Gulf luxury car market shows signs of recovery

Luxury car makers have been hit hard by the regional economic slowdown, but signs of a recovery in demand are emerging. (Courtesy of Aston Martin)
Updated 01 September 2017
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Gulf luxury car market shows signs of recovery

LONDON: The market in luxury sports cars in the Gulf has been impacted by the effect of lower oil prices and government budget cuts, but some manufacturers have swum against the tide in the first half of 2017.
Aston Martin, which announced record sales figures last week, said that the Middle East was the only global market that showed a significant downturn in the first half, but that it had increased its market share in the period, largely at the expense of big rivals like Ferrari and Lamborghini.
“Consumer confidence in this sector has been hit by the low oil price and the effects of spending cut backs. The good news for us is that we have gained market share and are now second to Ferrari, the long term market leader,” said Christopher Sheppard, chief executive of Aston Martin MENA.
That general state of the regional market was confirmed by independent analysis from IHS Markit, information consultancy.
Emmanuel Darku, an analyst based in Germany, said: “A lot of dealers and manufactures are not happy about the situation so far this year. It is caused by low oil prices, decreased consumer confidence, a slow-down in investment and currency fluctuations.”
However, he thought that there was a recovery under way toward the end of the half, as government spending recovers, especially in Saudi Arabia, and that luxury manufacturers would not be as badly affected as volume car makers.
In Saudi Arabia, figures from IHS show big growth for Aston Martin (150 percent) so far, with 20 cars sold this year compared to 8 in 2016. Jeddah was the main market, Sheppard said, but there was also growth in Riyadh and Al Khobar.
Bentley was also a big seller in Saudi Arabia, with a near 130 percent hike year on year. Darku said that sales of the Bentayga SUV were especially strong in the region.
In the UAE, the biggest luxury car market in the Gulf, Aston Martin grew by 15 percent and Bentley by 9 percent in the period to mid-May, IHS figures showed.
One of the factors holding Aston Martin back in the region has been a lack of financing options for vehicles, but Sheppard said the company had addressed this issue.
Aston Marton MENA Financial Services is being trialled in Dubai and will be rolled out across the GCC region, underwritten by local banks.
Darku said that Aston could challenge Ferrari for the number one slot, but that it would take time.
Ferrari is such an established brand world wide, every rich person wants to own a Ferrari. But the new Aston Martin SUV could be a game changer in the region,” he added.


Japan, EU to sign widespread trade deal eliminating tariffs

Updated 17 July 2018
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Japan, EU to sign widespread trade deal eliminating tariffs

  • Both sides are heralding the deal, which covers a third of the global economy and more than 600 million people
  • Besides the latest deal with the EU, Japan is working on other trade agreements, including a far-reaching trans-Pacific deal

TOKYO: The European Union and Japan are signing a widespread trade deal Tuesday that will eliminate nearly all tariffs, seemingly defying the worries about trade tensions set off by President Donald Trump’s policies.
The signing in Tokyo for the deal, largely reached late last year, is ceremonial. It was delayed from earlier this month because Japanese Prime Minister Shinzo Abe canceled going to Brussels over a disaster in southwestern Japan, caused by extremely heavy rainfall. More than 200 people died from flooding and landslides.
European Council President Donald Tusk and European Commission President Jean-Claude Juncker, who arrived Monday, will also attend a gala dinner at the prime minister’s official residence.
Both sides are heralding the deal, which covers a third of the global economy and more than 600 million people.
The deal eliminates about 99 percent of the tariffs on Japanese goods to the EU, but remaining at around 94 percent for European imports into Japan for now and rising to 99 percent over the years. The difference is due to exceptions such as rice, a product that’s culturally and politically sensitive and has been protected for decades in Japan.
The major step toward liberalizing trade was discussed in talks since 2013 but is striking in the timing of the signing, as China and the US are embroiled in trade conflicts.
The US is proposing 10 percent tariffs on a $200 billion list of Chinese goods. That follows an earlier move by Washington to impose 25 percent tariffs on $34 billion of Chinese goods. Beijing has responded by imposing identical penalties on a similar amount of American imports.
Besides the latest deal with the EU, Japan is working on other trade agreements, including a far-reaching trans-Pacific deal. The partnership includes Australia, Mexico, Vietnam and other nations, although the US has withdrawn.
Japan praised the deal with the EU as coming from Abe’s “Abenomics” policies, designed to wrest the economy out of stagnation despite a shrinking population and cautious spending. Japan’s growth continues to be heavily dependent on exports.
By strengthening ties with the EU, Japan hopes to vitalize mutual direct investment, fight other global trends toward protectionism and enhance the stature of Japanese brands, the foreign ministry said in a statement.
The EU said the trade liberalization will lead to the region’s export growth in chemicals, clothing, cosmetics and beer to Japan, leading to job security for Europe. Japanese will get cheaper cheese, such as Parmesan, gouda and cheddar, as well as chocolate and biscuits.
Japanese consumers have historically coveted European products, and a drop in prices is likely to boost spending.