Mideast major driving force for Daimler - Emirates24|7

Mideast major driving force for Daimler

(SUPPLIED)   


 

Daimler Middle East and Levant has responsibility for premier automobile brands such as Mercedes-Benz, Chrysler, Dodge and Jeep.

The Dubai-based firm was formerly known as DaimlerChrysler Middle East. However, despite the change in name, it still has a Chrysler Group division.


President and CEO Nicholas J Speeks talks to Emirates Business about the factors that make Dubai stand out in the car market. He says the dollar peg has not harmed his business and makes a plea for more reliable statistics on the auto industry.

 

How did your firm perform last year and what are your expectations for this year?


it has been a great year with around 20 per cent overall growth – seven per cent for Mercedes cars, 10 per cent for Mercedes trucks and 25 per cent for Chrysler.
 
We expect to meet our target for 2008 but we do not make forecasts public. There is a high degree of confidence but there will be variations among the different segments.
 

Which models experienced the highest growth in 2007?


With Mercedes-Benz we had good growth rates for the C, S and E classes, but for the SUVs it has not been so high.
 
The Chrysler Charger and Jeep Wrangler have been doing well. Generally speaking, all our models have experienced growth. I believe the C-Class will do exceptionally well this year.
 
Are you investing in new facilities?

Our partners are spending $150 million (Dh550m) on establishing new facilities in Qatar, Kuwait, Lebanon and Jordan. This will include showrooms, workshops and service facilities.

What major challenges have you faced?

The biggest challenge has been coping with the rate of growth. There has been a very positive development in terms of markets, both for cars and trucks, and we have had to provide sufficient volume to meet customers’ demands.

The GCC contributes to 85 per cent of our total volume. There has been stability and managed growth. Our partners and distributors have been coping successfully.
 
Most of our partners in this part of the world were appointed in the 1950s and 1960s. One challenge has been to adopt new approaches so that dealers can cope. The other challenge is maintaining our position, which we believe is a leading one.
 
What is your market share?

We do not have official statistics on how the market is doing and the lack of such information does not make our job easier. Normally you have a fairly clear view from the registration statistics but we do not have this in any of the countries we cover.
 
Import statistics do not give you a real idea. In Europe or North America you have a segmented monthly view of what is going on. It would be nice if such information were available but it is up to the governments to decide whether to have market statistics.
 
On the trucks side we have a vague idea based on our own research and conversations with manufacturers and colleagues. We have roughly a 45 to 50 per cent share of the trucks market with Mercedes-Benz. We compare Mercedes-Benz cars with brands such as Audi, BMW, Volvo, Jaguar and Range Rover – we call this the competitive set.

It is not the total market since it does not include Lexus, for example. In this set we have a market share of around 34 per cent. Chrysler operates in different markets with different competitors. We have not been able to establish a basis for sharing numbers with brands such as Ford, GM and Toyota. Basically, we are not able to say where we are with Chrysler.
 
To what extent does Daimler benefit from the GCC countries’ peg to the US dollar?

We price our vehicles where we believe they should be positioned in the market against our principal competitors. If you are pricing vehicles for a distributor in a currency such as the euro, which has been fluctuating, it is very difficult for the distributor to fix a price for a product and then translate it into a retail price that we are happy with.
 
We want to have a situation where it is transparent and clear to our customers what prices they are paying for their cars, not only today but also tomorrow. This should not depend on when the car is shipped to the UAE or to the region and what price the distributor paid for that car in euro.
 
As a manufacturer we price our products in dollars to our distributors. The distributor pays the price in dollars and the price he gets for the car is in the local currency that is linked to the dollar.

It is our job to absorb fluctuations in the currency market. At the end of the day our partners’ responsibility is to successfully market our products in their countries and we expect them to be experts at that. What we want is consistency and transparency in the showrooms.
 
In order to achieve this we have to match the currency the distributor is using to pay for the product with his source of income.

We have been invoicing our products in dollars for many years. It benefits our business since it provides the customer with consistency and transparency. The fact is we are in a US dollar-based market.

The low end of the automobile market has seen fierce competition with an ever-increasing number of manufacturers – has this affected you?

If you look at either Mercedes or Chrysler we have not seen any negative effect. Any market you compete in is competitive whether it is Mercedes or Chrysler. Every manufacturer has a spread of products that includes the low end.

Many consumers in the UAE have been put on waiting lists for cars  why is this?

I attribute this to the fact that demand has exceeded expectations. We usually deliver requested models in a reasonable time. Consumers have loyalty to certain brands and models, and are willing to wait.


How do the markets you serve vary?


The UAE is the biggest market for Mercedes-Benz – not Saudi Arabia as many people may think. Dubai is the only market where we have such a cosmopolitan customer base.

In Abu Dhabi our customer base is very much Emiratis but in Dubai we have Emiratis and expatriates, which is something we do not see in Kuwait, Qatar, Saudi Arabia and other countries. In Dubai there is an increasing need to provide the facilities that this sort of customer base requires when purchasing their cars.
 
 It is a sophisticated market in terms of leasing, buying, financing and residual values on used cars. These factors, which have been common in the European market, are increasingly emerging here in Dubai, but not to the same degree in other markets in the region.
 

How do other emerging markets compare with the Middle East?


When we look at the world today, for our business, there is a lot of talk about Russia, India and China. Yes, there is spectacular growth in these countries. But there is consistent and sustainable growth in the Middle East – and Dubai is leading the way.
 
I believe the Middle East will remain a major driving force for our business in the next five to 10 years. There are still good things to come in the Middle East.

 


PROFILE: Nicholas J Speeks,
President and Chief Executive of Daimler Middle East and Levant

 

Nicholas Speeks, from the United Kingdom, has been with Daimler Middle East and Levant since 2003 and previously held various sales and marketing positions around the world.

He started his career with Mercedes-Benz in the UK and worked in Germany, China, Iraq, Kuwait, Vietnam and Poland before assuming his current position in Dubai.

He was the director of sales and marketing of Mercedes-Benz passenger cars and vans at Daimler Chrysler Automotive Polska in Warsaw, Poland, from 1998 to 2003 and director of sales of Mercedes-Benz in Saigon, Vietnam, from 1995 for three years.
 
From 1992 to 1995 he was sales manager at Al Bisher & A Kazemi, a Mercedes-Benz agency in Kuwait.Before that he was based in Stuttgart, Germany, where he was responsible for sales activities in the Middle East.
 

He supervised commercial vehicle sales of Daimler-Benz Services in Baghdad, Iraq, in 1990. Speeks is married with two children.

 
 
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