Authorities in Qatar are once again considering introducing a price ceiling on new cars sold in the country, in the wake of motorists’ complaints that vehicles cost more here than in other Gulf states.
The State Cabinet has reportedly tasked the Ministry of Economy and Commerce (MEC), which runs the Consumer Protection department, to conduct a study of car dealers internationally, and find out the costs involved in importing vehicles to Qatar.
The MEC would then give recommendations for the profit it believes car dealerships in Qatar should make on each sale, and subsequently set the maximum price for vehicles being sold in showrooms, the Peninsula reported.
The goal of such a plan would be to prevent alleged “price manipulations” by dealers, as some consumers complain they are being overcharged for a car in Qatar compared to what residents are paying in neighboring countries.
Qatar has been discussing the idea of implementing new vehicle price ceilings for a number of years, although in September last year, a senior official from the MEC said it did not plan to roll them out.
Youssef Al Suwaidi was quoted in the Peninsula at the time as saying that Qatar was a free market that encouraged competition among suppliers.
“We keep receiving complaints from the people that cars in Qatar are quite expensive as compared to the neighboring countries. We tell the people that there are various brands of cars available in Qatar and they have varying price ranges, so they should buy the cars that suit their budget,” he said.
Dealers’ view
A representative of a leading car distributor in Qatar told Doha News that claims of dealers inflating the costs of new cars in the state were “not necessarily accurate.” He continued:
“We track all our brands within the GCC market. The prices of cars in Qatar is not out of line. Some models here might be a bit more expensive, but other models are cheaper.
Qatar customers also generally like to order cars with a higher level of specification than in other parts of the Gulf. So these cars will cost more.”
The public perception that dealers make big profits on vehicles sold in Qatar is also incorrect, he said, particularly because these businesses face rising staffing and rental costs for their premises.
“Our margins are not even close to double digits. They are not very high at all,” he added.
The representative said that the MEC already strictly monitors and controls the cost of all goods on sale in the state. Distributors who want to raise the price of any good have to formally apply for permission from the ministry’s consumer protection department.
Ultimately, the introduction of an official price ceiling on new cars could give customers a worse deal, the manager warned:
“We are always happy to work with the government to improve service to the customer. However, we operate under tremendous margin pressures. We don’t yet know what sort of margin they think will be reasonable for us. As long as it is a realistic figure then we can work with it.
But if it is unrealistic, then that could harm consumers. If we as a company are not making money then we won’t be able to invest in facilities like customer service,” he added.
Around 90,000 new cars were sold in Qatar in 2014, with sales for this year expected to hit 100,000, according to a senior official of Al Fardan Automobiles who was quoted in the Peninsula at the end of last year.
Thoughts?
Introducing a price ceiling on cars is a good initiative. At the same time government should also put a ceiling on the rising rent. That way the interests of all parties are safe guarded.
“If we as a company are not making money then we won’t be able to invest in facilities like customer service”
Customer Service? Hello! Do we have it now?
How about introducing competition? Prices will level themselves out.
Agreed, a free market without competition makes no sense. As long as every industry is monopolized, Qataris and foreigners alike will continue being taken advantage of in this way.
makes a lot more sense than trying to limit prices
Yes, placing a limit on prices doesn’t seem like a good idea to me. Prices are set by the market in a perfectly competitive market, not the government. If the market were to transition from monopoly to competitive, there would be less need for government regulation.
Yeah, ’cause that’s working so well in the housing market…
Every day on my way to work I go past 2 completely empty towers and a massive empty villa compound, and the 1.5 year empty house next door, yet despite an obvious property glut, my rent goes up each year by much more than inflation.
Until the majalis price-fixing is axed and landlords compete openly on quality, features, and location, prices are going nowhere but up.
This is not a free market and with the size of the population and with agencies concentrated in so few hands it is never going to be, so some market regulation by the government is required.
One significant aspect of the problem is that Qatar has such a low population that monopolies are easy to create and maintain, particularly when one holding such a monopoly has wasta. Qatar is definitely not a free market. Big property owners are effectively a cartel that can fix prices. Perhaps more aggressive anti-collusion laws, coupled with real enforcement, would make a difference there. Although, unless you’re terribly fond of the color blue, I wouldn’t recommend holding your breath until that happens.
Competition is good for the consumer, but only when it’s accompanied by regulations that prevent collusion to fix prices. As it is, I don’t see that happening anytime soon. Just imagine if Qatar had alternatives to the QDC, more food importers, more auto retailers for each mark, etc., that were legally restricted from colluding. Prices would fall into normal ranges and the cost of living would drop, just a guess here, but I’d say somewhere around 30%.
Of course, the cost of petrol is regulated too and the same price is charged throughout the country. A true free market would remove subsidies and price caps.
If the return of car dealers is not “that great” and not in “the double digits” – why keep it locked then ? Allow others to import cars, they might be more effecient than you. Or is it in the double digits and you don’t want to share that with anyone ? Hmm
Every monoply is a bad monoply, unless its your monoply.
This is a good idea. Just picking up the UAE’s Gulf News makes it fairly obvious that Qatar based customers are paying considerably more for the same product. UAE based customers are getting a better variety of service and warranty packages and paying less for the same car. There is no reason for this other than dealer monopolies gouging the local market because they can. Rents in Abu Dhabi and Dubai are not exactly cheap so that argument doesn’t hold very well.
It’s unworkable. Why not just remove the restrictions on bringing in new cars and let people buy cars anywhere they like in the Gulf?
“Our margins are not even close to double digits. They are close to three digits,”
Well…
My thought exactly.
Lol….and QDC as well
That would be great.
Get rid of the monopoly for various businesses and the market would sort itself out
reduce first the housing rent costs.
To be honest, I am more worried by the price of spare parts and cost of labour in case you have an accident, and I think most dealerships make more money from that than from the sale of new cars. It would be good also to make sure insurers covers everything rather than ask you to share the costs with a percentage they fix themselves as they wish.
Honestly there should be 4 or 5 dealers for each brand. That should introduce better customer service n fair prices. In these parts Dealer is king rather than the customer!
The thing that bothers me the most is not the price of the car, but the length of time for car to be serviced / maintained by the official service centers. Only here in Qatar that I’ve waited for almost a week just to get my car back. Even while working in Saudi Arabia, the longest time I had to wait is 4 hours.
Standards of Service in the Dealer’s workshop really is poor.
“Service”? You can’t really call it that.
Woah, almost a week…
Euromotors in Bahrain once told me the earliest appointment for a service was in 3 months!
“Youssef Al Suwaidi was quoted in the Peninsula at the time as saying that Qatar was a free market that encouraged competition among suppliers.”
So if I want to buy a new BMW please Mr Al Suwaidi tell me who my options are apart from Al Fardan? If I want a new Landcruiser which options do I have, and so on….
Stop going out in public and making yourself look like an idiot.
Well for Landcruisers (Toyota) you have Al-Tadamon and Abdulghani.
And strangely the prices are exactly the same.
I got mine for 5% cheaper at Al-Tadamon.
Abdulghani is an interesting case, if you go to saudi to buy your new LC he will refuse to honour the international warranty.
Yes, but if you go to UAE Al-Futtaim will honor it. Al-Futtaim is the regional distributor. Abdulghani has nothing to do with the Saudi Toyota cars. In my opinion the international warranty should be honored by every Toyota company, and btw I am against the Toyota duopoly here in Qatar 🙂
They are sub dealers of Toyota. Nothing changed
Al Fardan seems to price anywhere from 50-80% over US prices. It’s insane the monopolistic scam they have running in this country! Lets not forget the forced parts purchases through Al Fardan’s service center also. If you buy authentic parts from any other part of the world, they refuse to install it and threaten warranty revocation!
Wise move. Because Qatar is just as big as KSA and UAE
I purchased a new vehicle last week, but it was a search to compare each vehicle and price, the parts and services etc all played a role.. I discovered that some dealerships were selling 2013/2014 vehicles at the 2015 prices.. I questioned this and at first they tried to convince me nothing had changed between models and had a few other excuses, some vehicles had changed dramatically… I think there must b completion but older vehicles shld not be sold for 2015 prices there shld b discounts..