Flat UAE cars sales point to stagnant 2010 economy
Posted on 15 April 2010 with no comments from readers
Middle East cars sales are picking up but first quarter sales remained flat in the UAE, indicating that the emirates’ economy remains depressed after the real estate crash last year.
Dealers told Gulf News that first quarter car sales were unchanged on the depressed levels of the same period in 2009 when the real estate slump first hit the UAE. Since then as many as 400,000 construction and real estate workers are believed to have left the country even if their residency visas have been kept open, making them ghost residents.
Worker exodus
These were not mainly high spending residents but nonetheless the impact of the population decline and the knock-on loss to the rest of the economy has been considerable. The construction and real estate sector had ballooned to 30 per cent of GDP in the boom.
Car dealers expect five to six per cent growth in premium cars sales this year, although that growth has been missing so far in 2010. They reported that car financing is no longer an issue with 90 per cent of customers getting finance approved, and some 70 per cent of car sales are with finance.
Arabian Automobiles said full year UAE car sales will reach 215,000 vehicles with growth of two to five per cent over 2009. But the Middle East region is faring better. Yesterday Audi posted regional first quarter sales up by 8.4 per cent to 1,579 vehicles with March sales rebounding 31 per cent in the year.
Boom to bust
Perhaps it is understandable that the country that enjoyed the biggest gain in GDP during the oil boom of the 2000s should be hardest hit by the downturn.
How long it takes the UAE to turnaround this slump is the big question. The sudden stop came without warning as oil prices peaked and global credit dried up freezing real estate developments that relied on borrowing.
The mess left in its wake has affected everything from housing rents to car sales. But sectors can help themselves. A lot more new cars would be sold in Dubai, for example, if trade-in values could be subsidized. Market forces sometimes need a helping hand in a recession.
