Most of
the African buyers are buying substantial quantities of automotive batteries,
tyres, spare parts, ball bearings, water pumps and a host of electronic goods
from Dubai for selling them at a profit in their own countries. "The African
customers price-sensitive - they are looking for low priced goods and are not
much concerned about the quality aspect," says Ahmed of Popular Tyres Trading,
one of the largest stockists of tyres, tubes
and batteries in the UAE. "Chinese tyres are in great demand in African
markets as they are cheap and provide excellent value for money," he says.
The
used spare parts market in the UAE is as old as that of automobiles. In the last
ten years, it has become a full-fledged multi-million dirham business involving
a large number of small and large enterprises spread all over the country. Many
such outlets also deal in used engines which they import from Japan and then
re-export to many African and Asian countries, including Russia, India, Egypt,
Iran and Pakistan. Second hand spare parts normally come from damaged cars sold
by insurance companies and the rest from police auctions. These agents sell
mechanical parts at 25 per cent of the price of new genuine parts but the body
parts, which are in more demand, are often sold at around half the price of new
ones. The rates, however, vary from part-to-part subject to the condition of the
spare and the availability of that part in the market.
Used
engines are in good demand in many African and Asian countries, especially those
with big re-conditioned car markets. The diversified range of used mechanical
and body parts of cars and engines has brought this business parallel to genuine
and non-genuine new spare parts businesses as it offers big variety at
affordable prices. Dubai has rightly developed a reputation as being a buyer`s
market. a glance at the prices of various products confirms that no other place
in the Middle East provides such a variety of goods at such low prices.
The
decisive factor is that over the decades, Dubai has developed a substantial
community of retailers, a sophisticated import system and substantial
warehousing for stock. This has lead to the emergence of a keenly competitive
market that ensures that prices in Dubai are as much as 10 to 15 per cent lower
than in neighbouring markets. [Dubai continues to be number one for buying
anything from second hand cars to automobile spare parts and ballbearings," says
Pradeep Gupta of Ameeco Marketing, a leading supplier of ball and roller
bearings. Analysts say sales of automobile spare parts and Accessories in the
Gulf has risen by 20-25 per cent in 1997 despite the sharp oil price fall in the
year. Several reasons are cited for this development.
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With price taking the upper hand over quality for many buyers, the
market for substandard spare parts will always exist. This is a demand that many
manufacturers and dealers are all too keen to satisfy. While some of the cheaper
spares are imported through the proper channels, there is also a significant
area of parallel imports of spare parts. Illegal imports from neighbouring
countries have been increasing at an 
alarming rate since 1991 when imports grew from
Dhs 13 million to Dhs 51 million in 1994. A consequence of such imports is loss
of income, loss of business, loss of reputation and credibility and
deterioration of the brand image. This not only deprives the government of much
needed income but also gives the illegal importer an unfair pricing advantage
over the authorised agent.
Dealers of the genuine spares say that they don`t feel any threat
from the used spare parts market simply because new genuine parts are purchased
by only those who can afford them and more particular about the trouble-free
running of their cars. Some of the spare parts dealers consider used parts as
direct competition to duplicate parts because of the price margin between the
two are close than new genuine parts. People prefer buying used spare parts
because they are genuine and are often in good condition. Every spare parts
outlet may not provide the full range of used parts of all car models but
together the market is capable of providing nearly 90 per cent of such parts.
The majority of second hand spares end up in the local UAE market, with
customers coming from nearby GCC states. On the other hand, almost the entire
stock of imported used engines is re-exported.
1990s has been the explosion
in the number of visitors from the republics of the former Soviet Union lured by
the many ways money can be made in the Gulf. Enterprising Russians have been
travelling to Dubai on specially-chartered flights to buy as many products as
they can carry for re-sale at huge profits at home. An estimated 100,000
tourists from the former Soviet republics travel to the UAE each
year. Each visitor is estimated to
spend a
minimum of $10,000 in
local shops. More than a quarter of this goes on
automobile spare parts and related products. As the spare parts trade to Africa
gains in stature, there is bound to be new demands from within the African
market. The UAE, with its strategic location and its well established
distribution network, can reap rich dividends by catering to the increasing
demand for automobile spares, ball bearings and lubricants in the fast
developing markets of Africa.