Dubai car sales gather steam

The downturn wreaked havoc on consumers' buying habits, and the car market in Dubai was no exception. Recent figures from the Roads and Transport Authority show that the emirate witnessed a steep drop in the number of new vehicles registered in 2009. From a high of 142,121 new vehicles registered in Dubai in 2008, the new vehicles registered in 2009 fell 82.5% to 24,883.

However, analysts say the worst is over for the sector, and dealers are expressing confidence that overall sales will be higher in 2010. 'Things are a bit calmer this year,' says Pankaj Dev, managing director of AutoMiddleEast.com, an industry analysis firm. 'The adjustments that dealers had to make in terms of their operational costs have been made. Second, the high level of inventory that everyone was carrying for most of 2009 has been neutralized.

'So the inventory levels that dealers are working with are far more in line with current market demands than what they were. Therefore the cost of carrying that inventory has reduced at the dealership points.'

At the same time banks are a bit more flexible in terms of car loans than they were six months ago, however they are not back at the levels that they were in 2007-2008, he told AMEInfo.com.

Luxury auto segment strong

At the top end of the luxury scale, sales remain strong. One investor from this region has booked 60 Aston Martin 177s - only 77 of which have been put on the market worldwide - at a cost of about one million euros per car, he says.

Slightly down the ladder, brands like BMW and Mercedes have reported good numbers for the month of May. However, the crunch is really being felt is at brands below the luxury levels, he claims, with significant discounts being offered on many types of brands.

While some brands will gain market share compared to others, market sales overall will remain on par with levels seen in 2009, he predicts. 'That itself will be a big achievement for the industry to have a market stagnant and not fall below 2009 levels,' he said.

Dealers see growth

Dealers in Dubai are more upbeat in their assessment of the market. 'When comparing sales volumes for the first couple of months of 2009 to the same period last year, we have seen a definite increase in the number of units sold in the UAE and across all of our car brands,' said Len Hunt, Group Director at Automotive, Al-Futtaim, which sells brands such as Toyota, Honda, Volvo, and Chrysler.

Strong sales are also being seen in Al-Futtaim's used car division, which recently had its best sales month since launching ten years ago. Great offers currently in the market are playing a large role in driving sales volumes, but an increase in consumer confidence is also being seen, he noted.

'The number of people visiting the showrooms continues to grow and when speaking to our customers, the hesitancy that we saw in early 2009 in terms of making a buying decision has decreased,' Hunt said. 'The banks are also contributing towards stimulating the market with some good finance deals on offer.' Overall, the company has forecast a stronger second half and a 'good close' to 2010, he said.

At Al Tayer Motors, which represents manufacturers such as Ford, Maserati, Ferrari, and Land Rover, sales are steady in some segments and improving in others, according to the company's CEO, Ashok Khanna. 'Easier bank finance and an overall settling market are boosting confidence and demand,' he said. 'However, the UAE is part of the global economy and any change in the global economic situation could also have an impact on the UAE.'

Still, Khanna remains confident that overall sales will be higher in 2010 compared to last year, with the second half of this year ranging from 'steady to positive'.