Since it was first produced in 1976, the Ford Fiesta has regularly topped bestseller charts because of its affordability, availability and reliability.
Yet, in an extraordinary twist, an automotive expert has told The National the previously ubiquitous model now comes with a 12-month wait in the UK.
Unsurprisingly, it is now nowhere near the UK top sellers list for 2022 to date. It's a far cry from the slogan of mass production pioneer Henry Ford, who promised buyers any car they wanted (as long as it was black).
"The longest lead times are now on the cheapest cars," said Steve Young, managing director of the International Car Distribution Programme.
Ford is not the only manufacturer whose forecourts are no longer crowded. Giant lots with rows of cars awaiting a willing buyer are a thing of the past. Motorists expecting to walk into any showroom and leave with a new car are likely to be sorely disappointed.
This remarkable situation doesn't have a single root cause. It is part of a seismic change in the global motor industry brought about by several factors, from supply shortages and environmental factors to war and changing consumer preference.
Like many other industrial reformations, it has been catalysed by the coronavirus pandemic. It coincided with what Mike Hawes, chief executive of the Society of Motor Manufacturers, describes as the industry's “biggest change in 100 years” ― electrification.
“We’re in uncharted waters in terms of manufacturing, supplies, supply chain and retail,” he told The National.
Generational industrial change doesn’t come cheap, and so the Covid hit on automotive revenues was inauspiciously timed.
In 2019, the global automotive industry sold 91,227,182 new passenger and commercial vehicles, data from the International Organisation of Motor Vehicle Manufacturers shows.
Just 12 months later, the figure had plunged 14 per cent to 78,774,320.
The industry staged a minor comeback in 2021, creeping up 4.96 per cent to 82,684,778.
Yet this is still the loss of a 10th of new-car sales in just two years, almost unfathomable in a sector that was calibrated to volume supply and jacked up by an addictive range of financing options.
In order to be sold, new vehicles by definition need to be produced, and in 2020 and 2021, the number of passenger cars made was more than 10 million fewer than in 2019, when 67,149,196 rolled off the production lines, OICA data shows.
The shortfall is enduring and pervasive.
In the UK, figures released by the SMMT at the end of April show car manufacturing declined 32.4 per cent during the first three months of 2022, with almost 100,000 fewer units made than in the same period last year. This does not bode well given car production in Britain plummeted to a 65-year low in July 2021.
Chances of a full recovery in 2022 are slim to none. Even as the pandemic's worst days appeared to be receding, in its wake a swirl of intractable challenges have been left behind ― from a global materials shortage to rampant energy costs.
Risks from Russia
The conflict in Russia and Ukraine has turned this swirl into a maelstrom.
“The most significant [risk impact-wise] would be if gas supplies are disrupted to Germany and other countries that host assembly and supplier plants,” Mr Young said.
“Germany is a bigger user, and more dependent on Russian gas than some of the other countries. Supply shortages that led to gas being rationed to industrial users would be hugely disruptive.”
Russian sanctions “will affect the global availability and pricing on a number of key raw materials, including some that are key to catalyst production”, he said.
When the chips are down
The one component that has monopolised coverage when it comes to a global shortage is the semiconductor.
The shortage cost the industry $210 billion in revenue and lost production of 7.7 million vehicles in 2021, consultant AlixPartners estimated.
“It goes deeper than semiconductors,” Philip Nothard, insight and strategy director at Cox Automotive, told The National.
“You’re talking about magnesium, you're talking about aluminium, water, leather,” he said.
“And the automotive industry is up against many other industries for the same materials.”
Mr Nothard acknowledged that semiconductors were “the big one” by dint of the number of raw materials it takes to make them and that demand for them went up during the pandemic as a result of the acceleration in the electronic goods industry spawned by lockdowns.
The shortage of components such as semiconductors and wiring looms ― the latter being heavily manufactured in Ukraine ― has forced vehicle manufacturers to radically alter their business models.
“The chip shortage seems likely to have an effect continuing into 2023 for most manufacturers, and this has led some to drop models from their product range and refocus on highest margin variants, albeit with reduced features where these are chip-intensive ― effectively, where is the best return on your chips,” Mr Young said.
Semiconductor chips, left, and electrical wiring looms, right, have been lesser-spotted commodities in recent times. Reuters; Getty Images
Motor industry makes margin call
The change of tack has led to Porsche dropping adaptive headlamps as an option for Taycan, Nissan leaving out navigation systems on thousands of vehicles that usually feature them, and Renault reducing the size of the digital screen on its Arkana SUV.
It is the prioritisation of higher margin variants that has flipped the industry on its head, and created the longest lead times now associated with cheaper, lower margin cars, such as the Fiesta.
The desertion of the mass market by the mainstream manufacturers leaves a gap for new players from the East.
“Look across the world at vehicles coming from China … they have low overhead costs and the economies of scale from their domestic markets could transfer across,” said the SMMT’s Mike Hawes.
“We know there are a lot of Chinese brands looking at entering the UK and European markets.”
One such brand is MG. Owned by Saic Motor, China’s largest vehicle manufacturer, the lower cost MG could well help shape the future of the automotive industry.
“[Such vehicles] may become the affordable, accessible volume vehicle in the UK market,” said Cox’s Philip Nothard.
An automotive paradox is born
The switch from volume manufacturing to high-margin vehiclescreated an automotive paradox: the industry is selling fewer cars yet is more profitable.
Volume manufacturing has been the industry’s core precept for years. The more cars that are made, the more parts that are required to make them, the more jobs that are created around their manufacture, and the more revenue that is generated for all stakeholders. In essence, the volume model drove the industry’s colossal economic footprint.
Yet with the pandemic and global materials shortages shattering that model, the industry adapted to survive. Profitability became the watchword du jour.
The focus on producing only top-of-the-range cars has increased the margin on each new vehicle sale, a trend amplified by more cars being sold to private motorists.
“Normally in the UK [the split] is around 50 per cent private, 50 per cent business and fleet,” Mr Hawes said.
“Private retail is a higher margin sales channel than fleet because you give a discount to fleets because they're buying in bulk."
A further dynamic is the shortage of new cars has led to used-car prices rocketing. Last year in the UK they increased by 30 per cent as demand grew. The demand has extended beyond conventional engine vehicles too.
Sales of used battery electric vehicles in the UK grew from 6,625 to 14,586 between January and March 2022, a rise of 120.2 per cent from a year earlier, according the SMMT. Sales of plug-in hybrids and hybrids totalled nearly 50,000 vehicles.
In all, UK sales of used cars in the first three months of the year grew to 1,774,351 from 1,687,755 in 2021, an increase of 5.1 per cent.
The end of target culture?
One British dealer who has been hugely appreciative of the shift from volume to profitability is Robin Luscombe, managing director of Luscombe Motors in Leeds.
“It’s brilliant,” he told The National.
“We're not in an oversupply situation. We're not driven by targets. Targets create bad habits.
“It's making the manufacturers normal. It's making the dealers normal. And it’s actually preserving the residual value of the customers’ cars because nobody is dumping loads of products into the market at ridiculously cheap prices."
Mr Luscombe’s delight at this new age of profit isn’t completely untempered, however.
“It comes with all sorts of problems," he said. "You can't walk into a dealership and say, ‘Can I have a car?’
"[Now we say] 'You can have one, we’ll order it for you, but it might take two, three, four months ― some of them might be in six, 12 or 18 months. That becomes a problem.”
A Luscombe Motors forecourt where proprietor and employees alike are thrilled at having fewer cars to sell. Photo: Luscombe Motors
Those at the coalface of this problem are the car salespeople.
"It’s been very challenging,” Andrew Milliken, senior account manager at Balgores Car & Van Leasing, told The National.
“In pre-Covid times you would always have loads of stock of a particular manufacturer.
“Ford would come out and say, ‘Oh, we've just had 100 Fiestas come through. Do you want to buy them and we'll give you 25 per cent discount if you take them all.’ This obviously completely died a death.”
To mitigate against stock shortages, Mr Milliken has changed his customer approach.
"Whereas before when we'd have renewals coming up for people coming out of lease it was for three-month periods," he said. "Now it's calling people six to nine months before the end of their agreement, minimum.”
Switching models
There is no blueprint for changing the way the industry works, Mr Nothard said.
“Many of the manufacturers don't exactly know what they're doing and how they're going to do it, but they know they've got to do it.
“Now a lot of that is about having access to that vehicle for longer. So there's a move away from producing the vehicle, pushing it out the factory gates, and then it going on somebody else’s funding while [the manufacturer] makes another one.
“They can't do that in the world of electric cars: the materials are not there and the profitability is not there. So they've got to make fewer vehicles but earn a better and a longer return on that asset."
Tesla has moved from niche product into the vanguard of industry electrification.
To achieve this, manufacturers are planning to "have a more direct relationship with the user of their vehicles for longer”, Mr Nothard said.
This effectively means that instead of the dealer or wholesaler taking all the profits from things like servicing, financing and upgrades, the vehicle manufacturer will now try to extract revenue throughout the vehicle’s life cycle.
Death of a car salesman?
Superficially, such a model appears ominous to dealers. Although Mr Nothard does not think their death knell needs tolling just yet.
“Manufacturers historically have never been good at retailing cars,” he said.
“They try to do it and they're good at marketing and customer relationships, but they're not very good at selling, and they're not very good at stock management and that kind of world."
He says there is a place for both but the relationship will change.
As an example he used Mercedes, which is switching to an agency model in Europe on January 1 next year.
At this point, every official Mercedes vendor in the region will be paid a commission by the manufacturer for each vehicle they sell, service they offer and upgrade they install.
Manufacturers will electrify and it will happen quickly
Mike Hawes, SMMT
Whether this shift will result in dealers-cum-agents being less or more profitable remains to be seen.
What is certain is that there will be fewer of them.
There has already been a marked shift in the industry to online sales, with the likes of Carwow, Cinch and Cazoo in the vanguard in the UK. The shift has meant manufacturers simply don’t need as many physical outlets. Instead, the focus has been on building larger showcase outlets in regional centres.
That said, Mr Nothard did point out several companies who started off solely as online sellers, like Cazoo, are now investing in bricks and mortar in recognition that customers still like to come in and test drive cars before buying them, and have a convenient place to take them for repairs should things go wrong.
Automotive's electric dreams
The drive to consolidation, then, was already happening before being turbocharged by Covid, because of electrification.
“At the moment, you've got something like 114 different electrified models on the UK market,” Mr Hawes said.
“From a UK perspective, all our manufacturers are looking at making hybrids and some of them already make electric vehicles. In the end all of them will have to, but the question is, at what pace do you get there?”
Nissan Ariya electric crossover sport utility vehicles being assembled by robots at the company's plant in Japan. Bloomberg
He described the shift as “the biggest change in a century” ― and it won’t come cheap.
“How do you afford that?” Mr Hawes said. “You need to maintain revenue. You’re looking at every opportunity to increase your incomes, hence [selling] higher margin vehicles.
Job losses inevitable
The component sector could be an early victim.
In December 2021, the European automotive suppliers’ association, Clepa, released a report forecasting that more than half a million jobs in the supply chain could be lost in internal combustion engine powertrain components production by 2035.
While vehicular and infrastructural electrification will create new jobs, they won’t be enough to compensate for such swingeing losses.
“You need a strong vehicle manufacturer so you can see that opportunities are there," Mr Hawes said.
“You also need support reskilling and helping companies identify market opportunities.”
What is clear is that the automotive industry has an arduous journey ahead. How it emerges will have a bearing on far more than the industry alone. In the meantime, good luck finding that new car.
The Abu Dhabi Supreme Petroleum Council was established in 1988 and is the highest governing body in Abu Dhabi’s oil and gas industry. The council formulates, oversees and executes the emirate’s petroleum-related policies. It also approves the allocation of capital spending across state-owned Adnoc’s upstream, downstream and midstream operations and functions as the company’s board of directors. The SPC’s mandate is also required for auctioning oil and gas concessions in Abu Dhabi and for awarding blocks to international oil companies. The council is chaired by Sheikh Khalifa, the President and Ruler of Abu Dhabi while Sheikh Mohamed bin Zayed, Abu Dhabi’s Crown Prince and Deputy Supreme Commander of the Armed Forces, is the vice chairman.
UAE currency: the story behind the money in your pockets
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Rufus Thomas, Bear Cat (The Answer to Hound Dog) (1953)
This rip-off of Leiber/Stoller’s early rock stomper brought a lawsuit against Phillips and necessitated Presley’s premature sale to RCA.
Elvis Presley, Mystery Train (1955)
The B-side of Presley’s final single for Sun bops with a drummer-less groove.
Johnny Cash and the Tennessee Two, Folsom Prison Blues (1955)
Originally recorded for Sun, Cash’s signature tune was performed for inmates of the titular prison 13 years later.
Carl Perkins, Blue Suede Shoes (1956)
Within a month of Sun’s February release Elvis had his version out on RCA.
Roy Orbison, Ooby Dooby (1956)
An essential piece of irreverent juvenilia from Orbison.
Jerry Lee Lewis, Great Balls of Fire (1957)
Lee’s trademark anthem is one of the era’s best-remembered – and best-selling – songs.
Iran's dirty tricks to dodge sanctions
There’s increased scrutiny on the tricks being used to keep commodities flowing to and from blacklisted countries. Here’s a description of how some work.
1 Going Dark
A common method to transport Iranian oil with stealth is to turn off the Automatic Identification System, an electronic device that pinpoints a ship’s location. Known as going dark, a vessel flicks the switch before berthing and typically reappears days later, masking the location of its load or discharge port.
2. Ship-to-Ship Transfers
A first vessel will take its clandestine cargo away from the country in question before transferring it to a waiting ship, all of this happening out of sight. The vessels will then sail in different directions. For about a third of Iranian exports, more than one tanker typically handles a load before it’s delivered to its final destination, analysts say.
3. Fake Destinations
Signaling the wrong destination to load or unload is another technique. Ships that intend to take cargo from Iran may indicate their loading ports in sanction-free places like Iraq. Ships can keep changing their destinations and end up not berthing at any of them.
4. Rebranded Barrels
Iranian barrels can also be rebranded as oil from a nation free from sanctions such as Iraq. The countries share fields along their border and the crude has similar characteristics. Oil from these deposits can be trucked out to another port and documents forged to hide Iran as the origin.
* Bloomberg
UAE and Russia in numbers
UAE-Russia ties stretch back 48 years
Trade between the UAE and Russia reached Dh12.5 bn in 2018
More than 3,000 Russian companies are registered in the UAE
Around 40,000 Russians live in the UAE
The number of Russian tourists travelling to the UAE will increase to 12 percent to reach 1.6 million in 2023
Zakat: an Arabic word meaning ‘to cleanse’ or ‘purification’.
Nisab: the minimum amount that a Muslim must have before being obliged to pay zakat. Traditionally, the nisab threshold was 87.48 grams of gold, or 612.36 grams of silver. The monetary value of the nisab therefore varies by current prices and currencies.
Zakat Al Mal: the ‘cleansing’ of wealth, as one of the five pillars of Islam; a spiritual duty for all Muslims meeting the ‘nisab’ wealth criteria in a lunar year, to pay 2.5 per cent of their wealth in alms to the deserving and needy.
Zakat Al Fitr: a donation to charity given during Ramadan, before Eid Al Fitr, in the form of food. Every adult Muslim who possesses food in excess of the needs of themselves and their family must pay two qadahs (an old measure just over 2 kilograms) of flour, wheat, barley or rice from each person in a household, as a minimum.
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
How being social media savvy can improve your well being
Next time when procastinating online remember that you can save thousands on paying for a personal trainer and a gym membership simply by watching YouTube videos and keeping up with the latest health tips and trends.
As social media apps are becoming more and more consumed by health experts and nutritionists who are using it to awareness and encourage patients to engage in physical activity.
Elizabeth Watson, a personal trainer from Stay Fit gym in Abu Dhabi suggests that “individuals can use social media as a means of keeping fit, there are a lot of great exercises you can do and train from experts at home just by watching videos on YouTube”.
Norlyn Torrena, a clinical nutritionist from Burjeel Hospital advises her clients to be more technologically active “most of my clients are so engaged with their phones that I advise them to download applications that offer health related services”.
Torrena said that “most people believe that dieting and keeping fit is boring”.
However, by using social media apps keeping fit means that people are “modern and are kept up to date with the latest heath tips and trends”.
“It can be a guide to a healthy lifestyle and exercise if used in the correct way, so I really encourage my clients to download health applications” said Mrs Torrena.
People can also connect with each other and exchange “tips and notes, it’s extremely healthy and fun”.
The specs: Macan Turbo
Engine: Dual synchronous electric motors Power: 639hp Torque: 1,130Nm Transmission: Single-speed automatic Touring range: 591km Price: From Dh412,500 On sale: Deliveries start in October
Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs
Types of bank fraud
1) Phishing
Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
2) Smishing
The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
3) Vishing
The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
4) SIM swap
Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
5) Identity theft
Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
6) Prize scams
Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
Bournemouth 0-4 Liverpool
Arsenal 1-0 Huddersfield Town
Burnley 1-0 Brighton
Manchester United 4-1 Fulham
West Ham 3-2 Crystal Palace
Saturday fixtures:
Chelsea v Manchester City, 9.30pm (UAE)
Leicester City v Tottenham Hotspur, 11.45pm (UAE)
Abu Dhabi Grand Slam Jiu-Jitsu World Tour Calendar 2018/19
July 29: OTA Gymnasium in Tokyo, Japan
Sep 22-23: LA Convention Centre in Los Angeles, US
Nov 16-18: Carioca Arena Centre in Rio de Janeiro, Brazil
Feb 7-9: Mubadala Arena in Abu Dhabi, UAE
Mar 9-10: Copper Box Arena in London, UK
Innotech Profile
Date started: 2013
Founder/CEO: Othman Al Mandhari
Based: Muscat, Oman
Sector: Additive manufacturing, 3D printing technologies
Size: 15 full-time employees
Stage: Seed stage and seeking Series A round of financing
Investors: Oman Technology Fund from 2017 to 2019, exited through an agreement with a new investor to secure new funding that it under negotiation right now.
Suspend strict budget rules to allow member countries to step up defence spending
Create new "instrument" providing €150 billion of loans to member countries for defence investment
Use the existing EU budget to direct more funds towards defence-related investment
Engage the bloc's European Investment Bank to drop limits on lending to defence firms
Create a savings and investments union to help companies access capital
MATCH INFO
Schalke 0
Werder Bremen 1 (Bittencourt 32')
Man of the match Leonardo Bittencourt (Werder Bremen)
Day 4, Abu Dhabi Test: At a glance
Moment of the day Not much was expected – on Sunday or ever – of Hasan Ali as a batsman. And yet he lit up the late overs of the Pakistan innings with a happy cameo of 29 from 25 balls. The highlight was when he launched a six right on top of the netting above the Pakistan players’ viewing area. He was out next ball.
Stat of the day – 1,358 There were 1,358 days between Haris Sohail’s previous first-class match and his Test debut for Pakistan. The lack of practice in the multi-day format did not show, though, as the left-hander made an assured half-century to guide his side through a potentially damaging collapse.
The verdict As is the fashion of Test matches in this country, the draw feels like a dead-cert, before a clatter of wickets on the fourth afternoon puts either side on red alert. With Yasir Shah finding prodigious turn now, Pakistan will be confident of bowling Sri Lanka out. Whether they have enough time to do so and chase the runs required remains to be seen.
