Weak yen enables UAE motorists to drive bargains for Japanese cars

Demand for Japanese cars grew by 11 per cent to $2.38 billion in the first six months of 2014, with passenger car sales growing by 17 per cent.

UAE residents have taken advantage of a weakening yen to buy new Japanese cars, trade figures from the Japan External Trade Organization show.

Demand for Japanese cars grew by 11 per cent to US$2.38 billion in the first six months of 2014, with passenger car sales growing by 17 per cent.

The UAE was Japan’s fifth largest sales market for cars, after the US, China, Russia and Canada.

Overall UAE imports from Japan rose 13 per cent in the first half of year, to $4.6bn, from $4.0bn. Imports of machinery, intermediate iron and steel products, and textiles increased.

This follows a decline in the value of the yen of about 25 per cent against the dollar since the beginning of 2013 as the Bank of Japan, the country’s central bank, embarked on a massive programme of quantitative easing.

Japanese nuclear power production was halted in the wake of the Fukushima disaster, which has resulted in the country importing more oil at higher prices from the Gulf.

UAE exports to Japan totalled $21.3bn in the first half of 2014, compared to $20.7bn a year earlier.

The UAE supplied Japan with 146.8 million barrels of crude oil in the six months to June, equivalent to 23.2 per cent of Japan’s total oil imports.

Japanese demand for oil increased by 1.6 per cent year-on-year, with total oil purchases valued at $16.4bn. Gas purchases were valued at $4.3bn.

Japanese demand for intermediate aluminium products also grew. The country imported $347 million of aluminium from the UAE in the first half of the year, an increase of 28.8 per cent year-on-year.

Exports of copper scraps, lead waste, animal feed and electrical machinery also increased.

The UAE is Japan’s second-largest trading partner in the Middle East after Saudi Arabia, and accounts for 1.3 per cent of the country’s exports, and 5.1 per cent of its imports.

The Middle East remains a net exporter to Japan, accounting for about 19 per cent of total exports to the country -- mostly in hydrocarbons -- compared to 4 per cent of imports.

Shinzo Abe, the Japanese prime minister, has embarked on a major programme of economic reform in a bid to rid the country of the entrenched deflation and anaemic growth rates that have plagued the world’s third-largest economy since the early 1990s.

During his time in office, the Nikkei 250, Japan’s stock benchmark, has risen by about 50 per cent as the BoJ’s quantitative easing boosts the liquidity of Japanese banks.

One element of Mr Abe’s programme has involved reaching out to Gulf countries in a bid to boost trade.

Mr Abe led a major delegation to the UAE last year, in a bid to drum up business between the two countries.

But Japan’s current account deficit, persistently low inflation and negative growth rates suggest that the ambitious economic reform agenda launched by Mr Abe may be running out of steam.

In August, economists said that the Japanese economy contracted by 6.8 per cent, as the impact of a hike in consumption tax was felt.

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