By Tom Arnold
EXCLUSIVE: Industry expert says dealerships hit as banks put the squeeze on financing.
New car sales in the UAE dropped by as much 60 percent at some dealerships in November as consumers find it increasingly difficult to secure financing for purchases, a leading transport consultant has said.
The growth in the new car market could slow by as much as three to four percent next year as the global financial turmoil combined with the expansion of transport services in the country impacts on car sales, said Jose Paul, a consulting manager for the Middle East and North Africa at research group Frost & Sullivan.
Paul said in the UAE over the last year the new car market grew by 38 percent, with around 370,000 new passenger vehicles sold. Car ownership across the country stands at around 1.4 million, he added.
He said of the UAE car dealerships Frost & Sullivan had information about some had reported a drop in sales for November by around 40 percent, with dealerships selling less popular brands reporting a decline by as much as 60 percent. Paul did not specify the names of the dealerships concerned.
“Some dealerships are talking about an almost 60 percent drop in new car sales. The reason is not because of a lack of demand but because there’s a lack of financing available,” he said in an interview.
“Dealerships are saying they may have applications for 200 cars but are only able to deliver 85 as that’s what has been decided by the banks.
"The banks are becoming choosy as, on the one hand, they don’t have enough funds and the funds they do have they do not want to risk it, so they have become very stringent about who they are giving loans to.”
Gulf governments are pressing ahead with major projects to offer alternatives to the car as traffic congestion in major cities continues to get worse.
The first stage of Dubai Metro is set to be operational by September 2009, according to the Roads and Transport Authority. Forty-four trains will be running on the Red Line of the project which will be the first to open next year.
A monorail is under construction at Palm Jumeirah and trams are planned for both Downtown Burj Dubai and the Al Sofouh area.
In Abu Dhabi, the government is keen to open the first links of its tram and metro projects by about 2015.
In addition, the number of public buses operating in Dubai is poised to hit 2,500 by 2009, while another 500 buses are expected to be on Abu Dhabi streets by June 2009 to bolster the existing network.
This just goes to show that the government is in control of the traffic situation and that people have stopped buying cars in anticipation of the monorail and tram projects. Traffic problems solved. Well done people.
I am glad, as this at least puts a brake on what seemed an un controlled growth in the amount of cars on the UAE roads atleast for some time ,though the circumstances promting this could have been different. The uncontrolled growth of vehicles on the road and the very easy financing, has meant also that the Car agencies have been making in decent amounts of profits ... what else is causing them to resort to desperate measures of Direct Mailers and SMS campaings announcing 30-40% price reduction on latest models that they are now stuck with !! I am sure this temporary repreive will get us all back to the good solid basics of our great ancestors who lived within their means,saved for the future , borrowed less and if they did borrow, did only borrow what they had the means to settle. Let good sense prevail !!!
Well I hope the people who feel glad to see this should have disowned their vehicles by now, in order to reduce the congestion on roads and traffic.