The Dubai-based AW Rostamani Group’s automotive division is getting into multi-brand pre-owned car sales and servicing, which it says will crank up quite a sizeable revenue stream in the short-term. This will be done through a new company — AutoTrust — and with its network of stand-alone sales and service facilities.
The initiative comes at a time when local auto dealerships are looking to pick up higher sales from their certified pre-owned (CPO) sales programme, but for the individual brands they handle. New car sales in the UAE had a tough two years, and the upcoming VAT (value-added tax) roll-out will make cost of ownership a tougher sell.
“Even without VAT, we believe the UAE auto sales market is headed for a change in terms of new car-old car split,” said Michel Ayat, who heads the automotive division at AW Rostamani Group. “In the UAE, it’s 2:1 between new and old car sales, while the global average is the other way round.
“But the split is likely to change in the UAE as well ... at some point. We want to be prepared for that.” (The AW Rostamani Group operates the Nissan, Infiniti and Renault dealerships in the local market.)
Ayat insists that the upcoming VAT had no influence on the Group’s decision to launch AutoTrust. But VAT in a way will help second-hand car sales. “The VAT on pre-owned will be 5 per cent on the price difference between what it’s been bought by the dealer and then sold to a buyer,” said Ayat. “Say, for a car bought for Dh90,000 and sold for Dh100,000, it’s 5 per cent on the Dh10,000.
“Against that, for a brand-new car worth Dh100,000, it will be 5 per cent on the total, and that’s Dh5,000. Price-conscious buyers will be looking at these details.”
Interestingly, the Group does not limit itself to selling multi-brand cars at AutoTrust, but goes the extra mile with offering all-make servicing as well.
“Here’s a market where you either go to the official dealerships to service or anyone of the smaller workshops to do so,” said Ayat. “There’s nothing in between, and that’s where AutoTrust comes in. Irrespective of whether a model is bought through us or not, we can service it.
“For anyone who’s worried about the total cost of ownership, that’s where we want to come in.”
On where AutoTrust intends to source the models from, Ayat said: “Principally through trade-ins We have some flexibility there. For our own CPO programmes, the requirement is that the models should be under three years or under 80,000 kilometres. But for AutoTrust, these can go up to under five years and 100,000 kilometres.”