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REPORT: UAE Automotive Logistics

on Apr 1, 2017

This year has not been a good one for the auto sector. Car sales have slumped in the UAE and wider Middle East, putting pressure on car dealers who rely on re-exports to the wider region for extra sales. Inventory has piled up and prices have been slashed to try and attract buyers.

“It’s a two-tier market that we are seeing out there — dealerships concentrating purely on the local market and those who want a mix of local and re-export sales,” said Ajith Kumar, CEO of Swaidan Trading, the local Peugeot dealership. “Some dealers had become too reliant on going after re-exports. Those who are focused just on selling local are still doing pretty fine despite an intensely competitive market.”

But it’s those shipments that were meant for the re-export markets that are piling up at dealer’ stockyards and warehouses. The various conflicts raking the rest of the Middle East have meant few orders coming through in the year-to-date. Even Iranian off-take has not shot up much beyond the average. It is a buyer’s market then, and according to Azfar Khan, managing director, APL Logistics Middle East, this makes one of the foremost challenges of automotive logistics even more important.

“Zero damages is one of the greatest challenges, ultimately, all of us want to buy our brand new car without a single scratch,” he says. “I was talking to a distributor in the region a few months back and they specifically referred to how the quality of their product and on time delivery has become even more important in the current slow economic environment. Customers who have more to choose from in a competitive market are becoming more conscious of the options available to them, and would use this opportunity to challenge the price levels if there is even a small scratch on the car.”

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