JEDDAH: Potential car buyers who are delaying the purchase of vehicles until next month following media reports that prices are expected to fall between 20 and 40 percent on account of the weakening of the three big automobile makers in the US may be in for a big surprise, according to local car dealers.
“I check the newspapers for sales and have visited several car showrooms recently in search of a new car,” said Annan Abdelrahman.
“I heard that buying now would be unwise as prices are expected to drop at the beginning of 2009. So I have decided to save money and make a substantial down payment and at the same time get a major discount,” he said.
Advisories warning local consumers against purchasing cars at the moment were also listed online at popular websites such as www.expatriates.com. “Everyone is aware of the world recession and the US automobile market which has frozen in the last couple of months. Because of this, car prices in Saudi Arabia are expected to drop by 20 to 40 percent in the next few months. So be advised ... wait a couple of months so as not to miss a good buy,” said one posting.
Responding to the rumors, the National Committee of Car Agents (NCCA) earlier this month denied that prices were set to take a plunge because the US wanted to share losses with its agents in the Kingdom by exporting more cars of the same models at lower prices.
“I don’t think any responsible car agent would state something that would harm his business,” said Faisal Abu Shosha, NCCA president, adding that cars are still the main means of transport for people in Saudi Arabia as the country has no subway or train systems and that a price decrease would be without reason.
Nabeel Al-Hosain, director general of the western region of Al-Jazirah Vehicles Agency Co., said the issue was discussed at a press conference held at the Jeddah Chamber of Commerce and Industry earlier this month. “Car dealers said that statements and media reports that prices would drop by 40 percent were not something that could be accepted. This is especially the case when local dealers purchase a number of automobiles and own them,” he said. “It isn't the case that just because they don't sell, they can be returned. Dealers must sell them or suffer a loss. It is quite normal for dealers worldwide to offer a discount between September and this time of the year to help move stock so as to be ready for the arrival of new models. That has absolutely nothing to do with the crisis in the US,” he added.
Al-Hosain said that US factories are reducing production in order to decrease needed manpower and to save money, but that they were not lowering the prices of cars.
He further stated that there was a high demand for cars in Saudi Arabia with sales increasing by 20 percent in October and November. “Since we have a number of construction projects under way and the government has guaranteed that the funds are there to support them, I believe there will continue to be a high demand for cars at normal consumer levels but without a drastic discount of 20 to 40 percent as people have said,” he said. In addition, a marketing report published by Just-Auto, said that a number of major car manufacturing plants were opening in the Kingdom, thus reducing the number of imports to Saudi Arabia.
In relation to this, the Saudi Authority for Industrial Cities and Technological Relations and the United Arab Emirates-based Gulf Automotive Manufacturing Company signed a SR375 million contract in January this year to open a plant in Dammam.
The proposed plant would manufacture 15,000 cars per annum, with further plans to roll the first cars off the production line in 2009. The assembly line will then move to a new industrial city in Sudair, where capacity is expected to increase to 300,000 cars per annum.
