Monday, January 05, 2009

Let It Rust : خلوها تصدي


There's a backlash building up across the GCC against car dealerships. At its center is a campaign with the slogan "Let it Rust" which calls for people to boycott all car dealers until they reduce their prices. The campaign has been spreading through emails and mostly on Arabic online discussion forums such as Mqataa.com, Gulf4Cars and even Sablat Oman. The emails have mostly been pictures of huge yards full of unsold cars mostly in the US, though more recent emails have included pictures from dealers in Saudi Arabia and the UAE.

I think local auto dealers have more or less brought this on themselves. They use any excuse to increase prices. Any increase in the Euro or the Yen is immediately followed by increases in car prices, but when the situation reverses as it has now especially with the Euro the dealers come up with all sorts of excuses to keep the prices high. When I inquired why BMW hasn't reduced their price even though the Euro was down close to 20%, I was given the excuse that the drop was unexpected and that they have already booked Euros at the higher price for all their purchases till next year. Auto dealers in the gulf treat customers as if they are stupid. As if they have no access to information and prices except what they give them. The campaign has focused on this aspect, especially that auto dealers in the gulf are all monopolies. The emails have been showing the US list prices of some cars and comparing them with their prices here. Even without the crises, car prices were higher here in the gulf. Now with the US and Europe bracing for severe recessions, tens if not hundreds of thousands of cars are lying in inventories unsold. In the US, General Motors is giving a rebate of $8000 on every GMC Yukon sold. Here in Oman the price of the Yukon actually went up last month. The US big three auto manufacturers are on the brink of bankruptcy, and even the mighty Toyota about to announce their first lost in 70 years. The GCC is a tiny market for automobile manufacturers, but already rumors are swirming that even in Oman, Bahwan Toyota has already laid off 300 expatriate workers.

Car import volumes are still unaffected. A source in the shipping industry told me that the port here has inquired with all the local dealers to know if their volumes will be lower in 2009, all confirmed that orders will remain at least at 2008 levels.

I am not sure if a campaign like Let It Rust can have an effect, but auto dealers are definitely feeling the heat.

16 comments:

Twister said...

About time consumer awareness picks up here...it has been almost 5 months since the Rial started gaining traction...but no significant downwards revision to prices here yet...

As an example, the Australian-made Camry has gone up from 6800 onwards in the 07 model year (base model) to 7600 onwards (base model)....the 09 model year started manufacture in October 08, when the aussie dollar had already depreciated by a good 20%, and later went down by a further 8-10%...still no sign of a reduction from Bahwan as yet...

reverian said...

I heard a rumor about 2-3 weeks ago that all Dodge cars were going at buy one get one free. I went with a friend to inquire about it personally and we were told that the offer existed, but only on the Dodge Avenger, which is about 10k. So 2 for 10k. They were very hush-hush about it, and when someone else went and asked they denied it. So I'm not sure what the deal is.

Suburban said...

Bravo. Bravo. Bravo!

Let it rust, service at independant workshops, and order your spares from Tariq Al Kiyumi, the UAE, or the US until the dealerships here get the message.

mustafa said...

Your facts are not accurate. Having been in the motor industry for many years I know that the major manufacturers all transact in US Dollars, even the European ones. The USD has been performing badly for a long time so why would something change now? Nobody ever pays the RSP -you haggle to a lower price every time. Most car prices have not increased for many years and to my knowledge, the majority of car dealers do not make an overall profit – it is just the prestige of owning a store. I am all for saving money but remember, the stockyards of cars within Oman at the moment have already been paid for many months ago by the owners of the dealerships and as such, the world economic climate means nothing. Remember - Most companies are now working towards Omanisation and by asking people to 'let it rust', you are endangering the employment of many Omani brothers. Yes – dealers are desperate for sales so use it to your advantage. My advice is that if you want to buy a new car, there has never been a better time, go the dealer haggle and gat the price of a lifetime.

muscati said...

Twister- The Camry is made in Australia, but I don't think Toyota sells it to its dealers in Australian Dollars.

Reverian, the Dodge Avenger sells for about 6000 rials, so if they are saying 2 for 10,000, they aren't exactly selling it as buy one get one free. Useless car regardless whether you're getting one or two for the price.

Mustafa, I am a banker. I know what currency cars are bought in, I know what kind of payment terms they have. Most of what I know is confidential information which I can never share. But I do know for a fact that car sales are not done in USD except for US autos. German cars are sold in Euros. Japanese cars in Yen. And so on.

You say car prices haven't gone up in years. Are you for real? Prices have gone up like crazy. VW Touareg went from less than 18K to 22K. Infiniti FX35 went from less than 16K to 22K. BMW 530 went from 21K to 25K. Toyota Camry V6 went from 8.5K to 11K. The change in price was so big that Toyota changed the name to Aurion to try to hide the huge increase.

Car dealers don't make a profit? They're only doing it for prestige? Some prestige that is when Toyota's showroom in Wattaya cost over $80 million to build. You think they spent that much money when they don't make a profit? It's probably less than a year's profit. In Oman, no car dealer lost money in the last three years. Not one. I bet you even the Suzuki dealer is flushed with profit.

Twister said...
This comment has been removed by the author.
Twister said...

Muscati:

The Aurion is based on the Camry but it was meant to replace the Avalon where it is marketed (Aurion is also made by Toyota Australia)...Wherever the Aurion is sold, there is no V6 camry and no Avalon (except the GCC).

Aurion is an enlarged Camry chassis indeed...but it's marketed as a more luxurious car than the camry...in Australia, the home market, Aurions tend to be around 25% more expensive than the similarly equipped Camry variants (e.g. the top range Camry Grande 2.4 is A$ 39,990, and the top-end Aurion Presara-Grande is A$49,990)

alhindia said...

ACTUALLY I WENT TO BUY A NEW CAR YETURDAY, MOST OF THE PRICES GOES UP AT LEAST 10% IF NOT MORE THAN BEFORE 3 MONTHS.
NISSAN TIDA RO 6300 BASIC
NISSAN ALTIMA RO 8000 BASIC
TOYOTA COROLA RO 6350
TOYOTA YARIS RO 5200
KIA SPORTAGE RO 6400
HUYNDAI SANTA FE RO 8100

alhindia said...

I THINK THAT IT IS BETTER TO WAIT IF IT IS POSSIBLE FOR ANOTHER 2 MONTHS TO BUY A NEW CAR. IF THE ECONOMIC SITUATION STILL THE SAME THESE PRICES SHOULD BE DOWN.

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Steven Bady said...

I would've said that the protest was a bit extreme but with the current oil crisis situation, it may be well called for.
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Billy said...

There must be a great reason why this protest happened. Anyway, I support their sentiments. It is indeed unacceptable to buy a car which costs more than what it's worth.

Limo Hire Perth

scarlettdonnel said...

I am interested to support this campaign because car units are really overpriced. Even if there are so many payment methods that will let you buy the car, I still don’t like the fact that it is overpriced.

-Scarlett

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