Dubai is intending to crack down on the ‘parallel’ importing of new motor vehicles brought in from neighbouring nations.
These vehicles are subsequently sold in the emirate for much less than they are at local dealerships at ex-showroom prices.
In recent months, the issue has become an escalating problem with falling demand in home markets leading to countries doing whatever they can to liquidate their existing stocks.
AWR Automotive’s chief executive officer Michel Ayat says that the government in Dubai is aware of the issue.
The great majority of these sales are taking place in Al Aweer showrooms, and new laws are under consideration to deal with the problem, Ayat adds.
Many of the cars involved have no mileage on them, but they have also not been put through the tough local third-party inspection and testing process.
Advanced electronics are also included on many modern cars, but without pre-sale inspection, the reliability of such devices may not be guaranteed.
Parallel imports, also referred to as ‘grey’ imports, were a bane of local distributors in the 1980s and 1990s, with many coming in from Buraimi in Oman and being snapped up by buyers due to the discounts that could be offered from sellers.
However, the number of such imports has fallen drastically over the course of the last 10 years due to a tight check on shipments made to such dealerships being kept by car manufacturers.
The activity was frowned upon and the checks largely worked, but in the last few years this has started to change again.
New car sales in all markets in the Gulf have been hit since 2015 and higher levels of unsold stock are now being carried by some importers and dealerships.
Dubai is actually a hub market, making it even more attractive for the stock to be pushed there, with Al Aweez/Ducamz now being a source point for these kinds of sales and deliveries, according to Ayat.
A senior industry source says that parallel imports have always been something that the auto market in Dubai has had to deal with but that the intensity level has changed.
When half of all of the region’s new car volumes are wiped out, it results in too many cars being left unsold, and the only way for dealers and importers to get rid of them is to dump them in Dubai or elsewhere in the United Arab Emirates, a source says.
Dealers in Dubai and the UAE in general have been meeting with officials from the Ministry of Economy to ask for territorial protection and make a case for stricter regulations.
Millions are being spent on support facilities and showrooms and such investments need protection in the wake of an influx of cheap imports.
Anyone who is driving any vehicle in the UAE has to have car insurance by law.
Car insurance is the only way to guarantee financial protection from the likes of accidents and vehicle theft.