UAE auto sector to shift into higher gear in 2019

Affluent buyers, rising tourism and infrastructure developments, and automotive trade are key growth drivers

People walk past a Rolls-Royce "Phantom Coupe" model at a Rolls-Royce showroom in Dubai. Image used for illustrative purpose.

People walk past a Rolls-Royce "Phantom Coupe" model at a Rolls-Royce showroom in Dubai. Image used for illustrative purpose.

REUTERS/Jumana El-Heloueh

The UAE is known for its resilience and the automobile industry is no exception; it not only braves the slowdown in the sector - it is also gearing up for a brighter 2019.

Among the key growth drivers that are expected to influence the UAE market are affluent buyers; rising tourism and infrastructure developments; and automotive trade.

Axel Dreyer, general manager at Galadari Automobiles, said that while the GCC automotive market declined in 2018, this is not an isolated case; the sector in Europe and other countries in general also experience the same thing.

"In terms of trend, the UAE is and will follow the continuing increasing demand for sports utility vehicle [SUV] through all segments," he said.

Dreyer strongly feels that, with strong countermeasures and initiatives from the UAE government, this trend in 2019 will be stopped and the confidence level of potential new buyers will result in a stable market in 2019.

"We had launched very successful campaigns in second half of 2018 with low monthly installments and very attractive prices. Equally important for us is to invest in brand equity initiatives as we have communicate the unique brand values of Mazda to potential customers," he said.

Dreyer added that the new Mazda 6 will be available in showrooms in January and the level of refinement and features, together with an exciting design, will put a smile on our customers' faces.

"Despite the market trend, Mazda is doing very well as we were able to continue our market share growth strategy successfully also in 2018. For 2019, we are focusing on a strong market share growth in the popular SUV segments where Mazda is a strong contender with its very popular and award-winning CX models," he added.

"Galadari Automobiles is strongly focusing on brand value management. Emotional dealership experience through highly-competent staff with passion towards the brand and the customer is crucial to persuade prospects from Mazda. Simultaneously, as a driver-focused brand we are planning test-drive activities so customer can experience the cars properly," Dreyer said.

"One of our strategic objectives is to be innovative. Already, in marketing, we have demonstrated our very successful Mazda CX-9 in Ski Dubai with the influencer Supercar Blondie. Furthermore, Galadari Automobiles has now embarked into a new journey with the latest software to manage leads, CRM and marketing. This new system will enable us to launch efficientmarketing campaigns, manage and track customer interactions and secure that leads from various channels are getting handled professionally," Dreyer added.

Challenging phase

Mohammed Khader, president of Al Majid Motors Company, said the regional automotive industry has been going through a challenging phase since 2015, but it was impacted in particular with the introduction of VAT during the first quarter of 2018.

"As of the second half of 2018, however, the market has started recovering and is expected to enjoy increased sales in the coming years considering the massive projects and 2020 influence on the industry," he said.

Khader opines that being part of the industry, Kia was also not spared but it successfully sustained the challenging phases during 2016-18. Next year is expected to be a year of success as Kia is entering the premium SUV segment for the first time with the launch of the Telluride during the first half of 2019.

Growth drivers

The trend indicates that it is a buyers' market where consumers have a selection of choices; to sustain and obtain best possible sales results, a dealer has to offer the best possible customer service.

Experts noted that improved market confidence, with the economy set to grow 3.7 per cent in 2019, according to the International Monetary Fund and preparations for Expo 2020 Dubai, are strong drivers of demand.

"One of the defining trends in 2018, which will gain further traction in 2019, is the popularity being gained by electric vehicles [EVs] - guided by the sustainable development vision of the UAE," Nassim Mourani, group general manager of Liberty Automobiles, said. "The country has been at the forefront in promoting EVs for its long-term positive impact on the environment and the economy at large."

"There have been several initiatives to support electric cars, including the inception of free EV charging stations until 2019, free parking and benefits in road-toll badge registration and vehicle registration in Dubai."

Ayhan Olcer, CEO of AGMC-BMW, is optimistic on the outlook. "As we all know, the current market conditions weren't as easy as we would like it to be, however, we have a solution for this through our upcoming product offerings during 2019. We have introduced exciting models such as the all-new BMW X5 and are optimistic about the upcoming car launches to take place next year."

"We will be witnessing the highest number of new car launches in BMW Group's history next year. We will be launching the new 3 Series, Z4 as well as - for the first time ever - the all-new BMW X7," he said, adding that the company is expected to launch its 100,000 sqft showroom and after-sales facility in Motor City by the fourth quarter of 2019.

"Now, with all the recent product launches that happening in 2018, along with 10 complete new models that will be launched in 2019, we have no doubt that the year ahead will be very positive and exciting," Olcer concluded.

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