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Not a MyNAP member yet? Register for a free account to start saving and receiving special member only perks. Workshop Presentations and Discussions. Robert H. As its name indicates, the focus of DMMI is on issues relevant to materials, manufacturing, and the infrastructure that sustains the materials and manufacturing enterprises essential to national defense. Latiff noted that this workshop had originated in conversations with members of the Reliance 21 Materials and Processing community of interest on issues of parts obsolescence, diminishing sources for manufacturing, certification of spare parts, requalification of materials, counterfeiting, and other quality assurance and maintenance problems for DOD as defense systems are kept for longer and longer service lives.VIDEO ON THE TOPIC: WHAT ARE OEMs Original Equipment Manufacturers - OEM industrial spare parts
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Please contact customerservices lexology. Describe the significance of, and developments in, the automotive industry in the market. The UAE relies heavily on imports, with nearly all cars being imported from manufacturing facilities abroad. Aside from a small number of factories that assemble components for trucks and buses, as well as factories that produce armoured vehicles, there is no significant automotive manufacturing activity taking place within the UAE. Any increases in public spending on development projects and general infrastructure to support such an increase in population will generally bolster the automotive sector, through demand for trucks and other commercial vehicles required for such growth.
However, if oil prices remain depressed this may affect the level of public spending, which may in turn affect automotive demand. The UAE is also becoming a hub and re-export centre for vehicle parts and components in the Gulf region. What is the regulatory framework for manufacture and distribution of automobiles and automobile parts, such as vehicle-type approval process as well as vehicle registration and insurance requirements?
The process of obtaining such insurance and licensing is straightforward and can be dealt with by auto dealers or car owners directly at any RTA outlet. These regulations are primarily comprised of a combination of European Union and US federal motor safety standards. By way of common examples:. In relation to homologation of new vehicles in the UAE, automotive manufacturers often conduct simulated tests at their factory facilities followed by local testing in the Gulf Cooperation Council GCC to confirm that prototypes of new vehicles are fit for driving in GCC countries and meet the standards set by the GSO and ESMA prior to any mass production taking place.
Certain tests are designed in part to ensure that new vehicles are capable of functioning properly during extreme heat conditions which are the norm for GCC countries, for example between April and October in each year. The other vehicle processes such as engine lubrication, electrical systems, braking, steering and air conditioning are all monitored during these tests to ensure that they perform to the required standards of each market. In the case of substantial problems with prototype vehicles, the prototype will be sent back to the factory for investigation and a new prototype will be developed to undergo the same tests.
Otherwise, the prototype is left with the local distributor in order to increase its mileage and measure wear and tear conditions. In relation to certification, the automotive manufacturer will normally have a representative that is familiar with ESMA and GSO standards and confirm that the vehicle or any parts meet the requirements of these organisations. How do automotive companies operating in your country generally structure their development, manufacture and supply issues?
What are the usual contractual arrangements? The majority of automotive manufacturers operating in the GCC have their regional head offices and logistic distribution centres located in Jebel Ali Free Zone in order to supply new cars and spare parts to their network of authorised distributors.
The contractual structure of automotive distributors or dealers may vary according to the policies of each manufacturer. However, in general terms, the operations are normally governed by dealership agreements covering commercial commitments and targets, in addition to legal terms and conditions in connection with the responsibility and obligations of each party.
The lengths of such dealer agreements may vary, typically from one to five years, depending on the relationship between the manufacturer and distributor and any historic performance records in achieving annual commitments and targets. An automotive manufacturer cannot have a direct customer-facing branch or office in the UAE, meaning it cannot sell directly to customers and must instead use local Emirati agents as distributors to sell its products in the region.
There are analogous laws in several other GCC countries. How are vehicles usually distributed? Are there any special rules for importers, distributors, dealers including dealer networks or other distribution partners? How do automotive companies normally resolve restructuring or termination issues with their distribution partners?
Orders for new vehicles and parts are normally processed by the regional offices of the manufacturers. Weekly supplies of vehicles and parts are usually shipped from logistics centres by trailer within the UAE and GCC and by ship to other destinations in Middle Eastern and North African markets. Monthly stock orders may be shipped from factories abroad directly to importers and distributors in the UAE.
The importers and distributors must have trading licences issued by the Ministry of Transport and renewed periodically by local authorities such as the Chamber of Commerce in each emirate. Performance and metrics in relation to customer satisfaction are normally reviewed by automotive manufacturers and their distributors through regular meetings between senior executives from both parties.
Any restructuring of a distribution arrangement is normally preceded by a number of warning letters and potentially arbitration proceedings in accordance with the distribution agreement.
This was the case when a major international automotive manufacturer sought to terminate its distribution relationship in the late s. The manufacturer was unable to terminate the relationship due to restrictions under the Agencies Law. The dispute that arose between the two companies proceeded before the courts of the UAE, and the manufacturer was unable to appoint a new distributor in the UAE until the dispute was resolved. The manufacturer was unable to sell its products in the UAE for several years as a result of this dispute with its local distributor.
As an automotive manufacturer cannot sell directly to customers in the region, manufacturers do not have a significant direct presence in the UAE. In addition, distribution agreements often contain change of control provisions that will require the distributor to notify the automotive manufacturer if such a change in ownership were to occur. Are there any incentives for investment in the automotive market? Are there barriers to entry into the market? What impact may new entrants into the market have on incumbents?
The main barrier to entry into the market in the UAE is the requirement to use authorised distributors. Due to local laws, an international automotive manufacturer cannot simply 0pen an office or showroom in the UAE, and will need to appoint a local agent that will act as its authorised distributor in the country.
In practice, this means that any new automotive manufacturer entrants into the UAE market will need to identify an appropriate distributor in the region to sell their vehicles and parts to consumers.
This strategy could increase opportunities for automotive manufacturers and distributors in the UAE. What are the most relevant automotive-related product compliance safety and environmental regulations, and how are they enforced?
Are there specific rules for product recalls? There are no specific product recall rules that exclusively apply to the automotive industry in the UAE. We have therefore set out general principles in relation to product recalls and compliance safety below.
Consumer safety and protection are regulated by the MOE. Together with the emirate-level authorities, the MOE has the power to investigate and enforce the recall of defective products based on consumer complaints and reports from international markets.
The laws relevant to product recall are the consumer protection laws under Federal Law No. These state that a supplier of goods must promptly report any harmful defect discovered in any goods to the relevant UAE authorities and consumers.
The Cabinet Resolution contains more detailed provisions regarding the notification and other procedures that must be followed by a supplier where a defect is found in goods. The notification to the Consumer Protection Department must be made within 14 days of the commencement of any product recall.
It should be in Arabic but can be accompanied by the home language of the supplier and it must:. The supplier has a further obligation to notify the Consumer Protection Department with a report within 30 days from initiation of the recall, which must set out the following information:.
The advertisement in local UAE newspapers is also quite prescriptive in that it must not be less than 15cm by 15cm in size and must contain the following information:. The responsibility to notify the authorities and consumer will lie with both the manufacturer and the distributor, but it is the distributor that will be found liable for any failure to do so. Describe the significance of product liability law, and any key issues specifically relevant to the automotive industry.
How relevant are class actions or other consumer litigation in product liability, product recall cases, or other contexts relating to the automotive industry? There are no specific product liability laws or regulations which exclusively apply to the automotive industry in the UAE. We have therefore set out below the general principles that apply in relation to consumer litigation in product liability and product recalls. Question 7 contains information relevant to sanctions a distributor may face for failure to comply with product recall laws.
A consumer can make a claim against a manufacturer or an importer under the UAE Civil Code if any products are defective and such defects are not covered by a warranty, or if the products do not fit their descriptions.
Distributors can also be sued for misrepresentation in such cases. Additionally, consumers can bring claims for breach of contract against distributors under the Commercial Transactions Law No. As a general rule, courts in the UAE only award damages for direct losses. Class actions do not yet exist in the UAE, and are unlikely to be introduced in the near future.
When claims are brought by consumers against distributors or importers, vehicle manufacturers may be required under the supply contract to indemnify such parties for the cost of remedying the defects in vehicles or spare parts. What competition and antitrust issues are specific to, or particularly relevant for, the automotive industry? Is follow-on litigation significant in competition cases? It is therefore unlawful, for example, for automotive distributors to allocate territories between them and agree not to market products in the territories allocated to the other distributor.
Similarly, abuse of a dominant position by a distributor or manufacturer, or any agreements between competitors aimed at reducing competition in the market, such as collusion in bids and tenders or agreements on the terms and conditions for goods and services, will likely be prohibited under the UAE Competition Law.
Consumers who are affected by anticompetitive agreements or conduct can complain to the MOE. The potential for follow-on litigation is currently unclear on the basis that it is largely untested, but a finding anticompetitive behaviour will have a negative impact on the business of both the manufacturer and the distributor, in addition to resulting in potential criminal sanctions and fines ranging between 50, and 5 million dirhams for either abusing a dominant position or entering into an agreement that restricts competition in the UAE.
Notwithstanding the information above, the Federal Competition Law No. The competition law of the UAE has therefore not been completely implemented and it is uncertain and unclear how the courts will enforce competition law principles in the UAE.
What kind of disputes have been experienced in the automotive industry, and how are they usually resolved? Are there any quick solutions along the supply chain available? According to an article published in August by Gulf News, based on statistics provided by the Department of Economic Development, the automotive sector accounted for 2, consumer complaints recorded in the UAE during the first half of Seventy-three per cent of the disputes related to non-compliance with the terms of sales or service agreements, refunds or defective products.
The terms and conditions of vehicle warranty, insurance and sales and service agreements constitute most of the disputes in the automotive industry. Several manufacturers and distributors are in the process of setting up bilingual customer care counters in their showrooms to comply with the standards set by the Department of Economic Development, to offer solutions and accelerate the customer satisfaction process and resolve disputes with customers prior to the commencement of litigation.
Disputes between automotive manufacturers and their distributors are relatively rare in the UAE because of the difficulty a manufacturer would have in terminating such a relationship, as detailed in question 4. Injunctive relief is not typically available in the UAE. More importantly, the automotive manufacturer will be unable to sell any products in the region without having an appointed local distributor.
What is the process for dealing with distressed suppliers in the automotive industry? In practice, the distributor and the automotive manufacturer may seek to reach an agreement in order to extend the supply period by offering discounts to the distributor or shipping certain products free of charge in order to reduce damage caused to the distributor and to avoid complaints from customers.
It is therefore in each of their best interests to support the other party during periods of distress.
Are intellectual property disputes significant in the automotive industry? If so, how effectively is industrial intellectual property protected? Are intellectual property disputes easily resolved? Intellectual property disputes between automotive manufacturers tend to commence in international markets and are simply reflected in the UAE, rather than originating in the UAE. Disputes between distributors in the UAE are rare and have not historically related to intellectual property.
The principal intellectual property issues for automotive manufacturers and distributors in the UAE typically relate to branded counterfeit spare parts being imported or exported by non-authorised distributors and sold to consumers, which can potentially lead to safety concerns in addition to causing losses to the authorised distributors, which sell genuine but often more expensive spare parts.
Such a process is likely to require extensive communication with customs authorities and the police in order to effectively implement such measures.
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Please contact customerservices lexology. Describe the significance of, and developments in, the automotive industry in the market. The UAE relies heavily on imports, with nearly all cars being imported from manufacturing facilities abroad. Aside from a small number of factories that assemble components for trucks and buses, as well as factories that produce armoured vehicles, there is no significant automotive manufacturing activity taking place within the UAE.
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Its other activities include participation in international trade fairs, mounting trade delegations overseas and bringing out publications on various topical subjects related to the automotive industry. Your browser does not support the video tag. Deepak Jain. Vinnie Mehta. Member Login Become A Member. Login Forgot Password. Become a Member. Upcoming Events.
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