Is it time for MENA’s car retail industry to shift online?

Kuwaiti men sit in a Bentley Continental GTC 2012 convertible automobile at a showroom in Kuwait City on February 13, 2012. (AFP/File Photo)
1 / 2
Kuwaiti men sit in a Bentley Continental GTC 2012 convertible automobile at a showroom in Kuwait City on February 13, 2012. (AFP/File Photo)
The global pandemic has drastically accelerated digitalization in consumer-facing industries, including car sales. (Supplied)
2 / 2
The global pandemic has drastically accelerated digitalization in consumer-facing industries, including car sales. (Supplied)
Short Url
Updated 04 April 2021

Is it time for MENA’s car retail industry to shift online?

Kuwaiti men sit in a Bentley Continental GTC 2012 convertible automobile at a showroom in Kuwait City on February 13, 2012. (AFP/File Photo)
  • Data shows visits to showrooms fell by 80 percent in Saudi Arabia during the March-June 2020 pandemic period
  • A study by YallaMotor found 60 percent of car buyers now prefer to buy online rather than from a showroom

DUBAI: The global pandemic has drastically accelerated digitalization in consumer-facing industries, offering vendors an opportunity to survive the current slump but also pave the way for sustained future growth.

Global car sales were expected to shrink by 9.4 percent by the end of 2020. Many factors have contributed to this slide, including the COVID-19 pandemic and the subsequent decline in consumer purchasing power, plus weaker economies, a reduced need for transportation, and crashing oil prices.

The automotive market in MENA has been equally affected. Vendors in Saudi Arabia — which had one of the world’s fastest-growing motor industries between 2010 and 2015 — had a harsh time in 2020.

Between March and June, new car sales in Saudi Arabia fell by 60 percent, and visits to showrooms dropped by 80 percent. This has had serious repercussions for the service and aftermarket sectors, with the average spend per vehicle declining by 25 percent, periodic maintenance plunging by 75 percent and spare parts sales down by 70 percent.

So is it finally time for the region’s car retail industry to shift online?




A Saudi man looks at Nissan cars during the 30th International Riyadh Motor Show on November 29, 2016 in Riyadh. (AFP/File Photo)

It is certainly something to think about; looking at other markets, online tools have come to the rescue of ailing car dealers. In the US, where car sales are estimated at $840 billion, online transactions still account for only around 1 percent of the total, but their share has started to rise following COVID-19 restrictions.

“With coronavirus, we’ve seen an additional shift in the desire to purchase vehicles online,” Ernie Garcia, CEO of Arizona-based online used car retailer Carvana, told Reuters last August.

Some MENA auto retailers are beginning to recognize the value of online tools, suggesting that the “handshake deal,” which has long defined the regional marketplace, might not be the only way to do business in this sector in the future.

Last June, Mohamed Yousuf Naghi Motors (MYNM) launched its first virtual showroom for BMW cars in Saudi Arabia, allowing customers to remotely explore and compare models from both new and certified secondhand car collections. Mark Notkin, MYNM’s managing director, has described the move as “a step in the right direction.”




An Emirati looks at classical cars displayed in downtown Dubai on March 24, 2016 during the eight edition of Emirates Classic Car Festival. (AFP/File Photo)

Kia Motors followed suit by launching its “Live Stream Showroom” service, which offers personalized real-time video tours of select Kia dealerships in Saudi Arabia, Qatar and Pakistan. Customers can schedule live one-on-one sessions with a company representative to have their questions answered. Kia is expected to expand the service throughout MENA.

Seeking to lure wary car owners back into service centers and fuel the car aftermarket, Nissan started offering a door-to-door service in Saudi Arabia through a dedicated mobile app. Customers can arrange to have their vehicles picked up from a location of their choice and delivered back to their doorstep serviced and sterilized.

“Vehicle maintenance trends are becoming more convenience-oriented, and customers are now more inclined to avail themselves of services at their home or at their workplace rather than invest time in a service center,” Subhash Joshi, of market research group Frost & Sullivan, told a UAE daily.

It is still early to assess properly customer adoption of the new technologies offered by car retailers in the region.




Saudi women tour a car showroom for women on January 11, 2018, in the Saudi Red Sea port city of Jeddah. (AFP/File Photo)

A study by YallaMotor surveyed 1,200 respondents from the GCC countries about their car buying preferences after the COVID-19 pandemic. According to the results, 60 percent of the car buyers polled would now prefer to buy online rather than from a showroom.

This might provide an early indication of shifting consumer and business attitudes in the region for a market segment that has long been resistant to online sales, but it is hard to predict whether this shift is here to stay.

“We hope that these initial results will help guide the automotive sector towards their next plan of action,” Jorge Bialade, YallaMotor’s general manager, said in a statement.

Irrespective of the long-term success of these newly launched online tools, the changes sparked by the pandemic and declining sales have pushed the auto industry to explore ways of reinventing its traditional experience.

As a result, the post-COVID car marketplace in MENA is likely to differ from the one in pre-pandemic times.

-----------------

* This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.


Oman becomes fourth GCC country to introduce VAT

Oman becomes fourth GCC country to introduce VAT
Updated 35 min 48 sec ago

Oman becomes fourth GCC country to introduce VAT

Oman becomes fourth GCC country to introduce VAT
  • Tax starts April 16 at 5%
  • Zero-rated items include essential foodstuffs

OMAN: Oman introduced a 5 percent value-added tax (VAT) on Friday, the fourth Gulf Cooperation Council country to implement a so-called consumption tax.

It followed the UAE, Saudi Arabia and Bahrain. Saudi Arabia tripled its VAT rate to 15 percent last July to help fund its coronavirus relief efforts.

Oman has predicted it will raise OMR400 million ($1.04 billion) from the tax this year, equivalent to 1.5 percent of GDP, as it looks to narrow a widening fiscal deficit.

In June 2016, all six GCC states signed the Common VAT Agreement, pledging to introduce a 5% VAT rate. Kuwait’s parliament has pushed back the implementation date several times but the International Monetary Fund said last year that it expects it to be introduced by 2022. Qatar is expected to go ahead with VAT in the second or third quarter of this year and is said to be close to finalizing its tax administration system, Dhareeba.

Omanis had 6 months to prepare for the introduction of VAT, which may be followed by the Gulf’s first income tax in the coming years.

Goods and services exempt from VAT include financial services, health care, education, local passenger transport, bare land, resale of residential real estate and residential rents. Zero-rated goods and services include all exports, basic foodstuffs, medicine and medical equipment, investment in gold, silver and platinum, crude oil and derivatives and natural gas, among certain transport goods.


ADNOC to explore potential of hydrogen market with India

ADNOC to explore potential of hydrogen market with India
Updated 16 April 2021

ADNOC to explore potential of hydrogen market with India

ADNOC to explore potential of hydrogen market with India
  • Key to hydrogen economy will be aligning supply and demand - Al Jaber

RIYADH: The Abu Dhabi National Oil Company (ADNOC) sees a potential market for hydrogen in public and private Indian companies to serve the country’s growing demand for energy and need for cleaner fuels, said Sultan Ahmed Al Jaber, minister of industry and advanced technology and CEO of ADNOC.

“Today, India is one of our biggest and most important trading partners, particularly in the field of energy,” Al Jaber said during a high-level ministerial session at a virtual hydrogen roundtable on Thursday, WAM reported. “And as India’s demand for energy grows, we stand ready to help meet that demand by making the full portfolio of our products available to the Indian market.”

“Granted Hydrogen is still in its infancy, it could be a game-changer and a real opportunity to accelerate the broader energy transition, an opportunity that ADNOC and the UAE are well placed to capitalize on,” Al Jaber said. The “key to developing the hydrogen economy of the future will be aligning supply and demand,” he said.

ADNOC currently produces about 300,000 tons of hydrogen a year as part of its current industrial processes, and can become a major player in the developing blue hydrogen market, Al Jaber said.

The company is also exploring the potential of green Hydrogen through the Abu Dhabi Hydrogen Alliance, which was recently established by ADNOC, Mubadala Investment Company and ADQ, he said.


Sakani housing program served 70,000 families in the first quarter of 2021

Sakani housing program served 70,000 families in the first quarter of 2021
Updated 16 April 2021

Sakani housing program served 70,000 families in the first quarter of 2021

Sakani housing program served 70,000 families in the first quarter of 2021
  • Sakani beat target of 51,000 familes in Q1
  • Sakani announces launch of home finance app

RIYADH: Saudi Arabia’s Sakani program helped 70,000 families in the first quarter of 2021, surpassing its target of serving 51,000 families.

Sakani was formed in 2017 by the Ministry of Housing and the Real Estate Development Fund with the aim of facilitating home ownership in the Kingdom through the creation of new housing stock, allocating plots and homes to nationals and financing their purchase. It has a goal of reaching 70% home ownership by 2030.

Sakani revealed the data at an event in Riyadh on Thursday where it announced the launch of an online home finance app, SPA reported.

The program aims to serve 220,000 Saudi families this year, through the creation of 50,000 housing units, facilitating the reservation of 30,000 residential land plots and arranging 140,000 real estate loans, said CEO Marwan Zawawi.

More than 66,000 financing contracts were signed in the first quarter of 2021, supported by SR40 billion, a 23 percent increase compared to the same period of 2020. This brings the total number of families benefiting from the subsidized mortgage since its inception in mid-2017 until the end of the first quarter of 2021, to more than 487,000 families in various regions of the Kingdom, said Mansour bin Madi, general supervisor of the Real Estate Development Fund.

Sakani has enabled more than 350 thousand families to own homes to date, Bin Madi said.

About 178 infrastructure projects covering 244 million square meters have been developed at a cost of more than SR8 billion, said National Housing Company CEO Mohammed bin Saleh Al-Bati.

“In 2017, housing options under construction were limited, but now developers are racing to obtain licenses,” said General Supervisor of Real Estate Development Deputyship at the Ministry of Housing, Sultan Al-Sheikh. “Reservation of residential units on new developments is often complete within a few days and in some cases hours.”


Oil rises above $67 in fifth day of gains on demand hopes

Oil rises above $67 in fifth day of gains on demand hopes
Updated 16 April 2021

Oil rises above $67 in fifth day of gains on demand hopes

Oil rises above $67 in fifth day of gains on demand hopes
  • Brent on track for weekly gain of about 7%
  • U.S., China economic recoveries bolster sentiment

LONDON: Oil rose above $67 a barrel on Friday, gaining for a fifth session, as a stronger demand outlook and signs of economic recovery in China and the United States offset rising COVID-19 infections in some other major economies.
China’s first-quarter gross domestic product jumped 18.3% year on year, official data showed on Friday. On Thursday figures showed a rise in US retail sales and a drop in unemployment claims.
“Given the improving outlook for the world’s two biggest economies, there is little chance of the market’s feel-good glow being extinguished any time soon,” said Stephen Brennock of oil broker PVM.
Brent crude rose 26 cents, or 0.4 percent, to $67.20 a barrel by 0950 GMT, heading for a weekly gain of about 7 percent. US West Texas Intermediate (WTI) crude added 16 cents, or 0.3 percent, to $63.62.
New US sanctions imposed on Russia, one of the world’s top oil producers, over alleged election interference and hacking could also support prices.
“Though they do not affect the oil sector directly, they could lead to higher financing costs and general uncertainty in trade with Russia,” said Eugen Weinberg of Commerzbank.
Helping the rally this week, the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) both made upward revisions to oil demand growth forecasts for 2021.
Figures on Wednesday also showed US crude inventories fell by 5.9 million barrels.
Demand hopes offset concern about rising coronavirus cases in other big economies. India’s infection rate hit a record high while Germany’s chancellor on Friday said a third wave of the virus has the country in its grip.
Oil has recovered from pandemic-induced lows last year, helped by record cuts to oil output by OPEC and its allies, a group known as OPEC+.
Some of the OPEC+ cuts will be eased from May, with the group meeting on April 28 to consider further tweaks to the supply pact.


Ramadan harvest begins in Saudi Arabia’s city of roses

Ramadan harvest begins in Saudi Arabia’s city of roses
Updated 16 April 2021

Ramadan harvest begins in Saudi Arabia’s city of roses

Ramadan harvest begins in Saudi Arabia’s city of roses
  • Smallest vials sell for SR400 ($106).
  • Harvest falls during Ramadan this year

TAIF: Every spring, roses bloom in the western Saudi city of Taif, turning pockets of the Kingdom’s vast desert landscape a vivid and fragrant pink.
In April, they are harvested for the essential oil used to cleanse the outer walls of the sacred Kaaba in Makkah.
This year, the harvest falls during Ramadan.
Workers at the Bin Salman farm tend rose bushes and pick tens of thousands of flowers each day to produce rose water and oil, also prized components in the cosmetic and culinary industries.
The perfumed oil has become popular among the millions of Muslims who visit the Kingdom every year for pilgrimages.
Patterns of plants and flowers have long been part of Islamic art.
Known as the city of roses, with approximately 300 million blooms every year, Taif has more than 800 flower farms, many of which have opened their doors to visitors.
While workers pick flowers in the fields, others labor in sheds, filling and weighing baskets by hand.
The flowers are then boiled and distilled.
“We start boiling the roses on high heat until they are almost evaporated, and this takes around 30 to 35 minutes,” Khalaf Al-Tuweiri, who owns the Bin Salman farm, told AFP.
“After that we lower the heat for around 15 to 30 minutes until the distilling process starts, which lasts for eight hours.”
Once the oil floats to the top of the glass jars, the extraction process begins.
The oil is then extracted with a large syringe to fill different-sized vials, the smallest going for SR400 ($106).