Volkswagen sets its sights on a bigger share of the UAE market
Despite a large footprint across the globe, Volkswagen is yet to establish a significant foothold in the UAE's car market, particularly in the volume segments dominated by Japanese brands. Knowing this full well, the company has a plan in place to change that in 12 months' time.
"The challenge for us here is pretty clear," says Stefan Mecha, the managing director of Volkswagen Middle East. "In other markets, such as Europe, we're seen as a premium manufacturer, but premium in the volume segments. Here we're purely considered a premium brand, and competing in the premium markets."
And with the launch of the redesigned Jetta saloon in May, Mecha believes VW has the model to help transform this opinion. "The key thing is to show we are affordable. There is a myth that German-engineered cars tend to be premium and probably on the higher side [of price]. We need to break this perception and explain while the car might not be the cheapest, it's the best value for money. This is why the Jetta is so important for us."
Manufactured in Mexico and starting at Dh69,400, the Jetta is hoping to take the entry-level saloon fight to the Toyota Corolla, an omnipresent fixture on UAE roads for decades. Despite the model's having been on the market for only about three months, Mecha says the signs are good. "We're looking for an average of five to seven per cent market share in the Jetta segment across the region in the next three years, around 200,000 cars."
Then there's the saloon version of the Polo, plus the latest Passat mid-sized saloon, both of which Mecha hopes will be ready to roll by July. "This will be our judgment day, as we'll have three core products in the sweet spot of the market and you should see significant growth. We'll be able to showcase the brand and expand the volume at a large scale.
"And in the light commercial vehicle segment, the Amorak [pickup truck] is probably the most important vehicle we've ever had. By the mid to end of 2012 we will have the right configurations of the car available to see large numbers on the street."
One area where the VW name is proving successful is in the SUV market, with its large Touareg. But its success is only causing another problem for the automaker's Middle Eastern arm.
"The good news is that we have sold out," says Mecha. "The bad news is that our supply rate isn't sufficient. It's a luxurious problem to have, to have more demand than supply. The Touareg year-on-year has increased 50 per cent, but we could have sold more, especially in the UAE. We had some missed opportunities."
Mecha admits VW has some miles to go in the Middle East in promoting its rich heritage, which is well known in other parts of the world. "When you look at our competitors in the volume segment, they've been here for 30 to 40 years on a large scale, while we've only been here in the Middle East since the mid-80s."
But the heritage factor is an element Mecha says the company is going to be highlighting in its marketing towards the end of the year. "We need to go back to the core brand values. VW democratised the car industry - we made a car that was affordable for everyone. We need to strengthen this."
Mecha, the regional helm of VW in Dubai for two years, says the company holds a market share of about three per cent in the UAE, a figure that he says has been rising roughly 0.5 per cent per year. But with the new products, the ambition is to increase the volume annually by 50 per cent to 60 per cent. "We'll have three new products to capitalise on. But this is just the starting point. We have to get our feet on the ground and understand the customer base that today we don't have."
Published: August 6, 2011 04:00 AM