Generation game's big winners at Al Fahim Group

Profile: For one family business in the UAE, the persistence of a German salesman and an Emirati's vision resulted in a multi-company conglomerate. Thanks in part to the man from Mercedes, the head of Al Fahim Group has a hugely successful venture to pass on.

Mohamed Al Fahim, Rashid al Fahim and Mohamed Abdullah al Fahim / illustration by Christopher Burke for The National

Mohamed Abdul Jalil Al Fahim can still remember when, as a boy, in 1961, his father was approached by a German in Abu Dhabi.

The man was trying to sell the agency rights to Mercedes-Benz to Mr Al Fahim's father Abduljalil, who sold car parts, at a time when there were no proper streets in the emirate.

The salesman asked Abduljalil if he had heard of Mercedes. He had not.

The German, a Mr Neuhouse, explained it was the name of a very well known car brand in Germany.

Mr Al Fahim's father, intrigued by the man, asked him if Mercedes Benz made 4x4s. Mr Neuhouse said it only made saloon cars.

"My father replied: 'Your saloon cars can't run in Abu Dhabi. As you can see we have sand all over the plains and we don't have roads for saloon cars. If you have land rovers, maybe your company will sell," Mr Al Fahim recalls.

"My father offered him a Pepsi Cola, chatted with him for about 15 minutes, and then sent him on his way. The man asked, one more time, 'Are you sure you don't want the agency?' My father's response was: 'What will I do with an agency of a car that doesn't run in Abu Dhabi?'"

The next day, the man came back and tried one more time to convince Mr Al Fahim's father to take the agency rights to Mercedes in Abu Dhabi.

"He said, 'Look, I have to be very frank with you. I didn't find anybody else who understood anything about cars. Yours is the only shop that has spare parts, which means you know something about cars. Please take it. I'll put your name down and invite you to Germany to see the cars, and if you like them you can take one.'" But Abduljalil would not be moved.

Needless to say, Al Fahim Group's portfolio today includes the UAE franchise of Mercedes-Benz, Jeep and Chrysler cars, and the ownership of the Fairmont Bab Al Bahr Hotel and Hilton Hotels in Abu Dhabi.

The tides of fortune quickly changed for Mr Al Fahim and his father with the federation of the UAE and the subsequent development of the country, as the Al Fahim Group grew from a small trading company into a business empire.

One year after their first meeting, the persistent Mr Neuhouse came back to Abu Dhabi to see if AbdulJalil had changed his mind.

"This time, my father was prepared because he asked some of his friends about cars and they told him that Mercedes cars were running around in Doha and it is a good car to buy," Mr Al Fahim says.

"My father said: 'Look, you want to sell the car, I will import some. But you have to first take me to Germany to show me the cars,'" says Mr Al Fahim. The German salesman agreed.

Three months later, Mercedes invited AbdulJalil to Germany. He took his assistant with him, because he didn't speak English. He also took Mr Al Fahim with him, who was 13 at the time.

"You can imagine," he says, "travelling from Abu Dhabi in 1962 when there was nothing," says Mr Al Fahim, who is also the author of From Rags to Riches: A story of Abu Dhabi, published in 1995 and which has sold more than 100,000 copies.

"We didn't have electricity, phones, cars, streets, proper homes," he says. Landing in Stuttgart, after two days of travel through airports, he says his first sight of Germany was "like a heaven".

"It was a paradise on earth, green trees, streets clean, homes, electricity, cars running around. It was fantastic."

He and his father went to the Mercedes showrooms to see the cars. They saw an antique car, similar to one they currently own that dates to the 1800s, which was the first car that Karl Benz made, by hand.

"We were, of course, very impressed," Mr Al Fahim says. "I was impressed, not by the cars I saw, but by the giveaways - those were much nicer to play with and fantastic to carry."

In the end AbdulJalil bought four Mercedes. He took one for himself, and offered two to the Abu Dhabi Royal Family. The fourth, nobody wanted.

The car was parked in a storage area on what is now Hamdan Street. There were no buildings at the time. But by 1966, Sheikh Zayed, the first President of the UAE, became Ruler of Abu Dhabi and jump-started the development of the emirate, building streets, homes, hospitals and schools. Cars were needed. AbdulJalil bought 13 600 Pullman Mercedes, a six-door limousine and competitor of the Rolls-Royce and Bentley.

"They were state cars, presidential cars, royal cars," Mr Al Fahim says. "They were cars fit for presidents and kings, and yet my father was courageous enough to order 13 of them."

In 1968, Mr Fahim was asked to take over the family business. He set up a showroom with three cars on display. But by 1970 demand was so strong people did not wait to collect their cars from the showrooms - they would stand by the port to collect them before Mr Al Fahim had even paid customs.

"I had a man with me from the office who had a paper bag as we put the money in and gave the keys to the customers," he recalls. Three years later the number of shipments grew to 200 vehicles annually.

Today Al Fahim Group imports 3,000 Mercedes cars a year.

"There's a saying that the first generation starts up the business, the second generation grows the business, and the third generation does the opposite," Mr Al Fahim says. He has been vocal in the past on the merits of a listing the company and says up to 90 per cent of second and third-generation family businesses fail when they remain family held.

In the past three years, Al Fahim Group has tightened its corporate structure, a succession policy where the third generation are trained or asked to work outside, and if they are good enough, they are hired in the business - just like any other employee.

The group was also converted into a private joint-stock company and adopted international corporate governance codes.

Mr Al Fahim, the honorary chairman of the company, has gradually loosened his grip and put his younger brothers in charge of the group.

Mr Al Fahim says family members working for the company were exposed to the car trade from a young age to enable them to develop the relevant experience.

"I introduced them to the business and trained them at several departments, I put some in accounts and others in sales in the showroom," he says.

"I helped them to build an interest in the automobile business and it gradually grew with them. They started knowing the clients and how to deal with people and, as they grew up and I was getting older, I put them in charge of whole companies."

"I'm glad my brothers run the show," he says.

"All I can do is give advice and watch over them. The rest is their responsibility."

Rashed Al Fahim, his younger brother, says the transitions have been smooth. "There has to be a process, where we wan go to the point where we disagree, but we work towards an agreement," he says.

"Everybody has been educated, especially the third generation, for responsibility.".

Mr Al Fahim's nephew, Mohamed, worked in the public sector at the Securities and Commodities Authority before applying to work at the family business.

Now 32, he runs the company's tourism portfolio, which includes gems such as Safar Travel and Business. "It's a different outlook, because you are serving your family and at the same time you are an employee with them," Mr Al Fahim's nephew says.

"Each person you meet is a shareholder and your performance is based on how well you do, inline with the strategy."

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