Rise in Oil Revenues Fuels Growth of Luxury Car Market |
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RIYADH -- The sales of HyundaiHyundai
cars in the luxury segment surged by 12 to 15 percent last year, a senior executive of Hyundai Motor CompanyHyundai Motor Company (HMCHMC) told Arab News.The growing market for luxury cars in the Kingdom reflects a similar trend in other Gulf states, which account for one percent of the world's population but five percent of the global market share for cars in this category.
The trend is attributed to the increased purchasing power of Gulf nationals in the wake of the GCC states' booming oil revenues, which were estimated at $300 billion last year.
Referring to the entry of HyundaiHyundai
cars in the luxury market segment, J.E. Kim, executive vice president of HMCHMC for Africa and Middle East, said a noticeable trend during this period was that the sale of their small cars, which stood at 49 percent in 2005, dropped by 15 percent last year, while the luxury car sales of their brands like Azera were up by 12 to 15 percent during the same period. In the medium car segment, sales went up from 800 units four years ago to over 10,000 units in 2005.The sales of sports cars and SUVs, such as the 1,001-horsepower Veyron have also shot up, while buyers in the UAE have ordered 15 of the $1.2 million coupes since Volkswagen's Bugatti division began selling them in December last year.
Speaking of the market in Dubai, Kim said their Dubai office sold 3,000 medium segment Sonata cars per year. "This year more than 25,000 Sonata models were sold in the UAE. We are focusing on the medium segment along with a good program for the luxury model through Azera and Veracruz," said Kim.
The HMCHMC
executive was speaking to Arab News following the launch of their latest luxury brand, Veracruz, on the Saudi market. The vehicle is now available in the showroom of HyundaiHyundai cars, for which the sole distributor in the Central Province is HyundaiHyundai Al-Wallan.Saad Al-Wallan, chairman of the Wallan GroupWallan Group
, and Mishary Al-Wallan, president of the company, as well as marketing executives of HMCHMC were among those present.Kim said some major factors were responsible for the sales pitch. "First, the brand value of our cars has been improving every year. Now it is 72, up from 75 last year. Second, two to three new brands are launched annually as part of the HyundaiHyundai
line-up. Third, we lend good support to our business partners and expect the same from them," he said.Referring to their marketing strategy, he said HMCHMC
has sponsored two World Cup events. "We have already paid $200 million for the World Cup last year. This is in addition to our continuous quality improvement through research and development."Saad Al-Wallan said HMCHMC
has asked them to open a special showroom for Veracruz and Azera similar to the one for Lexus, the luxury brand of Toyota cars."To this end, there will be an aggressive promotional campaign for these good quality vehicles," he said.
"We have signed an agreement with six banks in the Kingdom to provide loans for the purchase of our cars. Kim's plan is to sell 100,000 cars in the Kingdom this year. We promised him that we'll achieve that target. They are giving us the tools to do it right through new models."
Speaking about their market for luxury cars, Sherif Yehia Soliman, car division manager of Bentley at Saudi Arabian Markets Ltd. (SAM), said: "Saudi Arabia has become the second largest market for Bentley in the Middle East, after the UAE."
At least four models in the Arnage range are available in the Saudi market, with the new Arnage Brooklands slated for introduction in early 2008.
Sales at Rolls Royce rose 36 percent last year in the Middle East, where the company sold 120 of the 796 cars it delivered worldwide. "Oil prices are helping to support our sales," said Axel Obermueller, director of European and Middle Eastern sales at Rolls Royce.
The Gulf, which accounts for less than one percent of the world's population, is especially important for luxury carmakers as it generates demand for the most expensive cars, with the widest profit margins.
About five percent of cars priced at $100,000 or more are sold in the Middle East, generating about 10 percent of earnings, according to Philipp Rosengarten, a Frankfurt-based automotive analyst for Global Insight Inc. He forecasts that the Middle Eastern demand for cars in that price range would rise more than 14 percent by 2009, while global sales in the category are likely to fall nine percent.
Javid Hassan
© Arab News 2007
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