Car dealers adopt a wait-and-see policy after fuel subsidies scrapped

While some were confident that sales would continue unabated, others were more cautious, saying that they might have to rethink what vehicles they offer.

DUBAI // Car dealers are weighing up their options as they wait to see what effect deregulation of fuel prices will have on business.

While some were confident that sales would continue, others were cautious, saying that they might have to rethink what vehicles they offer.

Fahd Al Henawi, of Motor World Automobiles, in Al Shamkha, Abu Dhabi, specialises in selling cars with eight or more cylinders but said that if there is going to be a big fuel price increase then he will have to change tack.

“We also have smaller, four-cylinder vehicles but we focus on the big ones,” he said.

“I would have to invest in getting more of the smaller vehicles for sale if the fuel price is going to vary very much.”

However, he said that if the increase is minimal, then he did not think it would affect his business.

As of August 1, the government will no longer regulate the cost of fuel. Instead, it will be set each month by an independent fuel price committee.

Fuel prices in the UAE are about Dh1.72 a litre, which is the highest in the Gulf but among the cheapest in the world.

Other car dealers felt it was too soon to draw conclusions on how the decision would affect buying trends. “It’s too early to say how much, if any, effect we will see from the deregulation in fuel,” said an employee at Arabian Automobiles in Deira, Dubai. “I think we need to see how this policy is implemented for a while before we see a trend among consumers.

“But even before this announcement we were seeing car makers opt for smaller engines and more fuel efficiency.

“In general, the trend is towards more hybrid or alternative fuel and I suspect that will continue.”

He felt that, despite the rule change, fuel prices will continue to remain relatively low.

“Sheikh Mohammed is keen on more environmentally friendly vehicles, and I think that is the way forward in general,” he said.

One dealer said he thought the reform would have no more effect than increasing rents or Salik road-toll fees.

“I pay Dh1,000 a month in Salik and my rent has been increasing every year and yet so are our sales. Competition with other dealers has more of an effect on sales than governmental rule changes,” said a spokesman at 4X4 Motors in Dubai.

One car maker that felt that the move would have little effect on business was luxury British marque Aston Martin.

Neil Slade, Aston Martin’s general manager in the Mena region, said: “We are in a small percentage of the market and we operate in countries in Europe and North America, where fuel prices are more expensive than the UAE.

“In that respect we don’t really see much of an effect from deregulation of fuel prices.

“Our customers tend to be more wealthy and, as such, don’t factor in the cost of fuel when they are considering purchasing one of our cars.”

*Additional reporting by Dana Moukhallati