Car prices in Qatar highest in region

December 24, 2010 - 11:19:49 pm

By Fazeena Saleem

DOHA: New car models in town are often advertised as setting new standards in specifications, build quality and safety. Most customers, however, are looking for an affordable car, wondering whether the fancy features are for the right price.

Certainly not, compared to the prices in some neighbouring countries.

The Qatari automobile market is mainly dominated by Japanese and American manufactures. Since it’s a small market, cars are imported by their exclusive dealers in relatively small quantities, so the manufacturers allow them lower margin as compared to those for mass importers in Saudi Arabia, the United Arab Emirates and Kuwait.

Some citizens are also believed to be importing specific car models from neighbouring countries.

The exact figures are hard to know but independent findings of The Peninsula show that anyone importing from neighbouring countries can save several thousand riyals on some brands.

As for other brands, the differences in prices here and in the other GCC countries is marginal — a few thousand riyals — and it doesn’t make sense to import them.

Importing vehicles requires around QR5,000 to be spent on transport and paperwork, aside from the hassles involved in bringing the vehicle here.

There are other disadvantages as well in importing a car from a neighbouring country, as after-sales service could be a problem. Then, its resale value is affected since vehicles bought in Qatar are preferred in the second-hand car market.

Against this backdrop, the government had begun pressing the local automobile dealers to slash their prices and bring them on a par with those prevailing in some neighbouring countries.

The Ministry of Business and Trade has warned automobile dealers to bring car prices down and this might see cars becoming cheaper soon.

The Minister of Business and Trade told car dealers at a meeting in October this year that they must make sure that automobiles are within the reach of limited-income families.

The ministry warned it would not remain silent and allow automobile dealerships to fix prices as they wished. Car prices must be brought to the same levels as those in other GCC states, it said.

The ministry also said after-sales services and maintenance of vehicles were expensive and asked the dealers to make these services affordable.

The Prime Minister and Foreign Minister H E Sheikh Hamad bin Jassem bin Jabor Al Thani, raising the issue during his annual interaction with businessmen, warned that if automobile dealers did not reduce car prices the government would take appropriate steps, and noted that some dealerships were charging up to QR40,000 extra for some cars.

Referring to car dealerships as monopolies, he said they would be stripped of this privilege if they did not mend their ways.

Car dealers attribute their escalating prices to a mix of factors that includes increasing rentals, transport and warehousing costs as well as rising staff salaries.

It is a global phenomenon, they insist, adding that car prices are going up in the countries of their manufacture.

Then, transport charges for vehicles work out much higher here in comparison to those of bulk importers, argue the dealers, justifying their higher rates. Some dealers also don’t agree that their prices are higher than those in other GCC states.

“As I understand, there is not much difference,” said Ihab El Feky, General Sales Manager, Qatar Automobiles Company, the sole dealers for Mitsubishi cars.

El Feky, an automobile professional for more than a decade in the Gulf region, said: “Sometimes, in term of volume, if you compare a market like Saudi Arabia, you might have the same size of showroom, same type of people, but you have a bigger volume. You also get support from the manufacturer; with some additional volume they review the prices. So it’s related to sales volume. But as I see it, you have to measure it as a package: the product, the service you are giving after sales, what is included in the prices.”

Referring to the trade and business ministry’s request to slash prices, El Feky said, “Yes we did, we reviewed our prices.”

The dealers argue there are lots of factors affecting pricing. The insurance cost, shipping cost and the currency affect pricing levels to a large extent. Dealers in Japanese vehicles say the yen plays a major role in the pricing.

“I would never say the pricing comes down in any matter. These factors play around when it comes to pricing,” said a senior official at a dealer company.

“There had been a definite gradual increase in the prices in 2009, 2010 and even in 2011, you would see, because there are so many elements across the globe that warrant these price increases,” he said.

The dealers say geographically also, when shipments are made to Qatar, they have to move in though Dubai, which leads to a slight price increase. And certain factors in the market also warrant that a certain pricing level is maintained, they say, because, its not that just one company maintains a higher price — it’s across all the distributors in Qatar.

“It is definitely higher than in Dubai and Saudi Arabia. It’s mainly compared with these two markets. And its justified mainly because we get (cars) at a higher price,” said the official, requesting anonymity.

“When it comes to Bahrain, there are comparable prices. In Kuwait also the pricing levels are different because Kuwait has a much bigger market,” he said.

The dealers in American cars argue that a comparison between two markets and brands is not justified.

“The American cars have built a reputation in the region. It’s that you can get more options at a very convenient price. This is actually the case,” said Waleed Al Sayed, Retail Manager, Jaidah Automotive, the sole dealer

for Chevrolet.

“The Qatari customer is very unique and sensitive; he wants the equipment of the car to be above standards, he is enjoying the car and its options. That’s why sometimes any other market is less expensive than us,”

he added.

Referring to the request by the trade and business ministry to reduce car prices here, the dealers say they have taken some measures to reduce prices.

“Yes, lots of communication is running between our board here and the ministry of trade. A lot of positive outcome has come out of that. In a way, another yes, and its processing,” said Al Sayed.

However, neither of the dealers wanted to reveal their car prices due to various reasons, including company policy. However, they said a lot of orders had been placed by Qatari buyers for 2011 models of some car brands.

Meanwhile, The Peninsula has learnt that the second-hand car market in Qatar is the most attractive in the region due to its lower prices and other reasons.

People from Saudi Arebia, Oman and Bahrain prefer to buy used cars from Qatar as they are cheaper, Qatari standards are stricter and the cars have lower mileages on their odometer.

The used car auctions at Street Number 10 in the Industrial Area on Thursday and Friday evenings are crowded with sellers and buyers.

Some small sellers who don’t take their cars for the auction park it along Street Number 10 looking for potential buyers. Any customer buying a used car has to pay an advance, and gets three days to complete the paperwork.

There are also several showrooms of used cars on Street Number 10, and they help both the buyer and the seller to close a deal for a nominal commission. Interestingly, the exclusive dealers in new cars also sell used cars.

But in spite of all this why even ordinary cars are expensive here remains a mystery for customers!