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Recovery in top gear

By Abdul Basit DUBAI -- The wheel of recovery is expected to move in top gear for auto industry in the country during 2011 while rear mirror, or 2010, was not bad compared to previous year, according to specialists.

The industry's engine got rid of old oil last year and looks fresh with new air filter in 2011. The industry's charm, its new models are lined-up for next year in different segments from small compact car to luxury four wheelers.

The sector recorded around 8.5 per cent growth in sales last year and expected to surpass pre-crisis levels in 2011 with double-digit growth, according to Business Monitor International (BMI) research.

Top distributors in the country claimed up to 30 per cent growth in 2010 that is more than enough to believe worst is over for the auto sector in the country.

They said the year ahead looks strong and the market seems to be much healthier. "We are certainly preparing for a double-digit growth," they added.

Despite good growth numbers in 2010, auto financing remains a major challenge for significant growth. "We are expecting more innovative approach to consumer lending by banks in 2011," they said.

"Last year was better for the UAE market, compared to previous year," Galadari Automobiles Company General Manager told Khaleej Times. Galadari is the sole distributor for Mazda vehicles in the UAE.

Last year auto industry hit by safety recalls of millions of vehicles across the world and the UAE was not the exception as thousands of vehicles were also recalled in the country by different distributors for numerous problems.

Most of the auto distributors claimed that they acted quickly to fix the problem by voluntary recalls. Ministry of Economy also issued directives for quick redressal of the problems.

Acknowledging the tough year Toyota experienced in the face of a series of service campaigns, Simon Frith, Managing Director of Al-Futtaim Motors, said, "Customer service continues to be our priority and this year we were tested to the full; the feedback we received from our customers and the media on our handling of these issues, has been extremely positive."

Nissan Middle East also launched voluntary safety recalls and said, "By issuing this voluntary recall, Nissan Middle East is ensuring that the drivers and passengers of its vehicles continue to be safe."

Watch out

There is a consensus amongst the auto dealers in the country that no bumpy road ahead for the industry and growth will continue with double-digit.

"It would be unrealistic to expect the market to return to its 2008 highs in 2011 but indications are that the growth trend will continue -- we are certainly preparing for a double-digit growth," Colin Cordery, Managing Director -- Trading Enterprises and Al-Futtaim Automall, told Khaleej Times.

"Based on our interactions with our banking partners, we are seeing a more innovative approach to consumer lending and believe that the consumers will benefit from better consumer led offers in 2011," Cordery said.

Mohammed Khader, General Manager at Al Majid Motors for Kia , said, "It should grow further. The year ahead looks strong and the market seems to be much healthier. Kia will launch two new models in smaller segments of passenger cars."

Frith said, "With new products coming on board we predict our overall market share to continue to rise throughout 2011. However, we will not be complacent; we have a commitment to look after our customers by providing outstanding value products and delivering exemplary customer service. Already this year we have extended the comprehensive warranty from three to five years and added unlimited mileage and complementary roadside assistance. Clearly this is a demonstration of our confidence in the Toyota range and enhances the residual value of the vehicles which will undoubtedly appeals to our customers in safeguarding their investment."

Rear view

Despite a BMI forecast of 8.5 per cent growth for auto sector, most of the dealers said they recorded a double-digit growth during 2010.

"If we compare our growth figures to BMI, we can say that 2010 has been a very successful year for our brands," Cordery said.

"Recent launches of the new Jeep Grand Cherokee and the Volvo S60, exceeded our expectations and is a good indication of consumer confidence," he said.

Al-Futtaim Automall also recorded its highest ever monthly sales volume on two occasions in 2010, he said, adding, :We have seen increased stability in the banking lending criteria and this has led to a strong bank loan approval rate in 2010. These are all very positive indicators for us."

Isam Abu Nabah, the President of Juma Al Majid Est. for Hyundai UAE, said, "No doubt that the year 2010 was better than 2009 for many industry sectors including the automobile sector, which witnessed an average growth of around eight per cent, however, having overcome the main obstacles of 2009 like overstocks, liquidity shortage, finance restrictions, lack of demand, budget deficit and so on, has contributed in favour of many companies to switch from losses to profitability and to regain its normal work flow up to a certain extent, even though many of the obstacles have not yet been totally eliminated, but the worst impact of the crises had passed and the wheel of recovery is moving forward."

Khader said, "Auto industry in UAE had a real roller coaster effect in 2010. The effect of economic melt-down lingered into 2010 and continued till the good part of the year."

Kia Motors launched four new models in 2010, is really an exceptional in global auto industry, Khader said, adding: "All these new models were applauded with great appreciation by the market, for it's design, advanced technology etc."

"Though, the market had slight restrictions from the financing institutions regarding the financing of vehicles, we did not face much problems. We expect to close the year with a growth of 26 per cent over 2009," he said.

Al Futtaim Motors ' Frith said, "During 2010 Toyota experienced significant growth in the passenger car segment with refreshed Corolla and Camry models bolstering October year to date sales up 63 per cent and 50 per cent respectively against the same period last year."

The four-wheel drive range continued its legendary performance with the new Prado continuing to generate robust sales, up 60 per cent on the same period last year with the Sequoia recording over 100 per cent growth and Land Cruiser increasing 40 per cent in the same period, he said.

Challenges ahead

Cordery said, "I believe we should approach 2011 in the same manner as we approached 2010 -- continue to drive a strong focus on improving the customer experience and keep an eye on the bottom line."

Khader said, "The opportunities are more, definitely more for KIA, because of the new models. As a distributor, we, Al Majid Motors Company are expanding further for a total customer satisfaction. We shall be launching a mega facility in Ras Al Khaima, an emirate, which is fast developing."

Abu Nabah said, "No doubt, that the new quality enhancement which was proven in the new generation models of Hyundai and the introduction of several new models with improved technology and unique designs, adding to that the improved brand positioning of Hyundai name globally, all had contributed to establishing more confidence in our market, and Hyundai being the top leading Korean brand and the fifth largest automaker in the world had enough reasons for its customers to believe its trust worthy to be their main choice when comparing all the pros and cons at the time of purchase."

"As for 2010, we have achieved 10 per cent year-on-year growth in spite the fact that due to the high demand globally on many of the new models had led to some shortage in the supply of these models to our market, while if we had enough supply from these models, we could have definitely achieved even more in terms of sales growth, and we are hoping to double this rate in 2011, if we get sufficient supply of these models, in addition to the fact that we will be launching new models in the C-segment in 2011, which will definitely gain big market demand and will contribute to maximizing the overall sales." 


© Khaleej Times 2011