Exclusive dealerships likely to go Monday, 07 March 2011 03:15

DOHA: If the government has its way, exclusive dealerships might not remain a preserve of Qatari companies any more.

Plans are afoot to open up protected dealership trade to foreign competition to ensure that the prices of durables (including, perhaps, automobiles) and other key imports come down to rational levels. Exclusive dealerships are so far a monopoly of Qatari companies and the law (Number 13 of 2000) regulating the trade forbids non-Qatari investment in

the sector.

But the Ministry of Business and Trade is quite enthusiastic to permit non-Qatari investment in the sector and has, thus, proposed amendments to some key articles of the above law.

The Economic and Financial Affairs Committee of the Advisory Council is to meet today to take up the amendments for a threadbare debate. The Minister of Business and Trade, H E Sheikh Jassim bin Abdulaziz Al Thani, is expected to attend the meeting to present the ministry’s viewpoint on the need to amend the law.

If the Advisory Council’s panel and later, the Council itself, approve the amendments, they would need to be ratified by the State Cabinet and the higher-ups to be effective.

Law Number 13 of 2000 forbids non-Qatari investments in — aside from exclusive agencies — banking, insurance and real estate sectors. The above amendments, however, aim only at opening the exclusive dealerships trade to foreign competition while the rest of the sectors would continue to be protected.

It may be recalled that the trade ministry has been talking with auto dealers in a bid to convince them to rationalise car prices but to no avail.

Cars in Qatar are more expensive in comparison to some neighbouring countries. This prompts many people, especially citizens, to travel to the neighbouring countries to buy cars.

It is, however, not clear how the existing car or even other dealers could be affected by the amendments since they have inked long-term dealership contracts with overseas manufacturers and have been allotted ‘specified territories’ as their target markets.

For example, car dealers from the UAE and Saudi Arabia could be permitted to set shop in Qatar and they could sell the automobile cheaper (as they import in bulk) but their contracts with manufacturers wouldn’t allow them to set foot into another dealer’s territory (Qatar).

It is also not clear if the regional dealers, provided they enter the Qatari market, would be providing after-sales service.

Also, Qatar has its own set of standards and specifications for cars which are different from other GCC states. Considering that car dealers from neighbouring states are allowed to set foot here, they will have to import cars of different standards and specifications. This might frustrate the economy of their business.

Observers says that if Qatar manages to resolve the vexed issue of dealer-manufacturer ‘nexus,’ consumers would benefit immensely since handling, demurrage and transport costs would come down.

The Peninsula

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