“Everyone is talking about semiconductor chip shortages and shipping costs driving up car prices,” said Michel Ayat, CEO of AWR Automotive, the Nissan, Infiniti and Renault dealership. “What they don’t realize is that today’s buyers want to have sensors, cameras and lane departure warning even on small cars. And adding these smart devices costs a lot more.
“For the next model year, the plan is to keep any price increases for car buyers to a bare minimum. In our case, 1-3%.”
Other dealers are also inclined to think along these lines. “Minimum ex-showroom price increase and give away as many freebies as possible – as we see more cost-conscious buyers turning to showrooms,” said one retailer. “Everyone calculates how they can reduce their monthly payments.”
By early next year, global automakers should have solved the chip shortage problem, according to Ayat. The ongoing semiconductor problem means that on the majority of models, car buyers in the UAE have had to wait even months for delivery of their confirmed orders. “With best-selling electric vehicles, it’s been even longer – six months on average,” said Ayat, who also heads the Dubai Auto Dealers Group.
“We will see a 28% improvement in shipments in Q4-22 and 100% next year. The delay – 1-3 months on average – in new model deliveries has dampened new car sales growth in UAE – it’s time this problem was solved once and for all.
Despite all the showroom shortages and delivery delays, new car sales did well in the first six months. “The UAE market saw 104,060 unit sales, and that’s a healthy 12.3% compared to last year’s 92,600,” Ayat said. “Interestingly, the share of made-in-Japan brands saw an even bigger increase – by 12.9% – to 78,252 cars sold.
“The share of European brands declined, although the Euro was much weaker and this meant that prices should also have fallen. For American car brands, the decline was 5.6% over this period .
“We have to look beyond these numbers – consumers are changing and who would have thought used car sales would be neck and neck with the news in the UAE? That is exactly what is happening now.