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Abu Dhabi, UAEThursday 15 November 2018

The other Great Wall: Chinese cars in the UAE

Chinese car manufacturers are trying to break the UAE market – but the road ahead is long

Workers assemble the Haval SUV H7 model at the Great Wall motors assembly plant in China. AP  
Workers assemble the Haval SUV H7 model at the Great Wall motors assembly plant in China. AP  

Travel down any road in the UAE today and there’s a good chance you’ll see a white pick-up truck. But one brand is particularly prevalent - Great Wall. Its letters are emblazoned in bold red on the back of a truck that seems to be everywhere: down the motorways, around construction sites, in the cities.

Al Naboodah Group Enterprises first started selling Great Wall vehicles here in 2001. It was among the first Chinese carmakers to enter a market dominated by European, American and Japanese brands.

Ajit Kumar is chief operating officer of commercial at the group and was involved in those early days.

“It was very challenging because we had to get the Chinese to understand the market. They had to adhere to global best practices in terms of warranties, support and customer care. These were things that were new to the Chinese automobile industry at that time.”

A further problem was that people did not trust the quality of Chinese-made cars. Improvements were made to the engines, air-conditioning units and lights. But enough progress was made by 2007 as passenger vehicles started to be sold under the Great Wall brand. And a few years ago, the company launched Haval to offer premium SUVs

But market share in the UAE is still dominated by Toyota, Nissan and other brands from Europe, Japan and America. In 2017, about 260,000 passenger cars were sold in the UAE. Only two Chinese brands - Geely and MG (a former British marque) – supplied data and they sold just 1,000 cars between them. Bill Carter, chief systems and innovation officer of Autodata Middle East, believes total sales for all Chinese cars are between 2,000 and 3,000 which equates to about 1 per cent market share.

Mr Kumar declines to give a sales figure for Great Wall or Haval but said they have increased by 30 to 40 per cent. He also believes Chinese cars are no longer viewed as cheap. “Look at many major products such as the iPhone - they are made there and manufacturing standards have improved.”

Chinese cars are roughly about 25 per cent cheaper but this perhaps is changing. Take the Haval H9 4x4. An entry level will set you back Dh109,900. One of its main competitors is the Mitsubishi Pajero, where an entry level price is about Dh95,000. Haval’s H2 costs from Dh59,900, and many competitors at that level are actually cheaper.

“Chinese cars can give you value for money, quality and a feature-packed product,” said Mr Kumar.

Since Great Wall, many other Chinese car-makers have entered the UAE market. Chery, JAC, Changan, Maxus and Geely are increasingly seen on our country’s roads. But for Mr Carter, the issue of after sales service and resale value continue to cause problems.

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“They are good at supplying a ‘cheap’ car but cannot supply spares or back up services. Until they get their head around this they will not succeed,” said Mr Carter.

“The Korean brands went through and are still going through the same issues but they are nearly on top of this.”

Added to this is the correction in the market here which makes it harder. At Dubai Motor Show last year very few Chinese brands were exhibiting but a few years ago they were all there. “Everyone is feeling the pinch,” said Mr Carter. And it’s not just that people are buying fewer cars because of leaner economic times, sales have dropped across the GCC because the re-export of cars from the region has been scaled back. This is due to the fact some export markets have dried up and manufacturers have cut back on this practice over fears about where the cars ultimately end up.

Looking ahead, the real challenge for Chinese car manufacturers seems to be building brand awareness. The arrival of Chinese president, Xi Jinping, should help in this regard.

Mr Carter points to Lexus when they entered the UK market in 1990 and it took them a decade before people took notice.

“It is improving but it takes a long time to build a reputation. Where the Chinese score is short-term value for money but longer-term quality counts as does strong residual value, where the mainstream wins every time.

“They have caused the major brands to sit up and take notice which is good for the consumer. We believe they still have a long way to go before they are a real threat.”