The UAE: A Thriving Japanese Car Market

Japan is currently the world’s third largest automobile manufacturer in the world with an annual production of 9.9 million vehicles in 2012. Six out of ten of the world’s largest automobile manufacturers have their bases in the island nation.

Brands like Toyota, Honda, Nissan, Suzuki, Mitsubishi and Mazda are synonymous with safety and quality. Likewise,Yamaha and Kawasaki remain the bywords of durability and endurance. The ‘green’ car industry is also ruled by Japanese car–makers Toyota (which includes the highly acclaimed Prius) and Honda (includes the Civic and Insight hybrids). Nissan is also aggressively pursuing a plan to push green car sales.

Japanese car–makers have faced a string of tough challenges over the past few years: starting with the 2008 financial crisis, followed by the yen strengthening to a record high against the dollar – a move that undermines the price competitiveness of vehicles built in Japan and is threatening companies to move production overseas.

A massive earthquake and tsunami in Japan and severe floods in Thailand disrupted the parts supply chain and led to months of production stoppages and constrained the supply of vehicles followed by recalls of millions of vehicles due to safety glitches.

In spite of these setbacks, Japan’s auto industry is starting to see potential big improvements in its business environment.

The yen recently weakened to a 28-month low against the dollar as the newly established government vowed to tackle the yen’s strength. The Nikkei subindex for the auto sector has surged more than 26 per cent since mid –November, outstripping a 20 percent rise on the benchmark Nikkei during the same period.

UAE’S TOP TRADING PARTNER

According to a report by Dubai Customs, Japan is the UAE’s top automobile trading partner, accounting for 25 per cent of foreign trade valued at Dh 8 billion for the first half of 2013.

Japanese brands traditionally regarded as more reliable than their European and US counterparts–are the country’s best one sellers.

Car giant Toyota announced a strong growth of 31 per cent in sales across the Middle East in 2012.The Japanese auto giant delivered 660,285 vehicles, making 2012 a record year in the region for the Toyota and Lexus brands. Globally, sales of Toyota and Lexus cars totalled 8.72 million units, an increase of 23 per cent compared to 2011.

Across the GCC region alone, Toyota sold 624,400 vehicles in 2012.

Similarly, 2012 was acknowledged as the best year ever for sales for Nissan Middle East for its Nissan Patrol flagship vehicle.

More than 14,000 Nissan Patrols were sold in the Middle East in 2012 representing a 66 per cent increase in sales and giving Nissan Patrol a record market share of 22 per cent in the Gulf market.

The Nissan Patrol is Nissan’s flagship SUV model and enjoys a rich heritage and passionate following in the Middle East that dates back to the 1950s. The iconic vehicle notched another historic milestone by setting a Guinness World Record – ‘heaviest object pulled by any production vehicle’.

An unmodified production of Nissan Patrol hauled a 170.9-tonne cargo plane, inclusive of the weight of the plane, cargo and fuel, for over 50 meters at the Sharjah International Airport.

GROWTH IN AUTO PARTS TRADE

The auto parts trade in the Dubai has grown over 27 per cent in the last four years, according to a Dubai Customs report.

Dubai’s auto spare parts foreign trade was valued at Dhs7 billion in 2012, an increase of Dhs8 billion as compared to Dhs29 billion in 2009. The auto spare parts market continued to rise, reaching Dhs32 billion in 2010 and Dhs36 billion in 2011, most of which is made up from export and re-export activities, taking up the major share of foreign trade.

Japan is deemed to be Dubai`s top trade partner in spare parts and accessories, claiming 28 per cent of the imports market share with a value of Dhs6.1 billion.