x Abu Dhabi, UAEFriday 19 January 2018

Japan disaster to hit car dealers

Local car dealers expect to feel the impact of the Japanese quake as inventories run low.

Local car dealers expect to feel the impact of the Japanese quake as inventories run low.
Local car dealers expect to feel the impact of the Japanese quake as inventories run low.

Car dealers expect to be hit by shortages of popular Japanese models as global production slows after last month's devastating earthquake and tsunami.

A sharp fall in supplies could dramatically hit dealers' second-quarter sales as Japanese brands make up more than half of new cars sales in the Emirates.

Felix Welch, the director of sales and marketing at Arabian Automobiles, the exclusive dealer for Nissan in Dubai and the Northern Emirates, said the company had a "reasonable" level of stock that would see it through this month, but supplies would fall thereafter.

"From May onwards you could start to see any one of the Japanese brands having an issue," Mr Welch said. "The more desirable models will run out faster, particularly with the market improving in the UAE. If I had a message for the consumer it would be to go and buy your car now."

Honda and Toyota both announced this week they would suspend production of cars at a number of plants around the world this month, due to a shortage of component supplies from Japan.

Nissan Middle East announced on Tuesday it was already 55,000 cars short of production targets.

Hugh Dickerson, the senior general manager of sales at Al-Futtaim Motors, the exclusive Toyota dealer in the UAE, said the company would "clearly" be affected by Japanese manufacturers' limited supply.

"There will be some effect because what happened in Japan was deeply catastrophic," Mr Dickerson said. "We are hoping for some production to begin in May, to what level is difficult to comment on."

Al-Futtaim Motors receives half of its Toyota cars from Japan and the remaining half from the US, Australia and countries in the Far East.

Sales in the UAE have so far been unaffected, Mr Dickerson said, because the group had a high level of cars already in stock.

Al-Futtaim expects to announce sales growth of Toyota and Lexus cars of 45 per cent for the first three months of this year.

Mr Welch said sales for Nissan had grown 50 per cent in the first quarter of this year compared with the same period last year, while BMW, General Motors and Ford all reported similarly strong growth figures this week.

The sustainability of this growth is now uncertain, however, due to limited supplies from manufacturers.

"I programmed for strong growth this year, so our inventory is high but it's difficult to tell at this stage if growth will continue because I do not have all the details," Mr Dickerson said.

Toyota said on Friday it would restart all domestic assembly plants on April 18, more than a month after they were shut following the disaster in Japan.

But it said its factories would be shut down again between April 27 and May 9, which covers some of the traditional Japanese Golden Week holiday, and production at its North American plants halted in five one-day shutdowns this month due to limited supply of component parts from Japan.

Toyota said no decisions had been made regarding production after April 25 in North America.

Nissan Middle East said production had so far continued on a limited level using remaining inventory supplies of components, but normal operations should resume.

"As the delivery of parts will still take time to be fully re-established, operation levels will still be limited, depending on the delivery status from suppliers," Nissan said.