Latest car models come at a price

August 23, 2014 - 1:40:11 am

BY MOHAMMAD SHOEB

DOHA: A section of the local social media is abuzz with complaints about some car dealers charging up to 20 percent extra for immediate delivery of the latest models of cars or asking customers to wait six months for the vehicles.

According to some potential buyers, the monopolistic nature of Qatar’s automobile dealerships enables dealers to force consumers to pay more to get a new car model soon after it is launched.

“If you need quick delivery, pay 20 percent extra” seems to be the dealer’s mantra, they say. 

This, however, was denied by a leading agency. “It is baseless”, it said. 

Another leading dealer in luxury cars neither admitted not denied charging 20 percent extra for immediate delivery of cars but asked this newspaper to submit a detailed query on the issue to be responded to later.

Citizens and residents say that some car agencies deliberately hold up delivery of the latest models of cars, especially some luxury brands, for up to six months after their international launch.

They allege that once new models of cars arrive in Qatar, some car agencies sell the vehicles to their staff and managers, who resell them to individual customers at higher prices, which may be 20 percent above prices in other GCC markets. Customers unwilling to pay the high prices are told to wait for six months.

Commentators say that a lot of customers want to buy the latest models of cars soon after their launch, and some middlemen, perhaps with the connivance of some senior agency staff, are making money by selling the latest models to only those who pay up to 20 percent more.

Some interested car buyers are so upset with these practices that they have approached the Ministry of Economy and Commerce and the Consumer Protection Department and sought their intervention.

“Some car agencies in Qatar are involved in exploiting customers by denying them the latest models of cars for six months after their official launch. Those who offer them immediately after the launch demand 10-20 percent extra payment,” said a commentator on a local social media forum recently.

He pointed out that prices of automobiles in Qatar were already 10 to 20 percent higher than those in other markets in the region.

“Although these practices are becoming common in the GCC region, in Qatar it has become rampant,” he said of the overcharging.

Industry insiders have a different story to tell about the difference in prices of the latest models of cars and the previous year’s models.

A market analyst said that ongoing roadworks and the resultant traffic jams had led some potential car buyers to delay their purchasing decisions. This has resulted in a huge stock of unsold cars of older models with most car agencies. This has forced the agencies to offer heavy discounts and attractive incentives to customers to buy older models of cars.

An Indian expatriate who recently bought a car said: “I received a discount of QR4,000 on buying a 2013 model Nissan Sunny instead of opting for the 2014 model. I am aware of the fact that when I sell my car it will fetch me a relatively lower price compared to the 2014 model. But I also believe that a customer will evaluate the vehicle not only by the model (year of manufacture), but also take into account the mileage (the number of kilometres it has run).

Another commentator, referring to some employees of car agencies, wrote on a social media website that about 50 percent of the latest model cars were booked by sub-dealers and individuals for resale at higher prices to customers intent on buying the latest models soon after their global launch.

“The authorities must promulgate laws to prevent such practices on the part of some erring agencies who blatantly exploit customers. They should be allowed to sell only new cars imported to Qatar or cars used only for three months or less,” he said.

He also said that employees working in car agencies should not be allowed to book more than one car in their name unless it was for personal use. If they booked more than one car, they should not be allowed to sell the vehicles the same year, he said, adding that those involved in such practices should be blacklisted.

When contacted, a manager at one of Qatar’s leading car agencies said on condition of anonymity: “The accusations about holding latest models of luxury cars for six months or charging extra money are completely baseless. In fact, in this competitive market, we are trying to push our sales to retain and increase our market share. For this we are in the process of opening a separate showroom for our luxury brand.”

A Qatari citizen blamed the customers for giving car agencies the opportunity to exploit them. He said: “Why should we be so crazy about buying new cars every year? Most of the time the latest models have the same features or specifications as the previous models, which applies to about 99.9 percent of the cases. Changing cars every year is a sheer waste of money.”

He said: “Car agencies and some greedy middlemen know that Qataris have money and they won’t mind paying a little extra to acquire the latest model of their favourite car just after its launch.”

He went on: “We must change our culture of consumerism instead of blaming car agencies and middlemen. Businesses and middlemen always look to make extra money from their customers.”

Another commentator suggested that it was better to import cars directly from the source country than buy from exploitative agencies.

“If agencies continue to behave this way and do not care about the interests of consumers, we must buy cars directly from the country of origin and let the agencies keep their cars with them…. This way we can save a lot of money, ranging from QR50,000 to QR70,000 on each car, which, on some luxury models, can go up to QR100,000,” he said.

Some have suggested establishing a consumers’ forum or association to change the monopolistic behaviour of car agencies.

“Not only are car prices higher in Qatar, even spare parts and car accessories are very expensive compared to neighbouring markets such as Saudi Arabia and the UAE,” Qatari citizen Hammad Saeed was quoted by a local Arabic daily as saying.

Saeed said that the only advantage of buying a popular Japanese brand of car from the sole agency in Doha was that quality was guaranteed and some consumer-specific requirements were met by the company.

“Despite higher prices and many other problems, I would still personally prefer to buy my car from the authorised agency given the fact that it provides better after-sales service. It proves very wise, especially if you discover a manufacturing defect in your vehicle,” he added.

“However, it doesn’t come free of cost. The company charges for all these value-added services at the time of buying the vehicle.”

He said cars were cheaper in Saudi Arabia and the United Arab Emirates, but after-sales service and warranty cannot be availed of from here. As a result, the owner would be forced to take his car to a local private garage or workshop instead of taking it to a neighbouring country, which may prove too costly.

Another citizen, Abdul Hadi Al Rasheedi, was quoted by an Arabic daily as saying: “Prices of some Western brands of cars in international markets are 20 percent lower than what we pay in Qatar. Similarly, Japanese cars are up to 30 percent less expensive in other GCC markets such as Saudi Arabia, the UAE and Oman.”

Nasser Mabkhoot, a manager at a car retail company, said: “The existence of small car dealers in Qatar (who import vehicles from neighbouring countries to sell in the local market) is evidence of the local car agencies charging higher prices to make hefty profits.”

Nasser Al Tairi, manager of another car dealing firm, said: “We sell cars imported from Oman and the UAE with additional features and facilities. We have dedicated garages where regular check-ups and maintenance work are done with efficiency and proficiency. And people prefer to buy cars from us rather than from the sole car agencies as we give special care to the interests of our customers.”

The difference in prices is not confined to the cars. The spare parts of motor vehicles, both original and commercial (also called ‘tijari’), are also higher in Qatar compared to other markets in the region.

“Prices of spare parts in Qatar are increasing every year without any valid reason,” Ali Al Ghareeb, a Qatari customer, was quoted by an Arabic daily Al Raya as saying recently.

He said: “Earlier, they gave excuses like high rentals of shops, higher transportation cost and lack of space. But now, with the government providing all the needful support to businesses, they are still increasing prices without any qualified reasons.”

He stressed that one of the reasons the prices of spare parts, especially the original ones, were going up every year was the monopoly of importers and inadequate competition in the market.

“How can one justify a price of QR800 for a car battery and QR2,000 for four tyres of a car? This is an open case of exploitation,” he said, adding, “Exorbitant prices of original spare parts are forcing many people to buy counterfeit or used ones.”

Another citizen, Baha Al Sharief, pointed out that companies usually cited higher shipping costs and fluctuating dollar and oil prices as reasons to justify the high prices of spare parts, but when these factors turned in favour of the importers they never reduced their prices.

“This shows that the market lacks an effective price monitoring mechanism,” he added. “For instance, the company-branded brake pads of a popular car brand are being sold for QR420 while others are available for QR120. How can there be so much difference for the same product,” asked Al Sharief.

Badr bin Jalal, another citizen, was quoted by the daily as saying: “Prices of spare parts in Qatar cannot be compared with those prevailing in the neighbouring countries. The prices of original motor parts this year have increased by over 15 percent compared to last year’s prices while the prices of spare parts of other brands have increased by up to 30 percent, depending on the country of origin.”

Yet another citizen, Abdulaziz Al Ajmi, noted that the problem was not limited to the arbitrary pricing of spare parts.

“Even if you buy an original spare part at a high price you may not be sure that the same part has been used in your car. It has been found that some garages use commercial (tijari) spare parts and charge the customer for original ones,” he said.

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