By Andy Sambidge
Car finance not flowing as freely as banking results suggest - Business Monitor Int'l.
The recovery of the UAE's automotive sector in 2010 could be weakened by an unwillingness by local banks to relax lending, Business Monitor International has said in a new report.
Vehicle sales are predicted to reach more than 352,000 this year, well up on the previous year but analysts said finance was "not flowing as freely as the positive economic outlook and banking results might suggest".
"Many [banks] have also tightened their lending terms to avoid non-performing loans. The subsequent tightness of lending may mean the auto market’s recovery is not as strong as it might have been," the BMI report added.
It said the lending restrictions remained "despite an array of moves by the central bank and government to boost liquidity and encourage lending".
BMI said that the number of cars sold in the UAE would be slightly below 2008 levels this year, representing a "good recovery from 2009".
It added that vehicle sales fell to 325,274 units in 2009 from 355,177 the previous year as the
economy struggled amid the global downturn.
However, BMI analysts said a rebound in the oil price to a high of around $75-80 per barrel will help the UAE economy grow at a rate of 2.8 percent in 2010.
BMI also said that competition was growing in the UAE auto market, which has been dominated by Toyota in recent years.
"The firm [Toyota] has apparently been losing its competitive edge in recent years, with rivals gaining on its world-leading market position," the report said, adding that Arabian Automobiles Company, the exclusive dealer for Nissan, Infiniti and Renault was aiming to claim a 25 percent share of the UAE vehicle market, which would put its annual sales at more than 80,000 units this year.
What's really slowing car sales here are refusals by auto dealers here to lower prices as opposed to what dealers in other countries do to encourage sales.
I just ordered my car from the UK with full Dubai specs. I got not discount but it still works out aed 40,000 cheaper, and that is including import duty, shipping, insurance etc
i also agree that the main issue is the pricing. While car prices everywhere in the world have gone down, here in Dubai they have gone up! As usual no logic in their decisions yet the salesman blame the banks.