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Thu 18 Dec 2008 01:34 AM

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Credit crunch puts the brakes on Gulf car sales

Sales since Nov. hit by lack of car finance, say regional reps at UAE Motor Show.

The global credit crisis will make 2009 a challenging year for car sales in the oil-exporting Gulf region, top automakers said on Wednesday.

Land Rover , Mercedes-Benz of Daimler and General Motors are among those who have noticed a slowdown in the region during the past couple of months.

"There's been a 10-15 percent reduction in sales in the last two months due to a lack of financing from banks," said Mike Devereux, the Middle East managing-director of General Motors.

"Up to November this year, sales have been up 10 percent to 134,000 vehicles in this region, an all-time record," he told newswire Reuters at the Abu Dhabi Motor Show in the United Arab Emirates.

The troubled US automaker expects to grow its market share next year as it plans to roll out five to six new models, Devereux said. He added that dealers in the region are continuing to support GM despite its problems in the United States where it's awaiting word from the US government on billions of dollars in emergency loans it says it needs to avoid near-term collapse.

Chrysler LLC is in a similar situation waiting to hear about possible US government emergency loans.

Indeed automakers everywhere are under pressure to cut costs and save money as tight credit and weak consumer sales hit demand.

And the Gulf is no exception.

Record oil revenues fuelled an economic boom in the region in the last few years which also saw an exponential growth in sales of cars. But as credit becomes scarce, sales of cars will slow more in the coming months.

"We have seen a slowing growth in the last few months and there's an uncertainty about 2009 which will be challenging," said Robin Colgan, managing director for Land Rover in the Middle East & North Africa.

Land Rover sales grew 25 percent and Jaguar sales grew 35 percent up to June this year in the region, he said.

Simon Frith, Managing Director of Al Futtaim Motors, distributors of Toyota in the United Arab Emirates said sales of the Japanese cars jumped 35 percent in the first half of 2008, but sales have been hit in the last two to three months. "The biggest impact is financing," he said.

France's Renault saw regional sales grow 30 percent this year and plans to launch four new models next year. "Yet, we are not satisfied with volumes," said Bennani Mohamed, managing director for the Gulf.

"The market is... down and although we are a small player, we expect 2009 to be tough year," he said.

And German brand Mercedes-Benz of Daimler is cautiously optimistic for 2009.

"I am cautious, not nervous as we are seeing an impact - less showroom traffic, purchase postponements and tighter credit by banks," said Frank Bernthaler, Regional Sales Director. (Reuters)

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