Car agents and dealers will be forced to offer five-year service agreements with every new and used model sold, the UAE government said Wednesday.
The Ministry of Economy has introduced a new contract that guarantees the five-year service warranty, and has warned that dealers or agents who do not comply will be fined and could be shut down.
"Car agents and dealers shall abide by providing the spare parts for five years as of the date of signature, and by extending after-sales services through writing down the telephone number in order to help consumers contact the agency in case of any emergencies in the car," Consumer Protection Department (CPD) Director Hashim Al Nuaimi said at a news conference Wednesday.
The move comes at a time when car retailers are launching summer promotions to get rid of the old stock prior to the launch of the 2012 models from September.
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The contract, which will come into force on October 1, stipulates that faulty parts in a car must be replaced after failing on three occasions. Following the first breakdown, agents have 15 days to fix the vehicle, and if they fail to do so they have to provide a new car until the defect is fixed.
If the defect recurs, the client shall be given another car instantly once he hands over the faulty vehicle to the agent.
Al Nuaimi stressed that the department will issue an initial warning notice if an agent or dealer refuses to comply with customer demands, followed by a financial fine. The final measure will be the shutdown of the agency.
Al Nuaimi also told Gulf News that car prices or sales have not been affected by new guidelines that prevent banks from offering 100 per cent loans for new vehicle purchases, retailers and government representatives have claimed.
He said the new regulation — which came into force last May 1 —benefited consumers, banks and auto dealers by reducing to 80 per cent the amount that can be lend to new customers.
Meanwhile, car retailers said they had come up with new incentives to persuade people to buy new cars, including lower monthly payments and shorter loan agreements.
Simon Monahan, General Manager of Toyota Retail at Al-Futtaim Motors said that Al-Futtaim had just launched a new finance package which will make it easier for UAE motorists to purchase new vehicles. "The Guaranteed Minimum Future Value of the vehicle gives the financial security of knowing that one's car has a guaranteed resale value that will not change over the period of the finance agreement.
"This means less hassle and uncertainty about the value of your car in the used car market," he said.
Khalid Shakhshir, Area Manager of Hyundai in Dubai and the northern emirates, said the sales at Hyundai motor showrooms had not been affected at all by the changes. He said that sales had improved compared to last year.
"Our performance and sales during May increased and the Central Bank's new rules did not affect our sales at all.
"If compared to 2010, our sales are much better and we are adopting some options that encourage consumers to purchase autos because of the good packages that we have for them including the after-sales service and maintenance."