Alhamrani United Company, the authorized dealer of Nissan cars in the Kingdom, has been slammed by a member of the Saudi delegation to the World Trade Organization (WTO) for trying to stifle competition in the domestic automobile market. The criticism comes in the wake of Alhamrani issuing a veiled warning – in an advertisement in sections of the Arabic press on Sunday (Feb. 26) – for customers not to deal with unauthorized Nissan dealers. Subsequently, Tuesday (Feb. 28), Alhamrani was censured for the advertisement by the Ministry of Commerce and Industry for violating the country's laws. The company was asked to publish corrections to its advertisements at its own expense. In response to questions from Saudi Gazette, the WTO delegate said Wednesday that while Alhamrani may be the sole distributor of Nissan, the Japanese car manufacturer which produces the luxury models branded as Infinity, this does not mean it should try to stop customers from buying Nissan cars at other dealers. Car manufacturers are allowed to sell their cars legally through other dealers in the country under the Kingdom's laws, said the WTO delegate. “Whether intentionally or inadvertently, we find that the published announcement/warning creates a baseless perception in the minds of readers, as if Alhamrani cars are superior or of better quality than other cars belonging to the same manufacturer, whereas these imported cars are lawfully authorized for sale in the Kingdom's markets. This is precisely the legal refusal of the printed advertisement,” he said. “Saudi Arabia's membership of the WTO requires traditional dealers, distributors and agents to adjust to changing global market conditions. The truth of the matter is that manufacturers and service providers are not limited to having their products and services sold through authorized dealers or representatives. Markets have matured in many parts of the world and manufacturers and service providers are finding other lawful ways to penetrate or increase market share by not being tied up with a sole dealer or distributor,” he added. Asked if this represents an end to traditional dealers or distributors, he said: “Not necessarily. An authorized dealer or distributor still holds other advantages such as the technical and managerial support he usually receives as part of the dealership contract. He usually receives the product on a four-to-six month interest-free credit basis and receives huge discounts when he surpasses certain sales targets. He is also given help to manage his stock of spare parts which provides huge savings. In addition, some of the special editions of the product are only sold through authorized dealers/distributors. There are also many other advantages,” said the WTO delegate. “Car dealers in the Kingdom should not be cry babies. We know that an authorized car dealer or distributor makes more than 200 percent profit from a car sale over five to seven years. The revenue comes from scheduled maintenance, spare parts, repairs due to accidents, which is especially [lucrative] in Saudi Arabia, and the resale of refurbished used cars. They are not going to be beggars,” he added. As for the sale of spare parts, the official said that current regulations support and protect a licensee, dealer or authorized representative, against false claims. “They could assert that their warranty extends over genuine parts of their trademarked goods; could give priority-of-service to their legal customers; and even insist on removing all non-genuine parts before repairs. However, they cannot claim that spare parts not sold by them are not genuine. There is a fine line between warranty obligations and obligations to perform an authorized service.” He said the situation of current franchise owners is different in two ways. “Firstly, a franchisor usually gives trading rights to a franchisee for a defined period of time. Secondly, a franchise is limited to a particular segment or geographical region. The rights of the franchisor are much clearer than in traditional authorized dealer/distributor contracts.” __
