The distributor of Volvo cars in the UAE plans to open three showrooms, joining a growing number of dealers spending heavily on sales infrastructure in the Emirates.
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Trading Enterprises, part of Al-Futtaim Group, plans to open the new facilities within the next three years, with one in Ras al Khaimah to open next month.
"What we are starting to see through 2011 over 2010 is that there is definitely more consumer confidence around," said Colin Cordery, the managing director of Trading Enterprises and Al-Futtaim Automall.
The company is one of a number of dealers investing in showrooms and maintenance facilities on the back of strong growth in car sales in the first quarter of this year.
"What we are very focused on here in the Volvo business is the experience of our customers. Quite frankly, we want to give them a better experience in our showrooms than they receive elsewhere," Mr Cordery said.
BMW announced last week that its dealers in the Emirates were investing a total of Dh300 million (US$81.6m) in upgrading forecourts and workshops.
General Motors and Ford have also said their partners in the region, particularly in the UAE, are spending hundreds of millions of dirhams on sales infrastructure.
Volvo has one showroom in Dubai and another in Abu Dhabi, and its vehicles account for less than 1 per cent of the total car market in the UAE, where sales of up to 220,000 units are forecast for this year, Mr Cordery said.
Trading Enterprises wants to take advantage of the robust demand for sports utility vehicles in the Northern Emirates with its Volvo XC60 and XC90 models.
"It's difficult in this part of the world to get people into our smaller cars, because the stereotypical car people have in the market is a big 4x4," he said. "But certainly in more of the fuel-conscientious markets around the world they are excelling."
The many issues to be considered when opening a showroom include deciding whether to buy property or rent an existing space, given that fitting out a showroom costs about Dh1.5m, Mr Cordery said. Trading Enterprises is also looking at a site in Al Ain, where a showroom could be built by the end of this year.
"Our forecast is to match our current sales rate, so if we get to the end of 2011 and revenues had grown at the same rate, we would be very pleased," said Mr Cordery.
Last year, Ford sold Volvo and related assets to the Chinese manufacturer Geely Automobile Holdings for $1.8 billion.
"Many of the American car makers have disposed of their niche brands, which has allowed these brands to seek new investors and reinvest in the product cycle," Mr Cordery said.
"This is critical in managing to retain market share."
