Big Three eye Mideast for recovery

The US top three giants remain optimistic that the Middle East market will continue to grow and beat this financial crisis.

Senior officials from General Motors and Chrysler told Emirates Business that their plans for the region are still in place despite lower sales due to bank's tight lending policies.

Ford Motor Co on the other hand continues to rake in double-digit growth rates even in the past two months when access to credit has been most difficult.

"The performance of the Middle East markets has been on target," Trent Barcroft, Vice-President and Director, Chrysler Regional Centre – Middle East, said. "Although the banks have tightened lending, our products offer the latest design and technology at value prices. We are optimistic about our sales growth in the region."

"Year 2008 will go down unlike any other year in the industry, and thus, comparisons to 2007 sales have become irrelevant but nonetheless Chrysler in the Middle East has performed well with our year to date sales growing by 20 per cent."

UAE sales for General Motors have also slowed down by 10 per cent in the last two months. In an earlier interview, Mike Devereux, President of General Motors – Middle East Operations said this is because rejection rates in auto finance loans have soared from 5 per cent to 20-30 per cent.

"The Middle East market is critically important to GM," he said. "Our business has almost tripled over the last seven years here in the Middle East. This [UAE] is a growth market for us and we need to invest in it."

The UAE has bit one of the most hit sectors in the region, he said, as about 70 per cent of its sales have been financed through banks compared to Saudi Arabia whose sales have been financed by cash, he said.

"We hope things to pick up by next year," Devereux said, adding that GM aims to double its sales in the next five to six years.

Meanwhile, sales of Ford, Lincoln and Mercury from January until end of November 2008 have grown 26 per cent over last year in the GCC countries. Passenger cars recorded an 11 per cent growth and tucks/SUV sales increased by 44 per cent.

"Our sales during the past three months remain positive where September 2008 sales were 22 per cent over September 2007, followed by a 19 per cent increase in October 2008 and in November, we recorded a 24 per cent growth over the same period last year," Waldo Galan, managing director, Ford Middle East, said.

Galan admits that the world financial crisis is beginning to impact the region and expect the total industry in 2009 to be "somewhat affected".

"However, our customer base is still on an upward trend and we believe this performance comes as a result of the competitive value for money that our award winning products offer, coupled with the valuable after-sales support that our dealer network offers in the region," he said.

Currently, there is an immense tension in the US after Congress failed to pass a bailout for the US automakers.

President George W Bush has signaled that tapping a $700 billion financial industry bailout fund to GM, Ford and Chrysler was a "possibility", leaving more room for uncertainty than hope.

Bankruptcy even of one of Detroit's Big Three would be a body blow to the US economy, which is already in recession, immediately hitting car parts makers and car dealers, as well as manufacturers.

The Middle East is among the top five markets for Chrysler International and contributes significantly to the sales volumes of the company.

The region represents nearly half of Ford Motor Company's Export Operations (countries where Ford, Lincoln and Mercury are imported through an importer-dealer). And while only about two per cent of GM's global sales come from the Middle East, 60 per cent of GM sales now come from markets outside the US like the Middle East, Russia, China, Brazil, Turkey combined.

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