Car dealers in the UAE expect slower sales during next year because of the economic slowdown, job cuts and a glut of unsold vehicles.
New car sales in the UAE are down by nearly 30 per cent on last year and will not recover until the end of next year, according to Bill Carter, the head of valuation and product manager at Autodata Middle East, a Dubai-based data provider for the automobile industry.
“Car dealers will have to get used to this level of sales,” said Mr Carter. “Everything changes from here because as the oil price receded, confidence dropped and people are concerned over job security.”
The introduction of value-added-tax in 2018 is another dampener on sales, as well as the liquidity crunch, said an automobile report from Dubai-based investment bank Alpen Capital.
K Rajaram, the chief executive of UAE’s Al Nabooda Automobiles, said in the report that recovery is expected by the fourth quarter, if oil prices stabilise.
“There is excess inventory consequently supply far exceeds demand, hence retail prices are under pressure that is seriously hurting margins and operational profitability,” said Mr Rajaram. “Another vital element is the cash flow or liquidity in the economy. SME segment has been affected and repayment of term loans are disturbed which has given rise to disruptions in the cash flow which eventually affects consumption.”
The recent liberalisation of fuel prices, exchange rate fluctuations and car imports through non-regional distributors or the grey market will affect car sales, the report said.
Still, a recovery in the automobile market is predicted in 2018 as more infrastructure projects get underway, the population increases and consumer sentiment improves.
The number of passenger cars in use in the UAE is expected to expand at 5.3 per cent a year to reach 2.5 million in 2020, compared with 2 million last year, the report said.
New car sales in the UAE are forecast to grow at a rate of 4.5 per cent a year to reach more than 267,000 in 2020, the report said.
Although next year’s sales are expected to be in line with this year’s figures, Al Habtoor Motors is foreseeing future pick up as it opens more showrooms.
“We are very positive about going forward,” said Karl Hamer, the managing director of Al Habtoor Motors. “With no growth in sales we have to do more to make sure we take more buyers from the available market which we will do next year.”
ascott@thenational.ae
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