The global economic recession has led to some car dealers in the Kingdom raising the prices of spare parts to compensate for the shortfall in car sales. The price of some spare parts has gone up by 35 percent according to traders in the business, while experts in the automobile market say that large profits are being reaped from the spare parts market, which they describe as one of the fastest growing markets in the Kingdom. “Frequently changed parts like batteries, oil and air filters, and brake pads have gone up in price enormously. Batteries have shot up from SR95 to 180,” said one dealer. The high exchange rate of some foreign currencies in the local market, such as the Japanese yen and euro, further aggravates the problem. Some economists have voiced concerns that the price of spare parts could affect the limited income group, the largest group in society, and many motorists are opting for inferior imitation products while they ask authorities to monitor dealers and force them to openly list their prices for customers. “The price rise should be halted immediately to prevent consumers resorting to fake and secondhand parts which could endanger lives,” motorist Nasser Al-Harbi says. “The Ministry of Trade and Industry and the Consumer Protection Society should monitor the market to protect consumers and break the price-fixing of spare parts by traders and car dealers.” Price difference “I went round all the spare parts stores in Jeddah in the hope of finding reasonable prices, but with no luck,” says Bandar Majally, who is having his car repaired at a mechanic's in the Industrial City in Jeddah. “The price differences are unbelievable. In one shop you can find brake pads for SR150 and right next door another shop will be selling the same brand for SR60. The only explanation is that greedy traders play around with the prices. They are vampires sucking our blood and draining our pockets. They must be stopped by the trade ministry.” “The type of spare part, its size and model, and the size of demand, govern the price of the part,” says Saeed Abdul Gader, a spare parts dealer in Jeddah. “Another factor is the competition between dealers. Some might have stock from a time when the exchange rates were better, and can therefore sell cheaper.” Gader says that genuine parts are safer and in the long-run cheaper, if one factors in the money spent on repairs. 35 percent rise “Prices are directly linked to car production, with production increase in a certain brand of vehicle associated with a decrease in prices,” said Abdul Rahman Al-Nimr, who works at a company's spare parts department. Al-Nimr said the price increase differed from company to company, but that it was on average around 35 percent. “The increase was not just due to a decline in production but also to fluctuations in exchange rates, particularly in the Japanese Yen. The yearly rate of increase ranges between three and five percent. The promotion of products and the willingness to meet the demand for spare parts govern the prices,” he said. Muhammed Al-Hiji, a company head of sales, says the increase is a natural product of the surge in operational costs. “To be added to this is the increase in freight and transport costs and the unfavorable exchange rate with the Yen and the Euro. Motor oil, filters, brake pads and batteries are the items that have increased the most,” he says. Al-Hiji says that manufacturers are keen to keep prices down to promote sales. Consumer protection Kamal Al-Aittani, head of Car Maintenance Committee at Jeddah's Chamber of Commerce and Industry, says the authorities have no control over prices. “Neither the Ministry of Trade and Industry nor the Consumer Protection Society has any power over prices because there is no government mechanism governing this.” Saleh Al-Qaidi, the manager of a spare parts agency. “Car agencies see the price as necessary due to the increase in operational costs. Freight fees have doubled. External factors aside, domestic influences such as the rise in the cost of living have also played a role.” Salem Baajaja, a Professor of Economics, says the price rise in new and secondhand parts, notably European ones, stems from the gains made over the last year by European currencies against the major world currencies. “There is also the increase in freight costs and price of raw materials to take into account,” Baajaja says. “Spare parts have no age limit, so differences in international prices don't normally affect them locally because traders and importers may have large stocks in their warehouses. The impact of the price differences would have no immediate effect on the market, unlike cars where any change in price is immediately felt.” The Kingdom is the fifth largest market in the world for American spare parts and operational machinery. Japanese products hold a 35 percent share of the spare parts market in Saudi Arabia. German parts hold 15 percent, Australian and Korean parts 7 percent each, and France 6 percent.
