Bumps in the road for capital auto zone

With its new showrooms due to be filled, Aldar's huge Motor World project is planned to be the one-stop shop for all car needs in Abu Dhabi.

Motor World, one of Aldar's flagship projects, aims to be a "one-stop shop" for all a customer's motoring needs when fully operational. Sammy Dallal / The National

Log on to the website for Motor World, one of Aldar's flagship development projects, and there is a jazzy video that takes you on a virtual tour of the planned village of car dealerships, workshops, cafes, residences and a hotel.

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In the pipeline since 2008, Motor World is set to take a big step next month, when the first 118 showrooms are opened to the public.

Located about 30 minutes outside Abu Dhabi in Al Shamkah, the project eventually aims to be a "one-stop shop" for all a customer's motoring needs, says Mohammed Al Mubarak, the deputy chief executive of Aldar.

"Motor World is one of the most important projects in Aldar's portfolio and in Abu Dhabi's portfolio," Mr Al Mubarak says.

"It's going to be a fully fledged community. That's the vision and it is continuing to be [that] today."

But the time frame for this motoring utopia is unclear, as the infrastructure for such a community is not being put in place, negotiations are still ongoing with the UAE's major new car dealerships and the proposed hotel is now under strategic review.

"As of today, Motor World is a commercially viable project and Aldar will only invest in projects that have a commercial return," Mr Al Mubarak says.

"Think of Motor World as a huge shopping mall. You have several stores and you have anchor stores. We are in discussion with another 100 stores, used-car dealers, and we are discussing with anchor stores, new-car dealerships."

In the early days of the project's announcement, huge figures were reported on the overall cost, some as high as Dh11 billion (US$2.99bn).

Mr Al Mubarak would not disclose the estimated cost of Motor World but he says the Dh11bn figure is off the mark.

The first set of used-car showrooms will be opened next month by independent dealers, which will be followed by a further 100 used-car peers currently in leasing negotiations with Aldar.

A number of food and beverage outlets have signed up to the scheme and Grand Hypermarket plans to open a store on the site. Mr Al Mubarak says Aldar has not fixed a final date for everything to be finished at Motor World.

But he says the project aims to simplify the process of buying a car in Abu Dhabi, so motorists can purchase, register and insure a vehicle all within the same complex.

"If you want to buy a used car, it's very difficult [at the moment]," he says. "[Abu Dhabi] is very populated, you have to go to different areas and it is very confusing."

To help solve this problem, Mr Al Mubarak says Motor World will have an car inspection facility operated by Abu Dhabi National Oil Company. Aldar is also in negotiations with "several" insurers to set up offices in the complex.

The developer says one of the positive side effects of Motor World is it would free up space on the congested Abu Dhabi island, particularly on Airport Road.

"From a Government perspective, most of the stores take up a lot of parking space," Mr Al Mubarak says. "The used cars for sale come in spaces and now all these parking spaces will go to residents in these areas. It's a significant amount of space."

But industry experts say there could also be some negative side effects to dealers moving to Motor World, as some smaller used-car dealers might not be able to afford the rents and could start posing as private customers on classified websites.

"[The authorities] have made no secret of the fact that they want all these car businesses out of the city," says Bill Carter, the head of valuation at Autodata, a research company focusing on the UAE car market.

"There's already been grumbling. The smaller shops that sell a dozen or so cars, if they cannot afford the rents, they will end up trading from home."

Despite this, Mr Carter says Motor World is a "great idea" and will be successful when it is finished.

"It's a massive undertaking. In reality, if the economic downturn had not happened when it did [Motor World] would be a lot further advanced," Mr Carter says. "I think it will work as long as everybody is there."

But at present, nobody is there. No new car dealership has yet signed up to Motor World, Mr Al Mubarak says, despite many of the UAE's biggest having already signed a memorandum of understanding (MoU) to open showrooms.

Aldar said in May Al-Futtaim Motors, the UAE's biggest dealership, had agreed to bring its brands, Toyota, Lexus, Honda, Chrysler, Jeep, Dodge and Volvo, to Motor World.

Al-Futtaim declined to comment - industry sources say dealerships are legally bound not to discuss Motor World if they have signed an MoU.

Insiders also say dealerships are now wary of committing to Motor World as they question the time frame for its completion following the restructuring of Aldar's business this year and the loss of 105 jobs. But Aldar says redundancies have not affected the project.

Omeir Bin Youssef & Sons, which distributes Peugeot in Abu Dhabi, has not signed a MoU with Aldar, but says it is interested in Motor World.

Ashwani Shiv, the divisional manager for Peugeot, says the company will launch a used-car business in Abu Dhabi and a showroom at Motor World would suit the expansion. He says the dealership will also consider a new car business at the project.

"We are looking to start a used car operation. There will be serious thoughts about taking some space [in MotorWorld]," Mr Shiv says. "Sooner or later everyone will have to be there."

For now though, the time frame for this grand project seems dependent on negotiations between Aldar and the new-car dealerships.

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