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Carmakers want to do more than sell cars in UAE

Porsche introduces its financial services subsidiary in the UAE

Image Credit: REUTERS
President and CEO of Porsche Automobile Holding SE Martin Winterkorn walks next to a Boxster car before the annual shareholders meeting of Porsche in Leipzig, April 30, 2013.
Gulf News

Dubai: Want to treat yourself to a new (it could even be pre-owned) Porsche? Well, you could get the financing direct from Porsche...or to be more specific Porsche Financial Services GmbH (PFS).

The financial services subsidiary of the German automotive major has just struck a deal with Emirates NBD that would ease the way for Porsche prospects in the UAE to get a model of their choice. It does not stop there – Audi and Volkswagen vehicles can also be acquired as part of the deal PFS has entered with the UAE bank.

All of the leading global carmakers have their own financing subsidiaries but they have not had the run of things in the GCC, with auto financing dominated by banks and financial institutions. With Porsche Financial Services, this could be set for change.

Porsche Financial Services is now represented in 15 countries, including the UK and the US. In the short term the entity aims to expand further in the Near East as well as in the Asia-Pacific region.

“The venture does not require a JV with local importers; PFS has started a wholly owned subsidiary called PSME [Porsche Services Middle East & Africa ],” said David Smith, general manager at PSME. “We would start with UAE first and then take it forward to wider GCC.

“PFS is not just about financing solutions but providing complete Porsche brand experience even in financing. We have taken this approach globally and have been successful and would like to bring the same philosophy to the UAE.”

As for the actual financing, PFS will comply with the provisions of the UAE Central Bank that limits auto financing to 80 per cent of the value of the car.

In 2012, PFS entered nearly 89,000 contracts worldwide worth 4 billion euros (Dh19.48 billion). In most of the markets it is in, the entity also enters financing deals for Bentley, Lamborghini and Bugatti, all three of which are part of the VW stable.

In the UAE, some of the leading importers have inhouse financing companies to offer funds in instances where banks don’t provide.

As to whether the Porsche entry sets the stage for global carmakers to do more than ship cars to these markets, Mustafa Vazayil, managing director of Gargash Insurance Services, said: “Major automobile manufacturers have globally set up their own financial services company or tied up with other non-banking financial institutions to lend to their auto customers.

“They find it as a forward integration to tie up a customer with a brand for his/her future auto financing. There is also money to be made as these organisations work on lower operating cost than normal banks.

“For the end-consumer. he will end up paying same costs although it might come up as a bundled offer.”