They have made inroads into the local commercial vehicle market, but are Chinese automotive brands ready to take their place on the passenger side? Maybe not yet.
"There will first have to be a convergence between retail buyers in the local market starting to accept Chinese auto brands and the Chinese manufacturers themselves being ready to launch passenger vehicles here," said Shrikumar Nair, general manager of Belhasa Motors Co. "That convergence can happen, but probably not in the immediate future."
The local dealership has represented a roster of Chinese automotive brands since the mid-1990s, principally on the commercial vehicle side. These include FAW and JMC on the trucks side of things and Brilliance Auto's Jinbei range on the vans.
"In the past we have had one-off arrangements on passenger vehicles, but Chinese automakers will need to go through the GCC compliance process if they need to push more deeply into the local and regional markets," said Nair. But for that to happen, sufficient demand will have to be generated.
"Chinese automakers are going through a learning curve themselves; even in their own domestic market, it is the joint ventures with the global automakers that have a major presence.
"So for an automotive market as mature and aware of trends in the industry as the UAE, it's still some way off for Chinese passenger brands to make an impact."
The same need not be said of demand in the commercial vehicle space. For the better part of the last decade and until the construction sector here went into a tailspin, Chinese made vehicles were a constant sight on project sites. With their competitive pricing against European makes that used to be the mainstay in the construction industry, brands like FAW were able to make a mark.
"Pricing helped, but so did the fact that FAW was able to offer more or less the same features on the operational side as the competition," said Nair. "But the drop in construction activity since 2009 has slowed down commercial vehicle sales.
"As everyone else, we remain hopeful of a revival in construction projects in the market. But, having said that, there will not be an immediate pick-up in commercial vehicle sales as a result of a future resurgence; it will be a gradual process.
"In the interim, we are trying to compensate for that by pushing more of our luxury buses line-up; with the recent improvements being made in tourist arrivals into the country, we have some expectations of increased demand for these."
Apart from the UAE, the dealership has in the past been able to strike contractual wins in Syria and Iraq. "It was an on-going process related to commercial vehicles and we did introduce some models," he added.
It also operates a bus building facility in India on a contractual basis. The chassis is brought in from China and the assembled units are for the Indian market.
For the current year, the dealership — part of the highly diversified Belhasa Group which has extensive interests in construction as well — is expecting a double-digit growth. If that happens, it would come on top of a 12 per cent growth last year.
Going forward, the dealership would not be averse to looking at adding other Chinese auto brands to its portfolio. "There are still many unrepresented brands and given our close association with some of the leading names over the years, we have the knowhow to make it work," said Nair.
Cars to cost more
With the incremental strengthening of the yuan, Chinese automobile imports will cost a lot more than they used to.
"In 2009, it was 7 to the dollar and by the end of the year it could be 6.2 or 6.3," said Shrikumar Nair of Belhasa Motors Co.
"If the yuan continues its appreciation, and it looks quite likely, we will absorb a lot of the fluctuations and not let it impact on our business volumes. Any impact would be on the margins, but our effort would be to ensure the brands we represent retain their competitive pricing edge."