Audi’s car sales in UAE up by 36.5% in 2007
Car sales are growing steadily in the Middle East, jumping more than 38 per cent for Audi last year. However, Jeff Mannering, the car manufacturer’s managing director for the Middle East, told Emirates Business the type of cars buyers look for in the region differ dramatically from those in demand in Europe. Mannering also spoke about new trends such as the rise of waiting lists for new models and the battle to communicate brand values.
How do you evaluate Audi’s performance regionally for 2007 and what are your expectations for 2008?
The year 2007 was an excellent one for us. We achieved a volume growth rate of 38.2 per cent compared to the year before. That’s growth from 4,616 vehicles sold in 2006 to 6,380 [in the GCC and Levant, including Yemen]. We opened a regional parts distribution centre in early 2007, started with the certification of our sales staff and opened new showrooms throughout the region. Our objective for 2008 is to continue at a similar pace. With the new Audi A4 and A5, we are launching two great new models that the market is already eagerly awaiting.
What is the UAE’s share in your growth and sales?
For the UAE, we recorded an increase of 36.5 per cent in 2007 and 2,602 vehicles were sold during the year.
There has been a perception that Audi parts and mechanics are relatively expensive. Is this still the case?
We made a strong commitment to the region with the launch of our regional office in 2005. It is a 100 per cent subsidiary of Audi AG. We have been investing heavily in the areas of after sales and training. In 2006, we opened the regional academy for technical and non-technical training. We even have a flying technician and trainer to travel around the region on a regular basis for support. With these initiatives, we have improved the availability and delivery time of parts and the quality of service. Our technicians are highly trained and the perception of service has improved tremendously. Of course, servicing a premium vehicle has its price, but we are in line with the competition.
To what extent has Audi been affected by the rising value of the euro and the dirham’s peg to the dollar?
We converted to dollar invoicing in the Middle East some years ago, which means Audi AG is absorbing the currency fluctuations through its hedging and no risk is passed on to the customers. The benefit of dollar invoicing is that we can offer stable and transparent prices to customers and at the same time the margin for our dealers remains secure. We simply have not been feeling the rise of the euro in the regional market. But as for our markets in Europe, we have been using the euro and that has been fine for us.
How do markets in the Middle East differ from each other?
We find Audi customers have very similar tastes across the region, although all markets are different from each other. The local population, for example in Kuwait, Saudi Arabia, and the UAE – in fact all GCC countries – are very focused on car customisation and it has been a huge trend. We opened a special customisation showroom called Audi Exclusive in Saudi Arabia last year and are planning to expand the business to other countries too. The Levant countries differ from the other markets in that the market there is more geared toward the smaller models. But bigger cars are also in high demand and Audi has a strong reputation due to the long-standing popularity of the Quattro four-wheel drive in these countries.
Which line of your cars does the best and worst in the region?
Our best selling models are the large saloons – the Audi A6 – as well as our SUV, the Audi Q7. Of the Q7 and A8 together, we have sold more than 3,000 cars last year.
The A3, which is among our best-sellers in Europe for instance, is the least in demand in the region.
How would you describe the sales of premium segment automobiles regionally and worldwide?
In Europe and most regions of the world, car sales in the premium segment can be described as a pyramid – the smaller cars are selling the most and build the base of the pyramid. The larger the car segment, the less units are generally sold. In the Middle East this pyramid is turned upside down. Large saloons are selling particularly well. This unusual model mix makes the region interesting for the premium manufacturers, despite its comparatively small size. In the Levant, where heavy duties are placed on the larger engines, the situation is a little bit different.
So do you expect the same trends to continue in 2008?
In 2008 this trend will continue and we will keep selling the Q7 and A8 particularly well. However, with the new Audi A4 arriving in the market, we have a very strong competitor in this smaller segment. We hope to reach a lot of new customers with this model. We expect the A4 to contribute significantly to our overall 2008 performance. The new A4 is also excellently positioned for competition. The A4 will offer features that have previously only been available in the large luxury saloons. A new feature is the Audi Drive Select, that will allow the driver to change the car’s entire character in terms of steering force, transmission, damping and so on at the touch of a button. So it is in fact several cars in one.
Have you increased your investments in brand expansion?
Yes, we have recently opened new showrooms in Jordan, Qatar and Bahrain. Further developments are planned including an extension of the Dubai showroom and a new location in Dubai. In terms of marketing, we are heavily focusing on an initiative called the Audi Experience. It is a four-pillar programme that engages our customers with the Audi brand in a new way.
As part of the programme we host the Audi Quattro Cup, the world’s largest amateur golf tournament series. Last year it attracted around 75,000 participants. Also we have established the Audi Driving Experience with a permanent base at the Dubai Autodrome, where courses in safety driving and high performance driving can be booked. We are also hosting concerts and after work lounges and our overall aim is to become a regular item in people’s event calendars.
Considering we have become this active, the perception of the Audi brand has also changed. In the past people in the region were not sure what exactly Audi stood for. Now, with all these events and products arriving in the market, the public is starting to feel the sportiness of the Audi brand, the technological background and what we really stand for. The new Audi R8, our first thoroughbred sports car, is probably the best example. It has received numerous awards throughout the Middle East including the vote as “Best Car” by visitors at the Dubai Motor Show. Audi is a premium brand and customers appreciate the prestige it projects without being too obvious about it.
How affected have you been by the competition in the low-end sector of the vehicle market?
Although the premium segment is affected by general market conditions, it remains relatively stable. Most mass manufacturers compete strongly on price. In the premium segment, the price is important, but manufacturers compete more on the level of design, technology, performance and so forth as customers are highly image conscious. As in most markets, the lion’s share of overall car sales goes to the mass segment. So large parts of the population rely on this segment. Premium and luxury manufacturers only carve out a small corner of the overall market, and probably because of that, they are so desirable to most people.
For the first time, the UAE is seeing the emergence of waiting lists – even in the mid-range segments – for car models. Is this because the growth was not anticipated?
Surely, the UAE is constantly growing as a market. Speaking for Audi, we currently have a waiting list for our new sports car – the R8. This is due to the very exclusive production numbers and the fact the car is largely handmade. For the Q7, the demand is higher than the number of units that arrive at the ports. The region is experiencing a period of growth and we want to be a part of it. It is an exciting time for Audi and there are many challenges ahead. New products such as the A5 and Q5 will ensure Audi continues to grow in the region and we will make sure the firm has a strong backbone of dealer networks, service quality and training to rely on.
Managing Director for Audi AG Middle East
Mannering has been in the automotive industry for more than 25 years. After 15 years with two major Japanese brands, he moved to Audi’s aftersales department where he spent eight years with Audi Australia and further two years as the head of aftersales in the Middle East. Among his achievements are the launches of the Middle East training centre and the parts distribution centre with an overall investment of nearly $10 million (Dh36.7m).
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