Dubai: UAE dealerships want customers behind the driving wheel ... and they are not leaving any strategy untouched to make that happen. A wave of Ramadan-specific promotions have started to convince hesitant buyers that now may be a good time to go for that new model.
They do need to try hard — through the first five months of the year auto sales in the UAE have been doing single-digit growth numbers, hitting the sector quite hard after the double-digits turns in recent years. The slowness that has permeated other retail categories has finally caught up with buying cars as well. Which is why dealerships are putting an extra edge into their Ramadan offer gameplans.
“Many buyers are postponing their decisions in the expectation that Ramadan/summer offers could give them the expected value,” said Michel Ayat, CEO at Arabian Automobiles Co. (AAC).
“Those decisions are getting made not on affinity to a particular brand or company but on what sort of benefits they can get. It makes it even more difficult for dealers to come with a precise promotional plan.”
The deals being offered are as sweet as they come — dealerships have raised the number of years under warranty, doubled the insurance-free (comprehensive, of course) period, ‘cash backs’ that run into thousands of dirhams, put up ‘0 per cent’ interest on some of the priciest and coveted models ... in short, the works. Some of the costliest cars in the world are being offered at relatively “accessible” instalments.
Even that may not prove enough to convince. “To keep potential customers into the showrooms, dealerships will not only have to get creative — but remain so,” said Joe Rogan — Director of Sales at Al Habtoor Motors. “In our case, that means making changes to all key promotions every two months or so. The longer a campaign remains unchanged, it will start losing its impact.
“These days, it’s not enough for dealerships to maintain a growth rate in line with the sector ... they have to outstrip that to get the desired results.” (Al Habtoor Motors is aiming to maintain a double-digit growth curve for the Mitsubishi, and expects full-year volumes of well above 60,000 units, including commercial vehicles.)
The distributors have one thing going in their favour in mounting these promotions — the soft euro and the weak yen. If their landed costs on shipments drop as a reason of favourable currency movements, it gives them more flexibility in how they price in promotions.
Also, the currency benefits are being passed on where possible into the pricing of the models. “It used to be an unwritten rule that dealerships would maintain a uniform pricing through the better part of a model year,” said Ayat, who added that AAC’s marketing campaigns will be tactical rather than image building or digital-led during Ramadan. “Now, with the yen at 120 (plus) to the dollar, Japanese car dealerships are in a position to price accordingly. As of now, 30 per cent of our shipments are coming as yen-(denominated) shipments.
“But dropping prices can only do so much — you have to simultaneously offer products in a customised way.
“It will not work when distributors wake up one morning and say to themselves they have to come out with “unbeatable” offers. It rarely works this way ... yet some dealerships still insist on doing it.”
