Dubai: How can one top up an automotive retail market that has been growing at an average 15 per cent plus month-on-month? If it is Dubai and summer, just bring on the promotions.
Local dealerships are upping their game to ensure that the high-momentum sales volumes of recent months will not fade during the summer stretch, which will also include the month of Ramadan. A split campaign strategy — one for the better part of summer and another to peak during Eid — is being deployed that, dealerships hope, will make new car buyers head to their nearest showrooms.
In fact, some dealerships are not expecting anything resembling a summer slowdown to happen. “The retail market is normally strong in Ramadan — from Al Futtaim Motors’ perspective, the last two summers we achieved some great results following Ramadan promotions,” said Simon Frith, managing director at the Toyota dealership. “This year, we expect sales to follow the same positive trend.”
“In our opinion, automotive summer promotions are driven by consumer expectations and their nature is in line with the market’s cultural and religious character.”
But dealerships are moving well away from the straight discounts offered on models. Instead, they offer value-adds — in the form of deferred installments, free registration and insurance, extended warranties and time-specific roadside assistance — to ensure a prospective buyer is interested and goes on to ink the deal.
Change of approach
This change of approach also bears the influence of the car makers, who do not want to see the residual value of their models get eroded through straight-up discounts just months into their launch. (The last time dealerships engaged in major discounting was in the two years following the downturn in 2009; at the time, it had as much to do with stock liquidation as trying to get buyers back at any cost.)
According to Frith, “In the past, we have used both strategies to satisfy the varying needs of customers. We adopted PCP [personal contract purchase] schemes to ease the financial burden of owning a Toyota and help package all payments under low monthly installments, while giving customers the advantages of a guaranteed future vehicle value and more.
“In addition, the monthly repayments tend to be between 8 to 12 per cent lower than a comparable auto loan. In other instances, we launched a UAE-first ‘Red T Sale’, a promotion of discounted cars to attract price-conscious customers.”
It is clear a horses (or should that be cars?) for courses strategy is in place and ticking along quite nicely. If the pace maintains, another bumper year of 300,000 plus units beckon. (According to auto industry sources, car sales have breached the 300,000 unit mark only twice — in 2008 and in 2012.)
But the question remains, do summer promotions offer as much value for the buck as those during the Dubai Shopping Festival or at the end of the year?
“There are two ways to approach the issue of marketing campaigns — one in terms of pure business value and the other in terms of customs/established practices of a market,” said Thierry Seys, general manager at Al Nabooda Automobiles. “Summer promotions are a fact of life in Dubai’s retail market and that’s how it will always be.
“Moreover, the Ramadan period has tended to create peak sales for us and our plan is to have all-inclusive packages on each Volkswagen model. In terms of what we hope to sell during this period, this campaign will pay off.”
Other dealerships — with their own campaigns to impress all too willing buyers — are hoping the same with theirs.