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.