The first serious effort to develop a market for Chinese-made passenger cars here could take place some time next year with ZNA, a Chinese auto major, and its local dealership AW Rostamani Trading paving the way.
An entry-level model from ZNA — a joint venture between Dongfeng Motor Group and Japan's Nissan Motor Company — is rated the most likely candidate. There have been sporadic efforts in the past to test market Chinese passenger cars, but unlike their commercial counterparts, they have never managed to build up a firm traction.
But with sales of smaller cars enjoying a renaissance — and cutting across brands — in the last two years, the time may have come for another stab at it.
ZNA's commercial models have been available in the local market since late last year through AW Rostamani Trading. It has since been expanded to include dealerships run by the latter in Saudi Arabia and, since March, in Iraq. The partners are looking to secure sales of around 1,500 vehicles in the second-half of 2012.
Last week, the partners delivered their 100th vehicle to a GCC buyer.
While no firm dates have been scheduled for the passenger car rollout, ZNA is likely to roll out its bigger SUVs in the coming months. The dealership is eyeing a 5 per cent share of the commercial vehicle market in the UAE in three years, according to a senior official with the dealer.
Another proposal that has been sounded out is for ZNA to set up a regional office here, as well as a spare parts hub that would serve the regional markets.
"ZNA clearly understands that the GCC auto market offers one of the highest growth rates and all future decisions will be aligned with this in mind," said Michel Ayat, chief executive officer of AW Rostamani Automotive. "Having already worked together in three markets, from our side we are ready to take the relationship forward."
Ayat declined to say whether this would mean new regional markets would be added to AW Rostamani's remit with ZNA. A top-ranking delegation from Zhengzhou — which included the city's vice-mayor, Sun Jin Xian, and the president of ZNA, Guo Zhen Fu — was in Dubai yesterday.
"Both ZNA and AW Rostamani Group have been associated with Nissan over decades and I keep running into Michel in Tokyo for Nissan's partner conferences," said Fu.
"Our business together will flourish and there are always options to build on what's been achieved."
According to senior officials with the dealership, the recent appreciation of the Chinese currency has had no impact on numbers so far. What is a worry, however, is the strength of the yen.
"The currency situation is something that we are constantly monitoring and trying to stay on top of any dramatic changes," said Ayat.
On growth track
According to available data, the UAE accounted for more than 27,000 light commercial vehicles (LCV) in the first half of the year compared with 24,944 in the same period last year. Within this, multi-purpose vehicles (MPV) achieved growth of 18 per cent in the same period.
For Chinese brands such as ZNA, these will be heartening numbers to base projections on. Commercial vehicle sales are highly sensitive to pricing and this is where ZNA will look to extract maximum advantage. While the construction sector has yet to create sufficient demand, other sectors — such as fleet operators — are pulling their weight in driving up the volumes.
September last year ZNA commissioned its second plant in China and raised production capacity to 210,000 units a year. This would be increased to 400,000 units in the second phase.