Used-car dealerships say they face a 50 per cent fall in profit this year as they are forced off Abu Dhabi island and made to set up shop at the nascent Motor World complex.
The dealers, who have a deadline of today to close their showrooms on the island and clear their stock from the capital's streets, say the level of rents at Motor World will make their business much less profitable this year.
Ahmed Ali Medrar, the manager of a used-car dealership on Airport Road, said he would try to sell the remaining 15 cars he owned and then start afresh in a new industry.
"The rental prices are very expensive at Motor World," he said. "I think I will try to sell them at another place, maybe in Mussaffah."
Mr Medrar said he made a Dh10,000 profit (US$2,722) each month and was paying Dh25,000 per year to lease a showroom on Airport Road but had been quoted Dh170,000 to Dh380,000 for a space at Motor World.
Used-car dealers must leave Abu Dhabi island and sell their vehicles elsewhere to free up hundreds of parking spaces for residents. Many of the dealers use parking spaces to display and store their inventory of vehicles, so government authorities have directed them to leave the island by today to make space.
Motor World, which is in Shamkah near the airport, was launched by the developer Aldar in April 2008, but was then put on hold while the company revised its plans after the property slowdown.
More than 100 used-car showrooms are available at the site.
Dealers are being asked to take up new space at the complex.
Dealers say Motor World needs better publicity and improved directional signs to the site from Abu Dhabi island. Otherwise, potential buyers will not hear about the complex or be able to find it, the dealers say.
"It's very expensive [at Motor World] compared to Abu Dhabi, and Abu Dhabi should be more expensive than there," said Rashid Al Mamari, the manager of 501 Cars, which sells Ferrari, Lamborghini and Rolls-Royce cars on Airport Road. He added that 501 would have to increase its prices and cut its margins to sell at Motor World.
"We need to sell luxury cars so we need [to] increase the price more and more," he said.
An Aldar official said comparing space on Abu Dhabi island and Motor World was not a "like-for-like comparison".
"Motor World is a dedicated, state-of-the-art development with ample indoor and outdoor exhibiting space, showrooms with varying sizes, ample visitor parking and facilities to meet the needs of both car dealers and their customers," the official said.
Dealers who had agreed to set up shop in Motor World expected profits to fall by more than half this year because few people knew about the complex and the overall market for used cars had weakened since a strong performance last year.
"We have booked a showroom. We have paid the rent," said one dealer who did not want to be named. "In the beginning we will lose business. In the future we hope it will be good."
Motor World aims to be a one-stop shop for all a customer's needs, including car dealerships, workshops, cafes, residences and insurance, registration and banking services.
"We are in the process of allocating space for three banks, ATM machines as well as insurance companies, coffee shops and prayer rooms," the Aldar official said.
But the project has is advancing at a slow pace and no new-car dealerships have started to set up shop at the complex.
Government officials visited Motor World last week, endorsing the project and its progress.
Mohammed Moneef Al Mansouri, the acting executive director of the Department of Economic Development's commercial affairs division, said the car showrooms on Abu Dhabi island must take necessary measures to move to the Motor World city and that it was now the "new headquarters" for dealers.
He added that at the end of last year there were 537 car dealers in Abu Dhabi emirate, with 367 in the capital.
A number of major dealers selling new cars have opened showrooms on or close to Abu Dhabi island in the past year.
In February, Abu Dhabi Motors opened the world's largest BMW showroom in Umm Al Nar, just off Abu Dhabi island. In September, Omeir Bin Youssef & Sons, which distributes Peugeot vehicles, opened a flagship showroom near the Corniche.