The NissanNissan distributor will invest Dh500m to boost facilities

Despite admitting to a slow down in the growth in terms of percentage in the automobile industry in this part of the world, Michel I Ayat, chief executive officer (CEO) of Arabian AutomobilesArabian Automobiles, told The Business Weekly that this area, particularly the UAE market, still outpaces other emerging markets.

In order to sustain growth, Arabian AutomobilesArabian Automobiles is targeting to reach the 40,000-unit mark by the year 2010. Similarly, from a current market share of 22.5 per cent, the company is looking at increasing this to 25 per cent by 2010. The company has also embarked on a Dh500 million expansion plan which specifically involves increasing its facilities throughout its territory.

"We want to reach 40,000 units within the coming three years. We want to increase our volume and have a market share of about 25 per cent of the domestic market of Dubai and Northern Emirates," Ayat said.

"This is an excellent market for the automobile industry and we are considered on the top in emerging markets like China and India and the Pacific countries," Ayat said.

As the UAE experienced a phenomenal growth from 2002 to 2006, Ayat said that it may no longer be on that level but somewhere in the vicinity of 15 per cent. The percentage of growth will come down but still, the UAE will be a buoyant active market for the automobile business."

Ayat said because of such phenomenal growth, various car dealers are now having a wider range of models than before.

"Today, we enjoy many models. In the past, we were not able to get all the models which were coming from assembly plants or the manufacturers. And I am not only talking about NissanNissan. I am talking about every other brand," Ayat said.

Arabian AutomobilesArabian Automobiles, which was established in 1969, is the exclusive distributor of NissanNissan, Infiniti and Renault brands in Dubai and the Northern Emirates. It has a total of nine showrooms, nine service centres and 13 spare parts outlets across this territory, and boasts of a total workforce of 1,600. According to Ayat, its turnover has crossed the Dh3 billion mark.

A yat revealed that from 11,000 units sold in 2002, Arabian AutomobilesArabian Automobiles has reached the 26,000+ unit mark in 2006. This year, the company is aiming to increase the figure to over 28,000.

Ayat revealed that the company has already purchased land of three million square feet at the Dubai Industrial CityDubai Industrial City and is targeting to have a contract signed with a contractor to start building within six weeks a model Infiniti showroom. In addition, it has also purchased another plot of land in Sharjah to build another Arabian AutomobilesArabian Automobiles centre, with a sales and after-sales facility for all the brands it carries.

Reaching such growth targets isn't just a dream vision for Ayat as the company's CEO. A clear-cut roadmap has been charted to achieve this goal. It involves four components: facility, technology, people and product.

"We have to improve the facilities because to reach 40,000 units, the number of cars running on the roads will increase and you need the capacity of your after-sales to offer the best services to these customers," Ayat said. This first step includes facilities like warehousing, delivery, parts, service and the showroom.

With regard to the second component, which is technology, Ayat explained that in order to meet customer demand for good service, the company must implement global best practices in customer relationship management.

"You need a customer database, customer information, communication tools and technology," Ayat said, adding that the company implemented Oracle ERP solution, a business management software product, a year ago.

"We have completed the first year which we call the stabilisation period, and we are now moving to optimise the technology for better services to our customers," Ayat said.

In addition, Ayat said the main component of technology is the enhancement of business processes in vehicle sales, after-sales and parts. "The company will be run by the best practices which will help to make customers feel that they are treated differently and warmly," Ayat said

The third component in the Arabian AutomobilesArabian Automobiles roadmap is people, the frontline people who deliver the services. "Today, almost everywhere, especially in the UAE, the market is very tough. You need competent people with good professional and personal skills," Ayat said. "So we need to select the right people, provide them with training, retain them and offer them the right package which is in line with the market."

"The people should have a sense of ownership and they should feel that they are the owners of the business," he added.

The fourth component is something which Arabian AutomobilesArabian Automobiles' business partners should deliver. And they are the car manufacturers and models which they want to be distributed in the market.

"The fourth one is the product. I need a product that should be the right product designed to suit the customers and of the best quality," Ayat said.

Having launched three new models under the SUV segment, the NissanNissan-Infiniti SUV line-up has now reached eight, probably among the highest number of SUV models in the market. While it is in Arabian AutomobilesArabian Automobiles' top-selling segment, the small cars, specifically the NissanNissan Sunny and the NissanNissan Tida, remain the top-sellers in terms of volume. And having such a wide range of models, NissanNissan continues to be Arabian AutomobilesArabian Automobiles bread and butter among the three brands it carries.

In addition, with the Infiniti brand, which belongs to the high-end luxury segment, Arabian AutomobilesArabian Automobiles, according to Ayat, is the number one dealer and top seller of Infiniti in the entire Middle East.

Elaborating on the reasons for the slowdown in the growth percentage of sales of new cars, Ayat said the improvement of the public transport network, restrictions in the issuance of driver's licences, toll fees and the increasing cost of living would have a significant impact. In fact, he believes that the second hand or used car market sales may increase because of this.

However, due to the high per capita income in the UAE, Ayat remained confident that people would still want to buy new cars.

"The volume of car sales in the UAE will still be a lot better because of the financing, the stylish attractive models and the capabilities of the distributors," Ayat said. "But what is more important is the high per capita income which is about $35,000 in the UAE."

Will Arabian AutomobilesArabian Automobiles expand its brand offering? Ayat said, "Arabian AutomobilesArabian Automobiles is proud to lead the NissanNissan family in the Middle East, and we will only do this. If we will have additional brands, it will be under a different company."

By Albert Alba

© The Business Weekly 2007