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New car sales kicking up a storm in desert

A good sandstorm blows up in Dubai and if the sealing and ventilation on your car is not right you are eating dust.

At midday in the summer, with the outside temperature at 50˚C, if your air-conditioning is not the best, you and your family are toast.

You can have whatever badge you like on the outside, but if you get those two things wrong you are out of the car business.

Toyota being Toyota, it takes note. The HVAC system is beyond rebuke and everyone knows it.

Toyota is market leader by a distance in Dubai and the United Arab Emirates, and that makes Simon Frith very happy.

Frith has been in the Emirates for just nine months as managing director of the Al-Futtaim Motor Company, having previously spent many years with Inchcape in the UK.

He sells Toyota, Lexus and Hino trucks and is therefore market leader by a distance. Not only that, but the whole market is on fire. “It is so much more exciting than the UK which is now very mature. Here we have had growth of 20% for each of the last three years.

“We sold 78,000 vehicles in the Emirates. About 35,000 of those were in Dubai.”

It is not just the scale of demand that is big. The scale of the retail sites is vast. One Dubai business is 5,500 sq m. It sells 20,000 vehicles a year. There is nothing that beats it outside the US.

“RRG in Manchester is the UK’s biggest site (he worked there). This is 10 times bigger. We have 200 service bays.”

There is little guesswork involved in forecasting growth. People are still pouring into the Emirates from all over the world. There are supposedly 55 nationalities happily settled in Dubai alone. This year, Frith forecasts nonchalantly that he will sell 95,000 vehicles. Next year it will be 110,000. In 2010 it will be 125,000.

#AM_ART_SPLIT# The brand breakdown is 60% Toyota, 4% Lexus and the rest Hino. Frith is looking after 12 sites. Three are in Dubai, two are in Abu Dhabi, two are in Sharjah and then there is one each in the other states of Ras al Khaimah, Umm Al Quwain, Fujairah and Arjam. Al-Futtaim owns the whole business from import to retail.

The total car market for the UAE is 375,000 cars, of which Al-Futtaim has 25%. The other Japanese brands own another 15% of the market between them. Nissan is the number two, followed by Honda. Ford of Europe and GM lead the European importers.

The premium market is led by Mercedes-Benz. Lexus and BMW are tied as runners-up. Lexus grew its market share by 180% last year.

Colin Leitch was Frith’s predecessor for 18 years. He joined from Arnold Clark in Glasgow and has now moved up a level to the board of Al-Futtaim representing both this business, Al-Futtaim Motors, and Trading Enterprises, which covers Honda, Chrysler, Jeep and Volvo, as well as a huge used car site which draws stock from both new car divisions.

The group also has the Hertz contract for the region, with 4,000 vehicles, and Famco, which sells industrial vehicles and Volvo trucks and buses. When Leitch arrived, Al-Futtaim’s motor business was a modest 5,000 unit-a-year operation.

So big is the business now – it will turn over £1.5bn this year – and so fast its growth, that it needs professional managers. Frith was last week in London interviewing prospects.

But he makes it clear that for the English applicants this is no shoo-in. He has already been to South Africa and is on his way to India and Australia. There is plenty of talent also among the 2,000 employees of the group but there is an underlying need to hire 10 senior people from the more sophisticated markets.

#AM_ART_SPLIT# “It works when you get a good cohesive multicultural team together and the mix of South Africans, Indians, British and Australians is good.”

Because it is such a young country – only 10% of the residents are over 45 – road casualties are high and there is a strong emphasis on vehicle safety in the buying preferences.

Nonetheless, there is plenty of demand for quick and exotic cars. The standard of living for the oil-rich locals is very high – higher than in the UK – and they are quite used to running fleets of cars for personal enjoyment – Porsches for the city streets, a modest Aston and a Mercedes for shopping and four-wheel drive trucks and pick-ups for outings to the desert.

A third of the new Toyotas sold are 4x4s and the petrol prices are a gas. A Land Cruiser that will accommodate £90 worth of juice in the UK, will only manage £20 in Dubai.

The men who own all the petrol are determined to have fun with it while it lasts.

#AM_ART_SPLIT# The man hiring for Dubai: Simon Frith

  • Royal Marines for nine years, serving with Nato and Northern Ireland.
  • East Anglia University, finance and economics
  • Joined Inchcape as management accountant for Toyota
  • Moved to regional management
  • General manager of network development
  • Lexus general manager operations
  • Managing director Radcliffe Road Garages, Manchester
  • General manager, training and development, Porsche Cars
  • Joined Al-Futtaim Motors as managing director.

    The Company
    Al-Futtaim Motors Company

  • Sells Toyota, Lexus and Hino
  • 78,000 vehicles in the Emirates
  • Of which 35,000 are in Dubai
  • 12 sites
  • Largest site 5,500sq m, 20,000 units, 200 service bays
  • Market share of UAE 25% of 375,000

    The Group
    Al-Futtaim Group

  • Established 1930
  • Established in 40 countries
  • Lead player in industrial, commercial and trading
  • Present in 40 countries in the Lower Gulf
  • 10,000 employees
  • Builder of the Dubai Festival City, 1,200 acres on 4kms of Dubai Creek

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