Qatar retools after boycott by top auto parts supplier Dubai

FILE PHOTO: Buildings are seen from across the water in Doha
FILE PHOTO: Buildings are seen from across the water in Doha, Qatar June 5, 2017. REUTERS/Stringer/File Photo

November 9, 2017

By Eric Knecht

DOHA (Reuters) – In a dusty industrial zone in the south of Doha where the city’s auto repair shops are clustered, one unlucky blue Hyundai Santa Fe has been sitting with its front smashed in since June 5, the day four Arab nations announced a boycott of Qatar.

The SUV has fallen foul of the tiny state’s dependence on Jebel Ali in neighboring Dubai, the first port of call for car companies distributing spare parts across the region but no longer an option for Doha since its neighbors severed ties.

The United Arab Emirates, Egypt, Bahrain and Saudi Arabia accused Qatar of supporting terrorism, which it denies.

With its traditional land, sea and air trade routes cut off, Doha has had to scramble to find new suppliers to replace everything from Saudi Arabian milk to Emirati engine oil.

It also has had to quickly pull together complicated new logistics, involving a mix of new air and maritime routes and use of nearby ports in Oman and Kuwait for re-export.

In many ways it has been a success. The boycott, which entered its sixth month this week, touches life on the streets only in minor ways, with Turkish dairy and Iranian vegetables taking the place of Arab foodstuffs on store shelves. Items are generally available and prices only modestly higher.

One exception has been auto parts, residents say.

In car-obsessed Qatar, where status symbol Bentleys and BMWs zip down the Doha corniche at night, spare parts that once arrived in days from Dubai can now take weeks or even months, leaving vehicles languishing in shops and drivers frustrated.

A manager at one American automobile dealership in the industrial area, who asked not to be named, described the situation as desperate.

“You have customers coming in and screaming, saying ‘my car has been here two to three months.’ And you’re just helpless. What do you say?”

Although most imports have recovered to near pre-crisis levels after dropping sharply on the boycott, auto imports in September were 40 percent lower than their year-earlier level.

The manager said attempts to re-route orders from Jebel Ali to Oman and Kuwait for re-export were abandoned because paying two sets of customs fees and additional shipping spiked costs 20 to 40 percent.

The situation has improved in recent weeks after the dealership moved to import directly by air from the United States, he said, but the process took months to set up.

“Until ten days ago we didn’t have batteries or oil. We were taking batteries out of the new cars.”

WHO NEEDS THEM?

Some 58 percent of imports to Qatar were either produced in or shipped from the four boycotting countries in 2016, according to a Ministry of Development Planning and Statistics estimate.

How much of that is autos and auto parts was not possible to determine, but two parts businesses in Doha said about 80 percent of their supplies previously came through Jebel Ali.

The boycott has driven a campaign to make the country less dependent on its Gulf Arab rivals even if the boycott ends.

Hundreds of cows have been flown in to scale up dairy farms that traditionally competed with Saudi Arabia, trade ties have increased with Turkey and Iran, and a draft law was passed that would grant greater trade protection to local producers. The legislation is still pending.

“Nobody will buy from Dubai even if it opens up. Why would we let Dubai take any profit from us?” said a spare parts dealer whose goods are now sourced from Vietnam and Korea.

At a high-end garage where a cream Porsche 911 Turbo awaited repair, the general manager said his shop has in recent months established direct import links with European suppliers, cutting down average delivery time to about three weeks, about twice as long as before the boycott.

“It’s taught all of us how to import because we have to find new sources … even if this story ends and the blockade is lifted, we won’t go back to buying from Dubai,” he said.

(Additional reporting by Andrew Torchia; Editing by Sonya Hepinstall)