Car dealer to invest nearly Dh1bn in showrooms and operations

The distributor of Porsche, Audi and Volkswagen cars is set to invest nearly Dh1 billion in new showrooms, workshops and operations across the Dubai and the Northern Emirates.

Al Nabooda Automobiles is the exclusive distributor of Porsche, Audi and Volkswagen cars in Dubai and the Northern Emirates. Satish Kumar / The National

The distributor of Porsche, Audi and Volkswagen cars is set to invest nearly Dh1 billion (US$272.24 million) in new showrooms, workshops and operations across Dubai and the Northern Emirates.

Al Nabooda Automobiles plans to build or refurbish 10 facilities in Dubai, Fujairah, Sharjah and Jebel Ali as it aims to grow sales of its German brands and maintain its position as the biggest-selling Porsche dealer in the world.

"The overall investment we are looking at is Dh900 million over the next two-and-a-half years," said K Rajaram, the company's chief executive. "The investment covers 10 individual projects … some are on stream and some will start in the course of next year."

Al Nabooda is one of the biggest car dealers in the Middle East, selling the highest number of Audi and Volkswagen cars. Its Porsche showroom has recently had some of its best sales months ever.

It is the exclusive distributor of the three German brands in Dubai and the Northern Emirates and currently has about 700 staff, which is expected to grow to more than 1,000 once the expansion is complete.

In September, the company will open a three-storey, 3,656 square metre Audi showroom - the car maker's largest in the world - on Sheikh Zayed Road, Dubai.

The showroom will feature an area where customers can design a car and see it in life size on a screen.

Audi announced record Middle East sales of 7,865 vehicles last year, with 40 per cent of its business plied in the UAE.

It is rapidly catching up with BMW and Mercedes-Benz after reporting a 42 per cent increase in sales last year to 1,250 cars sold in Abu Dhabi and a 39 per cent increase in Dubai to 1,887 vehicles.

Before the end of the year, Al Nabooda plans to open a Dh85m facility in Fujairah with salesrooms for all three brands, as well as aftersales workshops.

Not yet officially designated the largest showroom in the world, but in the running, will be a Porsche facility due to open next year in Dubai at a cost of Dh144m.

The biggest outlay by Al Nabooda will be a Dh212m paint and body shop being built at a Dh44m pre-delivery centre in Jebel Ali.

Mr Rajaram said the whole investment would be financed by internal cash flow and some help from the parent company, Khalifa Juma Al Nabooda Group.

"We have not borrowed Dh1 to finance this," he said.

Al Nabooda hopes to sell 7,000 cars this year, and is currently 25 per cent up in the first six months of the year, compared with the same period last year.

"Our increase in sales is purely controlled by how many cars we get from our principals," he said. "If someone was to give me 500 cars extra, I would have sold them."

Mr Rajaram added that banks had become more willing to lend to customers in the past two years, but warned that the UAE would not be immune to a crisis in Europe or elsewhere.

"Definitely, over the last two years, [the banks] have come to the party. There's never been a case of one customer who has walked in our showroom and not received financing."

twitter: Follow and share our breaking business news. Follow us

iPad users can follow our twitterfeed via Flipboard - just search for Ind_Insights on the app.