David Matta: Sophistication driving Saudi automotive market

Excerpts:
Given the economic recovery, observers of the Saudi market expect that the automotive sales will exceed a million vehicles annually over the next five years. How do you see that?
Virtually all indications show that the automotive market is going in that direction and is growing at a healthy rate of 6 to 7 percent a year for the next five years ceteris paribus. As for the luxury segment, it will grow at a slightly higher pace as more models and brands are entering and competing in this segment that they find lucrative. Influencing the demand are the favorable economic and political conditions, in addition to more availability of credit, more Saudization of the labor market and women’s growing transportation needs.

How much is your investment in the development of car showrooms in Saudi Arabia?
Recently, Aljomaih premium brands division followed an upward trend with the introduction of exciting products in recent years such as CTS, and CTS V, in addition to the launch of totally new products such as XTS and ATS this year. This has driven us to widen our network coverage in the Kingdom in terms of showrooms and service centers. Aside from the Kingdom’s three major cities (Riyadh, Jeddah and Dammam), AAC opened a facility in Madinah and is scheduled to open another facility in Al-Hassa early next year. A wider coverage also is ensured through our existing facilities in hub towns that will be accommodating Cadillac soon. These are multimillion projects and the envisaged network is part of our strategic plan to provide excellent and integrated services to our customers. At AAC, we strongly believe in the fundamentals of integrated retail marketing and that in the context of our business stands very relevant and strong as well. As part of our well-laid out corporate strategy for retail, we are making progressive and preemptive investments to deliver benchmark excellence in areas of 3S concept (showrooms, spare parts, service centers). We are exponentially increasing our modern and well-integrated branch network across all parts of the Kingdom — both in vertical and horizontal directions.

With expansion of the maintenance services being one of the most important factors to increase sales, what is your strategy in the sector of after-sale service?
Good after-sale service is primordial to fulfill first the obligations of the dealers toward their clients in providing the expected services that ensure the proper performance and safety factors and second to increase the loyalty of customers that will sustain future growth. From this angle, AAC Cadillac is focused and keeps continuously improving its scope and depth of services. By increasing the number of outlets we provide more convenience to our clients, and by focusing on operational performance we deliver better services. We have certified our first facility in Riyadh as ISO 9000:2008 last November and will be certifying all remaining facilities this year. Besides, we have implemented a set of GM standards that made all the difference in our customer satisfaction surveys. We were able to increase our scores from 59 percent in 2011 to 77 percent in July 2012, a growth of 30 percent, and have set challenging targets for remaining 2012 and the years to come.

Some clients complain of the warranties, and there is a lack of understanding about the content of warranties between clients and agents. How can we overcome this issue?
The problem of warranty is wider than just complaints about coverage terms or claims raised against the company. From the beginning, we noticed that unless the client is properly informed about the importance of maintaining his vehicle throughout its ownership and the active role he needs to play in this regard, talking about warranty is not enough. From our side, we make sure that we explain the importance of properly maintaining the vehicle and of bringing it to service on time. This is communicated to the clients upon delivery as well as during the customer orientation sessions that we hold every two months in each outlet. The warranty terms are explained in addition to the maintenance schedules and services, whether free or paid, that are offered by the dealers. Such activities have resulted in more satisfaction from our clients and ensured a better performance of our vehicles and safety.

Saudi society suffers from the menace of fake spare parts, which has caused major accidents. How can we stop this flow of dangerous spare parts? And how bad can these fake spare parts affect the driver, passengers, and vehicle safety?
We strongly promote and recommend our customers to use genuine GM parts for their vehicles. The use of genuine parts is a very important thing that affects the performance of the vehicle as well as the safety of its passengers. Besides, there is an exchange and return policy that we have in place in addition to a general warranty on the parts that we sell. This is contrary to the counterfeit parts that are in circulation in the market that do not provide such benefits. Our customers through visuals in the customer areas as well as through our communication and orientation sessions are always advised about the importance of this matter. We are also coordinating with other auto dealers in the Kingdom and through the chambers of commerce in order to put more regulation on fake parts’ imports. There is no doubt that the concerned authorities, such as the Consumer Protection Department and the Ministry of Commerce play a major role to combat this phenomenon.

How do you find and assess the automotive market for the coming years in the context of rapid political and economic changes in the region?
On the economic front, we do not have real concerns. On the contrary, we remain positive about the economic prospects in Saudi Arabia. The Gulf region in general is in a healthy condition when compared to other regions in the world that have been witnessing economic slowdowns and recessions for the last couple of years. The Kingdom on the other hand has been posting a steady GDP growth of more than 4 percent over the last years. This trend is expected to be maintained with the ambitious government spending plans and the initiatives taken by the private sector. On the political front, however, the region is passing through a political turmoil and instability with the Arab Spring, and the risks of spillover are a concern that we hope will be contained.

What are your important car models this year? And how do you define the competition in the automotive sector in Saudi Arabia?
All of our range of products is important to us and has proven to be successful in the Saudi market. We compete in the sedan segments three, four and five with the ATS, CTS and XTS, and in the SUV segments four and five with SRX and Escalade. We were able to carve ourselves a successful niche over the last couple of years. With the reestablishment of Cadillac as “The New Standard of the World” and by coming up with new and exciting products, we believe Cadillac will be able to establish itself as a leader in this segment. The Saudi automotive market is the largest in the region and is growing more sophisticated and demanding. Our strategy relies on three pillars — product leadership, operational excellence, and customer intimacy. This will benefit our client base as well as contribute to AAC’s profitability and sustainability.