UAE has the largest luxury market in GCC
Arabian Automobiles plans to acquire new brands and business lines in the automobiles sector. Michel Ayat, CEO of Arabian Automobiles (an Al Rostamani Group Company), said details of the same will be announced in the next two months.
In an interview with Emirates Business, he said: "Arabian Automobiles will soon launch the 2011 Renault Logan sedan will offer cost-conscious motorists a highly affordable car with a high specification and low price. Competing in the B-segment, the new Logan is offered in the local Dubai market with a 1.6-litre engine."
The UAE has the largest luxury market in the GCC, and we did not witness a drastic drop of demand here for this segment, he said. The establishment is on track despite the turmoil in the sector globally, he added.
Has the turmoil in the automobiles sector affected your business in UAE?
From a global perspective, the approximate total production capacity in the automobiles sector was 100 million units against a global demand of 65 million before the start of the crisis. With the onset of recession, the global demand fell to around 50 million units which led to manufacturers either closing plants or reducing work days/shift hours in response. Nissan Motor Company was nimble in its response to the global drop in demand for cars and took quick and measured actions by adjusting production levels to minimise its exposure to the downturn. Locally, at the retail level we offer value-added deals at attractive prices, services and insurance.
There's been a decline in sales /revenue in the region. How will you recover that? When will the industry return to the pre-recession figures?
Successful automotive retailers in the region were protected to some extent against the downturn in H2 2008 by driving customer retention through customer service and I'm proud to include Arabian Automobiles as one of those companies. The UAE car market effectively recalibrated itself last year… It may never recover to the same sales records it achieved year-on-year over the previous years, but much of that is dependent on the banks' attitude to credit and the general level of liquidity here. It's also great to see the government announcing an increase in its budget, this can only be positive for the UAE economy.
Are you offering price/discount /payment schemes to encourage sales?
Arabian Automobiles meets the requirements of different customer segments by offering value-added packages, which have been adapted to suit specific budgets. For example, we offer customers the best combination of free insurance, low interest rates and a zero per cent down payment facility.
Arabian Automobiles has embarked on an expansion plan of Dh750m. Is it aimed any particular region?
Arabian Automobiles confirmed a Dh750m expansion plan in 2008, which includes improved retail facilities in the Northern Emirates and a new dedicated Infiniti luxury Iredi (Infiniti retail environment design initiative) on Sheikh Zayed Road. We recently opened a state-of-the-art logistics centre for new cars and a central parts warehouse at the Dubai Industrial City in Jebel Ali. The expansion plan is distributed across our facilities in Dubai and the Northern Emirates.
How is the demand of the new G37 Convertible?
The luxury sports car segment represents 11 per cent of the UAE luxury market, which translates to about 3,000 units a year. The G37 convertible is a halo product for Infiniti brand. We are confident this will establish a market for itself and be a strong contender in this segment. In fact, the UAE has the largest luxury market in the GCC, and we did not witness a drastic drop of demand here for this segment.
Has the recall issue affected the sector here?
We can only speak for the brands we present and we have only issued minor customer service campaigns for a small number of Nissan and Infiniti models. Beyond this The UAE Ministry of Economy, (Consumer Protection Department), has instigated guidelines in respect of manufacturer recalls.
When will the UAE make its own brand/car?
We don't foresee a car manufacturing base being established in the UAE in the near future due to the inadequate production capacity and economies of scale. However, the UAE's involvement in the global automotive sector via equity stakes in certain brands from UAE financial institutions may increase as the sector emerges from recession.
How has Renault/Nissan merger helped Arabian Automobiles?
The Renault Nissan Alliance led to Arabian Automobiles becoming the official dealer of the Renault brand in Dubai and the Northern Emirates apart from representing Nissan and Infiniti brands.
What are your growth figures?
We nearly doubled our sales volume from 2004 to 2008. In 2009, our volumes dropped in line with the broader automotive market but we maintained our market share. For 2010, we project a modest five per cent growth in the UAE.
What are your future plans?
We think the market may only return to the record sales volumes of 2008 by 2012 at the earliest. I believe our local recovery in the UAE car market is U-shaped.
PROFILE: Michel Ayat CEO, Arabian Automobiles
Ayat has more than 25 years experience in managing volume and luxury automotive brands in Japan, Europe and the Middle East.
He leads the operations of Arabian Automobiles, the National Sales Company for Nissan, Infiniti and Renault in Dubai and Northern Emirates. He has helped the company quadruple sales and achieve market leadership position in key vehicle segments apart from enabling the organisation reach an annual turnover of about Dh2 billion.
Ayat is a founding member of the Automobile Sector Committee at the DCCI.
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