Audi plans to double Middle East sales as UAE market accelerates

In contrast to the desperate state of the car sector in Europe, the Middle East is proving a driving force for manufacturers.

The German luxury car maker Audi plans to double its Middle East sales to at least 20,000 vehicles a year by 2020, helped by investment in showrooms and service centres, it says.

"It is the minimum target. You have to have buildings, you have to have capacity," says Trevor Hill, the managing director of Audi Middle East.

"Already those investments have been signed off, most of them have been made already … So half the battle is already won [in] creating capacity and now we have to work in terms of volume improvement and in terms of quality," he says. Audi, a Volkswagen unit which booked a 16.4 per cent sales jump to a record 9,155 units in the Middle East last year, aims to sell at least 10,000 vehicles in the region this year, Mr Hill says.

Together with its local partners, Audi has seven major construction projects on the way, including showrooms and after-sales service facilities in the UAE, Oman and Qatar.

The brand needs to double its workshop capacity in the region, Mr Hill says. Globally, Audi plans to boost deliveries to more than 2 million cars and 4x4 vehicles by 2020, as it aims to snatch leadership of the luxury car market from BMW.

The Volkswagen division expects sales in the premium segment sales to surge by between 12 and 15 per cent in the Middle East this year, while the overall passenger car market could rise 6 to 8 per cent from an estimated 1.1 to 1.2 million vehicles sold last year, Mr Hill says.

Unrest in parts of the Arab world since early 2011 may have helped to boost Audi's sales in the UAE, its top market in the region, as the country benefited from its safe haven status, drawing in businesses and expatriates.

"Dubai is growing quite rapidly so that will create a lot more opportunities for us to sell.

"There is a lot of wealthy people living in Dubai right now," Mr Hill says. The UAE made up 41 per cent of Audi's total sales in the region, with 3,819 units sold last year, up 21.7 per cent.

Saudi Arabia, the Arabian Gulf's biggest market for volume rather than premium passenger cars, followed with a 26 per cent jump. Audi, which has suspended operations in civil war-torn Syria, does not forecast sales being hit in neighbouring Lebanon or in Jordan, where there has also been social unrest.

"We have not seen that much slowdown in Lebanon. Lebanon is hitting the targets, Jordan is hitting its targets, so there are no real spillovers for us in those markets," Mr Hill says.

"I think it [sales] will keep growing this year."

Audi expects to increase annual sales of luxury cars and sport utility vehicles to 1.5 million earlier than the planned 2015 target date, Rupert Stadler, its chief executive said this month.

On Sunday, Ford, which has a 7.5 per cent market share in the Middle East, reported record sales of more than 75,000 vehicles in the region for its Ford and Lincoln brands last year, a 10 per cent rise.

Its sales soared 55 per cent in the UAE, while Saudi Arabia and Lebanon were stable.

That is still behind Japan's Toyota Motor, which has a dominant share across the region and reported a 30 per cent jump in sales to 650,000 units last year.

* with Reuters