A driving force in the region

The UAE is considered one of the world's most exciting markets for the international automobile industry. Most major brands, regardless of the segment they cater to, are present in the region either through their principals or distributors.

Sales have also been in the double-digit range for the past few years, prompting more international brands to increase their presence in the UAE.

According to the Dubai Chamber of Commerce and Industry, (based on their membership database as of February 2007), approximately 365 companies are actively involved in trading of motor vehicles and related items and 2,018 companies are involved in the trading of motor vehicle parts and accessories.

More than 200 companies were involved in the maintenance and repair of motor vehicles while 73 companies were involved in other activities (trading, maintenance and repair of motorcycles and related parts and accessories).

The reasons for the proliferation of the sector are numerous.
Ashok Khanna, General Manager, Al Tayer Motors, which represents major European and American automobile manufacturers such as Ford, Lincoln, Mercury, Ferrari, Maserati, Land Rover and Jaguar across the UAE, says, "The UAE is a booming market and is attracting people and business into the country from around the world due to its growing economy, world-class infrastructure and high standard of living.

As consumer lifestyles transform and improve, expectations from the vehicles they drive have gone up. The majority of customers want automobiles that include the latest luxury features and comforts." Sales in 2007 Last year in particular was a good year for auto sales in all segments.

Khanna says that record sales of Ford brands in 2007 made the company Ford's second-largest dealer by volume in the GCC. He says that sales of Ford cars, SUVs and utility vehicles went up due to a number of factors including the launch of new models, each catering to individual customer demands.

Omar Baddar, Marketing Manager, Juma Al Majid Est, the sole distributor for Hyundai in the UAE, says Hyundai also witnessed general growth in most models.

"Hyundai has achieved noticeable growth in the SUV segment, thanks to the Tucson four wheel drive showing almost 20 per cent growth.

Another achievement was in the luxury segment with the model ‘Azera', as growth exceeded 50 per cent. Hyundai is concentrating more on the luxury segment, and it has resulted in a good response from our customers," he says.

Honda sales in the region also grew by more than 30 per cent in 2007 due to strong demand for its key products —Civic, Accord and CRV.

Guy Edmunds, General Manager, Trading Enterprises, exclusive distributors for Honda in the UAE, says that 2008 will also see growth but it will slow down a bit.

Luxury cars The luxury car segment has also been enjoying a great run in the UAE and Middle East in the past year.

For instance, the UAE is the fourth largest market for Rolls-Royce Motor Cars worldwide. Its importance is emphasised by the fact that Abu Dhabi and Dubai belong to the top five dealerships in the world, together with Beverly Hills, London and Tokyo, based on the company's sales in 2007.

Last year was an incredibly good year for Rolls-Royce, both worldwide and here in the UAE. Peter-Paul Schoppmann, Rolls-Royce Regional Director, Middle East, says that in the Middle East their sales increased by more than 40 per cent in 2007, compared to 2006.

The UAE remains the strongest market in the region with an increase of about 70 per cent. Schoppmann says that there was strong demand for all Phantom models, with the four-door versions (Phantom and Phantom Extended Wheelbase) remaining the best sellers, accounting for 75 per cent of the total.

However, it was the exceptional demand for the new Phantom Drophead Coupé, launched in the summer, that drove the volume increase. In the premium segment, BMW experienced growth of more than 10 per cent in 2007.

Phil Horton, Managing Director, BMW Group Middle East, says that in the GCC alone BMW sales grew by 14 per cent with particular highlights being the new X5 and the 5 Series.

The best selling BMW vehicles are the BMW X5 which experienced an impressive 146 per cent increase over 2006 with sales of 3,616 units (previous year: 1,663); the BMW 5 Series, with sales of 3,464 units; and the BMW 3 Series and 7 Series recording sales of 3,054 and 2,793 units respectively.

The UAE is BMW's most important market with Dubai and Abu Dhabi together accounting for more than 40 per cent of sales in the Middle East.

"We anticipate that the strong growth which we have seen over the past few years will continue for at least the next three. We expect a growth in the luxury car market between five and 10 per cent in 2008.

With the launch of several new models this year, we are confident that BMW will grow in line with the market," says Horton. Maserati, another brand represented by Al Tayer Motors, has seen its market share within the luxury automotive segment increase by nine per cent in 2007.

According to Al Tayer Motors, Ferrari, one of the world's iconic sports car brands, enjoyed a successful run in 2007 with local sales increasing by 55 per cent over 2006's figures.

"We have aligned the Ferrari brand with some of the most prestigious events across the UAE, with an extremely focused strategic marketing campaign which has ensured that the brand enjoys top-of-mind-recall and value,"
says Khanna.

Several factors have contributed to the success that luxury brands such as Infiniti enjoy in the region. "The largest and most important market for the segment within the GCC is the UAE, which comprises 38 per cent of the luxury market for the region.

Several elements have helped make the UAE an ideal market for the premium brands. The first is the overall economy which is doing very well thanks to rising oil prices and stock market gains.

The number of high net worth individuals is also rising. In addition, the line-up of luxury models in categories available from brands such as Infiniti, Lexus, BMW, Audi, Porsche and Volkswagon is also expanding.

Hence, discerning customers in this market have more options to choose from," says Abhijeet Pandit, Brand Manager for Infiniti in the Middle East.
This segment's success will also endure as Pandit says that they are expecting the luxury market to continue showing double digit growth as it did in 2007.

He says that new technological trends will help drive sales further. ‘"Features such as telematics, navigation systems and around view monitors have been added to luxury cars to bring more value.

Intelligent cruise control systems that adjust your vehicle's speed based on the speed of the vehicle in front and lane departure prevention (LDP) systems, which use a side-mirror-mounted camera to monitor the distance between the vehicle and lane markers and automatically correct the vehicle's path using the onboard stability control if the car drifts away from centre, are all important features that will making an appearance in luxury cars in the near future.

Top trends

There are several other trends that are being seen across different car segments. "Customers want more innovative features, luxurious interiors and a comfortable drive.

The mid-size segment is also witnessing rapid expansion with a wide range of variants being introduced. High demand for top-of-the-line models, with full options, across all segments is a feature unique to the UAE," says Khanna.

The popularity of SUVs is also an important trend that has been affecting auto sales positively in the region. Horton says that the bestselling BMW in 2007 was the new X5 Sports Activity Vehicle, the 5 Series was followed by the 7 Series.

He says that a normal model distribution in Europe or America, for instance, would have the 3 Series accounting for around 50 per cent of total BMW sales.

Baddar says that this trend will continue along with an increase in demand for the small cars mainly hatchbacks, which are becoming popular among younger customers.

"The increasing cost of raw materials will continue to have influence on car prices," he says.
Edmunds also says that hatchback cars are much more popular now and that the popularity of the Honda Jazz is testament to this.

"The SUV market is also very strong in the UAE and has recently seen a lot of new models being launched. Our offerings in the category —the Honda CRV and MRV are both in high demand," he says. Increased fuel efficiency and environment-friendly technology are also hot trends in the auto industry.

Going green

Ferrari broke new ground in sports cars when it unveiled its Flexfuel model using the F430 Spider as a base at the Detroit Motorshow in January.

"At the event, Ferrari also unveiled projects focused on improving the energy of the whole car, which would in turn lower fuel consumption and emissions levels.

The aim ultimately is to cut CO2 emissions by 40 per cent by 2012," says Khanna. Hybrid cars, which are battery operated or fuel powered, are a big trend with Toyota leading the way, says Pandit. Lexus, for instance, has launched the world's first full-hybrid V8 powered production car. Even General Motors has a hybrid SUV.

BMW will also join the list in the future. Horton says, "At the moment the availability of hybrid cars is almost insignificant in the region, however experience in other markets shows that they have the potential to punch well above the weight in PR terms.

Therefore, it will not surprise you to learn that BMW will also be launching a hybrid vehicle in 2009."

Auto finance

Such trends will push the auto sector towards achieving the double digit growth forecast for 2008.
It will also benefit the auto finance sector, which has been growing at an amazing rate over the past few years.

Business Monitor International estimates the value of the sector to be $2.1 billion (about Dh7.7 billion).
"One of the major drivers for growth has been the continuous influx of people into the UAE over the past 12 months.

Car sales would be natural beneficiaries of that. Additionally, vehicle finance is now available to a wider audience, distributed through a larger banking society, which offers a host of finance solutions," says Sean Drury, Managing Director, HSBC Middle East Finance Company Ltd, which offers a comprehensive set of auto financial solutions such as hire purchase agreements with balloon payment options, Murabaha agreements with balloon payment options and financial leases.

"It is widely accepted that during 2007 new vehicle sales increased by 13 per cent with a total value exceeding $3.14 billion (about Dh11.5 billion).

Continued growth is also forecast for 2008, although more modestly at about 10 per cent, says Drury, quoting a forecast by Business Monitor International.

And as the auto finance sector's fortunes are pegged to auto sales, 2008 also promises to be a good year.

Aftermarket

Another area linked to the auto industry that will benefit from growth in the automobile sector is the automotive aftermarket.

According to Dubai Ports and Customs' estimates, the sector will touch Dh33.8 billion in 2008. This is also evident in the success of exhibitions such as the Automobile Aftermarket Middle East.

Abdul Rehman Falaknaz, President, International Expo Consults, which organises the show, says that the exhibition has definitely benefited from the fact that Dubai is the re-export gateway to Mena (Midle East and North Africa) and CIS countries.
"Auto spare parts re-export is a substantial contributor to Dubai's GDP as 60 per cent of the autoparts coming into the emirate are re-exported," says Falaknaz. n

New launches

Latest models in the UAE showrooms

The new Ford models being launched this year include the new refreshed Ford Focus (three-, four-, five-door and station wagon) with its new kinetic design.

"These launches will follow the recently introduced all-new Mondeo, Ford Fusion which is a great mid-size sedan debuting in the UAE, new Ford Flex (seven-seater crossover), new Mercury Mariner (compact SUV), and the new Lincoln MKS full size luxury sedan," says Ashok Khanna, General Manager, Al Tayer Motors, which represents major European and American automobile manufacturers such as Ford, Lincoln, Mercury, Ferrari, Maserati, Land Rover and Jaguar.

Korean car manufacturer Hyundai has some new and redesigned models coming up. "These include three small segment cars, a sedan and luxury vehicle in addition to a sports sedan car, says Omar Baddar, Marketing Manger-Juma Al Majid Est., distributors of Hyundai vehicles in the UAE.

Honda plans to extend its Accord range this year.
"We just launched the all-new Accord sedan in November 2007 which is proving extremely popular due to its unique features.

The Accord range was extended this month with the launch of the Accord coupe which adds more pizzazz to the Honda brand. Later in the year, we will launch a new full-size SUV called the Pilot, which will replace MRV," says Guy Edmunds, General Manager, Trading Enterprises, distributors for Honda in the UAE.

The luxury and sports car segment too has some new excitement this year. Maserati will introduce the Quattroporte Limited Edition of which only 100 will be produced worldwide, as well as the new Granturismo S – the sport version of the car.

"Rolls-Royce Motor Cars unveiled its new Phantom Coupé at the International Geneva Motor Show recently.

Production of the new car will start at Goodwood in the summer of 2008. It will arrive in the Middle East in the second half of this year. The Coupé is the most driver-oriented model in the Phantom line.

A number of subtle but significant modifications have been made that change its character. It is noticeably more dynamic, whilst still offering incredible levels of comfort," says Peter-Paul Schoppmann, Rolls-Royce' Regional Director, Middle East.

BMW also has launches planned for the year.

"Cars that will be launched this year are the BMW M3 Sedan, the new 1 Series convertible and coupe, and the much awaited MINI Clubman. These products will help fill the demand for a selection of vehicles previously not available in the luxury vehicles market," says Phil Horton, Managing Director, BMW Group Middle East.

Horton says they are also looking forward to the arrival of the all new X6 Sports Activity Coupe in May 2008 followed by the all new 7 Series by the end of December.

Abhijeet Pandit, Brand Manager for Infiniti in the Middle East, says that after the launch of the Infiniti G37 Coupe in January, the company is launching the 2008 Infiniti EX35, a coupé-inspired SUV crossover and the M35. The modified Infiniti luxury range will comprise the new Infiniti EX35, G37 Coupé and M35, which will join the high-tech M45 premium luxury sedan, FX, G sedan and QX models.