes to the durability of their final product. This is a factor which Chinese firms are finding it difficult to compete with. Industry sources point to other clinches such as companies being able to provide constant additions to the product range and the order quantities of suppliers which have generated this move towards more well established entities among buyers.

Elaborating on the issue, Mr. Dirk Heibel, GM at Diesel Technic said, "Buyers prefer importing a large, diverse amount of products at the same time. Firstly, it gives them a legitimate variety of goods on the same invoice, and secondly, it justifies the huge shipment costs that they incur on the deal. Firms here don't mind importing a smaller amount of items at a higher price, as long as they're assured of a quick delivery date. Well-known brands have an obvious advantage in this regard. Over time, they've built up a reputation based on important points like reliability, large range and prompt service."

The quality message is echoed by another expert on the subject, Mr. Gordan Zuber, Global Fleet Coordinator of the International Federation of Red Cross and Red Crescent Societies. "We are globally operating 1400 light cars and trucks. Our set fleet management policy requires purchasing only genuine, by vehicle manufacturers approved, vehicle spare parts. This is due to the fact that our organisation is often operating in extreme conditions with poor or none existing authorised after sales support and good quality reliable genuine spare parts are 'must have'. Our organisation is purchasing spare parts directly from Japan or from authorised distributors in ME."

Industry insiders point out that sourcing from China usually means ordering high quantities of one single item from one supplier, and getting other items from a different manufacturer. This slows down the import process, and is a hindrance to buyers. More importantly, they argue that the price advantage from Chinese firms is often offset by the costs incurred in replacing cheaper parts on a regular basis - either due to breakdowns or glitches requiring additional maintenance.

There are approximately 500 well established Chinese companies in the automotive aftermarket, manufacturing products at world-class standards. Some of these are already exhibiting at Automechanika Middle East. There are on the other hand several thousand SMEs trying to do business here as well. In many cases, the only advantage these companies have is a cheap product, lacking after sales service and resources for research and development. Trying to make out a difference between the two can be a challenging process as the market is extremely dynamic.

The quality trend within the region's automotive industry is one of the key issues being highlighted at Automechanika Middle East, along with a host of other topics pertinent to the region's auto market. Automechanika is part of an international circuit of 15 auto-aftermarket shows that take place around the world, from Frankfurt to Buenos Aires, and most other major cities in the world. The Dubai showcase is slated to be one of the largest, with the event now firmly recognized as an influential trade platform for the global automotive industry to do business in. The trade show is organised by Messe Frankfurt, one of the world's top three trade fair companies.

In 2006, Automechanika attracted more than 10,500 trade visitors from 89 countries. This year's showcase is poised to be larger and more diverse than before, and will take place from
27-29 May, 2007 at the Dubai International Convention and Exhibition Centre.