Japanese vehicles are a common sight both on and off-road in the UAE. Automobiles comprise about 40 per cent of the total exports from Japan to this country.
The year 2006 had mixed results for the Japanese auto industry, which includes important automakers such as Toyota, Honda, Nissan, Mitsubishi, Suzuki and Daihatsu.
According to Fuijo Cho, Chairman, Japan Automobile Manufacturers Association (JAMA), in his New Year's message to JAMA members, automobile production in Japan was buoyed by robust overseas demand and consequently topped 10 million units for the fifth consecutive year.
Domestic demand, however, dropped by 1.9 per cent from 2005 to 5.74 million units, the second straight year-on-year decline.
The dropping domestic requirement, explains Yoshio Minagi, Managing Director, Japan External Trade Organisation (JETRO), Dubai, is linked to Japan's ageing population and dropping birth rate.
"As a result of these factors, the automobile sector is seeing no new demand. New car sales have therefore, gradually decreased," he says. Minagi, though, reiterates the findings of JAMA, and says that the country's automobile export market has definitely expanded.
According to JETRO's figures, auto exports were responsible for driving more than half of the increase of exports to the US in 2006. According to Takumo Hatano, the Japanese Ambassador to the UAE, automobiles also comprised about 40 per cent of the total exports from Japan to the UAE in 2006.
Crossing borders
The good news, Minagi adds, is that overseas production rates have also gone up, and car manufacturers have shifted their production bases elsewhere to growing markets such as China, India, Russia and even the US. "Today, Toyota is the largest exporter in Turkey, with a production rate of 150,000 units per year. Nissan has also started production in Cairo with 15,000 units per year," he says.
The Middle East, and the UAE in particular, is a popular destination for Japanese car exports. Not only is the region an important hub to access other important markets, the domestic demand for Japanese cars is high here. Sports utility vehicles such as the Nissan Patrol and Toyota LandCruiser are considered the best vehicles to tackle the UAE's sandy and rugged terrain, and are among the top-selling vehicles in the region. Japanese passenger cars — in all segments — are also doing well. In fact, according to manufacturers and dealers, the market share of Japanese cars in the UAE is almost 70 per cent.
High performance
This trend is clearly linked to factors such as fuel economy, high resale value, good performance and value for money — all of which are now synonymous with Japanese cars. Ambassador Hatano agrees. "Japanese cars have a good reputation because they are priced reasonably, offer good performance, and are fuel efficient, durable and have excellent maintenance services," he says.
These factors have also given Japanese cars an advantage over their western counterparts. Roger Ghosn, Marketing Manager, Al Habtoor Motors, exclusive distributors for Mitsubishi in the UAE, says, "In my opinion, the dominance of the Japanese automotive sector is due to the low-cost technology used compared to the European or American cars. In fact, if we make an analysis based on quality, technology and price, the value for money and high resale price makes them better than their competitors."
Guy Edmunds, General Manager Honda, Trading Enterprises, an Al-Futtaim Group company and exclusive distributor of Honda in the UAE, says that innovations introduced by the Japanese car manufacturers have also given them an edge.
"Just-in-time supply mass production allowed good quality cars to be produced at lower costs, and this was the start of Japan's success in the automotive sector, and it continues even today. Engineering skill and prowess seen in examples such as the VTEC engine (variable valve timing and lift electronic control) engines and hybrid cars is another key factor. Another crucial reason for their success is that the Japanese are good at finding out about what people want in their cars and then building them," he says.
The availability of original spare parts at a low cost, new trendy models and futuristic designs are also among the innovations offered by Japanese car manufacturers, says Ghosn.
Brand strength
These factors have also helped Mitsubishi build a strong brand image in the UAE. "Mitsubishi has been performing very well, especially for the last three years, and we are expecting to hit a higher target than what we have set during 2007. For two years we have been ranked number two on the automotive market chart. All of our Mitsubishi models are selling well, but we have to give due credit to our two heroes — the Lancer and Pajero," says Ghosn.
Mitsubishi has also launched the new Galant in the UAE. "The car is completely refurbished. We also launched new models of Pajero, Lancer EX and the Outlander this year," says Ghosn.
Automobile giant Honda's success in the region can also be attributed to the excellent products supplied in terms of design, performance and prices, says Edmunds. He adds that Trading Enterprises professionalism in dealing with customers in the showroom and the workshop has also helped the brand.
Honda sales in 2006 increased by 30 per cent compared to the figures for 2005. Edmunds says that 2007 will also see similar figures. He adds that Honda's highest-selling models in the UAE are the Civic, Accord and CRV. Honda also launched the new CRV late last year. The vehicle is doing well in terms of sales.
One of the world's leading automakers in terms of revenue and volume, Toyota, is very popular in the UAE. Along with its brands, Toyota and Lexus, the company also has a stake in Daihatsu Motors. In the UAE, Toyota's models are available through exclusive distributors, Al Futtaim Motors.
Latest entrant
At the September launch of the new FJ Cruiser — the latest SUV to join the Toyota range, Simon Frith, Managing Director of Al-Futtaim Motors announced that 2006 was a very important year for the Toyota brand and Al-Futtaim Motors. He said that they had also launched the Camry, Yaris Sedan, Aurion V6, RAV 4 and the new Previa during the year.
"The addition of these new models has helped us achieve an outstanding sales performance in 2006, with Toyota sales up 25 per cent over 2005. Strong customer demand for our vehicles has continued into 2007. In the first eight months of this year, Toyota sales were up 29 per cent on the same period last year."
Automobile manufacturer Nissan has also created a strong niche for itself in the region. According to Monal Zeidan, General Manager of GCC Marketing, Nissan, "The GCC is one of the fastest growing auto markets today. Nissan was one of the first Japanese auto brands to land in the Middle East in the early 1950s. We were the first Japanese automaker to open a regional office in the Middle East in 1990s with its own product planning, sales, marketing and after-sales functions. All of this to ensure the right product for our customers in the GCC.
"Over the last 50 years we have built a reputation that is based on product quality and after-sales excellence. Our vehicle line-up has also expanded from pick-ups and SUVs to include vehicles in all segments. We have the largest SUV line-up in the Middle East."
The Nissan Patrol, in particular, is considered one of the best vehicles for off-roading in the region. "Our line-up also includes small and medium sedans such as the Tiida, Sunny, and Altima. Among our range of passenger vehicles, the Nissan Tiida is one of our top selling models in the region. The Infiniti range is doing very well in the luxury segment and is the fastest growing Japanese luxury brand in the region. In addition to this, our success is also linked to our strong distribution network in the region," says Zeidan. He adds that Nissan has seen double-digit growth in 2006 and this growth is likely to be similar in 2007.
Strong sales, however, are not just slated for distributors based in the region this year, the auto industry in Japan is also expected to do well in 2007. In his New Year message, JAMA Chairman Cho said that sustained corporate investment in plants and equipment, and continuing improvements in the employment and income environments were expected.
"Domestic demand for passenger cars, trucks and buses should total 5.63 million units, while domestic demand for motorcycles should reach 720,000," said Cho.
These figures indicate good news for an auto industry that has achieved a clear leadership in the international auto market.
