The Automotive Market in Yemen: surprising realities [Archives:2007/1097/Business & Economy]

October 25 2007

By: Yemen Times Staff
The Yemeni Automotive market has witnessed several transformations during the last decade, mainly because of globalization. There has been several trends which the market has witnessed, first from the entry of large numbers of used cars from Europe and other parts of the world to be sold in Yemen as pre-certified cars, to the arrival of several brands of Chinese cars into the country, to the more recent popularity of importing one or two-year old cars from neighboring countries, to the extent that Saudi Arabia was the largest exporter of Cars to Yemen in 2006. Yemen Times surveyed the local market and spoken to several dealers, businessmen, and customers about their choices and the options in the local market.

Hussain Naser, a used car businessman, stated that there is only one brand which most buyers have confidence in, i.e. Toyota. He said that Toyota Vehicles have all the factors that people look for within a car, mainly quality, power, good resale value, availability of spare parts, and serviceable in most parts of the country. He said that in buying a Toyota one cannot go wrong.

Most other retailers agree that Toyotas are vehicles which are fairly appreciated in the second hand market, which makes them an attractive purchase for most customers, says Ahmed Dhab'an, another used car dealer: “Toyotas have the advantage of being trusted by Yemeni customers, and in turn are welcome in the used car market because demand for these cars is almost constant”.

Indeed, Toyota is the market leader in Yemen, it controls the largest share of new car sales, with sales exceeding 7000 units in 2006, thereby making a huge gap between it and the second-best seller, which is Korea's Hyundai, selling around 2,200 vehicles in 2006.

Deputy Director of Natco, the Sole Agents of Hyundai in Yemen, Mr. Jamal AbdulWasea' told Yemen Times that there will be some serious transformations within the new car automotive in the next year, stating that Hyundai has achieved this sales surpassing several other more-established brands in Yemen in a few years. He added that Hyundai has gained the confidence of the Yemeni consumer because of its superb quality and suitability to the local market, stating that although Hyundai is being sold at a price on par with other Japanese brands in Yemen due unfavorable currency fluctuations, Hyundai is still doing very well in Yemen.

A third group?

Apart from the Toyotas and the Hyundais, Chinese cars have succeeded in capturing a considerable segment of the new car market as well, Brands such as Cherry, GreatWall, chena, and Futan have started to create their own market due to their competitive pricing, Nashwan Mahmoud, a Chinese car sales cleric, says that once consumers know that our designs, engines, and other components are identical to older Toyotas and other Japanese cars, with the only difference that they are only built in China, many customers welcome this knowledge especially since they see the considerable price difference.

He adds: “we sell a pickup minibus for 7 thousand dollars, while the Japanese counterpart sells a similar one for 12 thousand, the price difference certainly justifies the decision to buy the Chinese pick up, and in turn our sales continue to climb”.

Customers also welcome Chinese cars, Hashim Al-Jarmouzi said that Chinese cars may not be as well-built as their Japanese counterparts, however, they give an excellent value proposition which makes them an attractive buy.

Used cars entering the market

It has become a phenomenon to find the latest models of cars on sale in the domestic market at a considerably discounted price, says Khalid A., you find last year's model sold with a 30 percent discount compared to the new one you drive off the show room, he added that the significant difference in price between the same car from the showroom and another one with 20 thousand kilometers divert sales from new car dealers.

However, Tariq Sabha, Commercial Manager of Sabha Trading company, an agent of Suzuki, disagrees, saying that customers when they buy a new car they are sure that this car is under warrantee and will serve them for many years trouble-free, and that peace of mind is very important for many customers, especially since new cars are increasingly more technologically advanced and need specialist care.

Roaming through the used car market, one finds other models of cars which have been imported from lands as far as the United States and the far east. Vehicles which have traveled many kilometers but are still in good condition are brought into the country and sold for competitive prices. Said Yassin Ghalib, an importer of used cars: ” we buy vehicles for significantly cheaper prices from the United States, put them in containers and ship them to Yemen, where we are able to sell them at competitive prices in the local market and yet make a good margin”.

However, not all customers are satisfied with buying used cars from other regions, says Thabit Saeed, I bought a used Toyota Camry which was brought from the United States at a competitive price, however, I could not find suitable spare parts in the local market and it troubled me every time it needs maintenance. Along the same lines, Jamal Abdulwase'a reaffirms that as agents of Hyundai they meet with customers who bought such imported cars but were unable to find spare parts for, advising them to restrict themselves to buying vehicles which were made for this region.

He added: “we test each and every model before selling it here, to ensure that it will be suitable to the local market and the driving needs in Yemen”, he also added that Hyundai offers conditional five-year warrantees because of the company's confidence in their cars which were made for this region.