Dubai: UAE’s auto market has been struggling with all sorts of speed-breakers, ditches and dents when it comes to keeping the high demand on track. Some of the problems date back to peak-Covid times of mid- to late 2020. And those issues have since taken on new forms.
All through this period, there has been one constant – if dealerships have enough cars to sell, there will be buyers. In an interview with Gulf News, Vincent Wijnen, Senior Managing Director Al-Futtaim Automotive, tries to chart a way for the industry and for the dealership that lists Toyota, Volvo and Honda among its brands.
At this moment, do you have any indication of when handover times on new car purchases in the will drop to 4 weeks?
The global supply chain issues have been caused by a highly complex and interdependent global supply chain network, in which the processes for raw materials extraction, refinement, manufacturing and delivery can span continents.
And are measured in hours and days, rather than weeks and months. In a system like this, even minor upsets can have major knock-on effects which ripple across the global network. A perfect storm such as the pandemic wreaked havoc on global shipping and supply chains.
While the world is scrambling to recover from these disruptions, and huge investments are being made by governments in the US, Europe, Japan and elsewhere to strengthen supply chains and reshore the manufacturing of critical components such as semiconductors, it will take time for the infrastructure to take shape.
Therefore, we cannot confirm a time at this stage. We have cars where we have stock and we have cars where you have to wait six months. It also depends on the grade as well - because if you take a high grade you may have to wait longer than a base grade. So the delay is not generic.
Do you reckon the immediate non-availability cut deep into H1 numbers across the board?
Al-Futtaim Automotive had a strong first-half of the year, reflecting the ongoing rebound of the automotive sector. The overall automotive market is up 9.3 per cent compared to the first six months of 2021. Al-Futtaim Automotive closed out the first-half with a market share of 35.4 per cent, selling 40,542 vehicles, up 2,190 units versus first-half of 2021.
SUVs continue to dominate the UAE market, making up 50.5 per cent of sales for the first-half. Toyota is the market leader in the SUV segment, accounting for 25.2 per cent from January to June.
The growth also continues across brands:
- Volvo has increased volume by 1.6 per cent year-to-date;
- Dodge and RAM witnessed a 14.4 per cent, with RAM holding the number one position in the large pickup segment; and
- The Polestar 2, which Al-Futtaim Automotive brought to the market along with the brand’s entry in February, has completely sold out of all stock reflecting global trends.
Has the momentum extended to luxury car sales?
While the luxury vehicle market is down 10.3 per cent overall, Lexus has managed to increase its luxury market share by 1.2 per cent, with the IS, LX and all-new NX remaining popular.
We are thrilled by the positive momentum so far in 2022, with our sales only limited by the global supply chain challenges. Al-Futtaim Automotive increased market share in some key segments with Toyota continuing to dominate the SUV and car market.
Mines and factories shut down, ports were closed or operating at reduced capacity, and shipping was hugely disrupted. Bottlenecks caused long backlogs for processing container ships in many critical ports, and raw materials and goods weren’t getting to businesses that needed them.
Semiconductors aren’t just used in vehicles themselves, but also in the machinery and equipment used to produce goods. So, shortages affect the whole manufacturing process, and limit the potential to create new manufacturing capacity.
- Vincent Wijnen, Senior Managing Director Al-Futtaim Automotive
Beyond selling new and preowned cars, Al-Futtaim Automotive went into car subscriptions. How’s that faring?
In October last, we announced the launch of new car subscription service, MOOV By Al-Futtaim, aimed at providing convenient and sustainable mobility for the growing demand from customers across the UAE. Since launch, customer base has grown by 70 per cent each month, demonstrating appetite for digital offerings.
By taking a short-term and no-commitment subscription, users can access a wide variety of car models, including options of hybrid vehicles, and beginning of Q3, electric vehicles. This will make MOOV By Al-Futtaim the first car subscription service to offer electric vehicles.