Astra-nomic achievement: Al Fairuz conquers Oman

In a country known for its consistent markets, the rise of a certain heavy-duty truck range is turning heads

ANALYSIS, PMV

The vehicle industry is not known for its big splashes. Fleets are expensive, so, even in the most over-excited of markets, the growth of product volumes tends to be steady and considered. However, the experience of Astra in Oman over the last five years presents an exception to the rule.

An Iveco and CNH Industrial subsidiary, Astra’s history in heavy vehicles dates back to 1946, when the company was responsible for converting military trucks into civil vehicles.

“The true roots of Astra are in the conversion from military vehicle technology to civil. The brand then moved into the construction or heavy quarry sector, and the dumper segment in particular,” explains Pierre Lahutte, Iveco brand president.

“Today, Astra trucks are referenced by many departments of defence. You find them in Italy, but also Switzerland and Germany, and we signed a big contract with France. Here in Oman they are known to the defence department, so Al Fairuz was in this segment, and expanded into the civil business.”

It is hard to overestimate the role played by Al Fairuz Trading & Contracting in CNH Industrial’s success in Oman.

Al Fairuz Trading & Contracting is a respected and connected Omani company, with interests in the equipment industry as broad as they are time-honoured. It distributes 15 brands that ultimately come together to deliver a holistic construction and industry offering, catering to a plethora of end user applications.

Prior to Al Fairuz’s adoption of the Astra brand, the absence of heavy trucks remained as a rare weaknesses in its othwerwise holistic product range. Now Astra complements CNH Industrial’s Iveco Defence Vehicles and Magirus civil defence brands.

Ashok Sudhakaran, senior GM of Al Fairuz Trading & Cotnracting, explains: “We started with Astra five years back. A foray into the Oman market with heavy-duty trucks was something that nobody had done before, and we have only gone from strength to strength to become the second largest seller of trucks in Oman.

“To be honest, we did not expect the Oman market to respond to us the way that it has done, because the truck market is a very closed in Oman; you have big players like MAN, Mercedes, Volvo, Renault, Scania — all of them — and Astra was new entry and an unknown entity and brand, so it took quite a lot of work from our side to establish the brand, and to get the customers to accept it.”

Today, there are an estimated 1,000 Astra trucks in the Oman market, distributed primarily to existing clients of Al Fairuz — hence the prominent role of the dealer in the story.

Lahutte comments: “It is complementary. Al Fairuz don’t just sell Astra trucks, and they don’t just sell Hitachi excavators or Sandvik crushers — they have a system. The strength and talent of this company is that they’ve brought a system to the construction market — assembling whatever they find that’s best and developing an appetising solution for the customer – that’s the source of their success.”

Sudhakaran returns: “Iveco-Astra has been very supportive of their mission to us in terms of the technical and commercial help that we get from them, and with that we have been able to far exceed even our own expectations.”
In 2015, close to one in three Astra models produced worldwide will be sold into Oman.

CLOSER INSPECTION

The feature that has led to the success is its extremely rugged design, with an extra heavy-duty chassis that is ultimately more suited to the temperamental road conditions of Oman, where highway can give way to off-road conditions in the blink of an eye. The standard Astra model and the most popular across the Middle East and Africa is the HD9 (HD for heavy-duty), but there is also the HHD9 for even heavier load capacity and special load applications.

“The Astra has a very specific, high-quality steel, straight chassis that is not limited by the typical legal constraints incumbent on heavy trucks in Europe. That’s what make it different from the standard truck brands used in construction,” explains Lahutte.

“In Europe you typically have very strict limits on weight, so you tend to develop trucks that are optimised for payload; but not for roughness. When you look at the off-road trucks from Europe, they are typically derived from on-road vehicles, and they are designed more to respect the road circulation circumstances of Europe than the operations of a frontier country like Oman — where you are literally still building the road infrastructure.”

European trucks are now largely designed to respond to stringent regulatory targets in terms of load capacity and fuel economy.

“They are much more sophisticated, but put trucks in a context where the road stops and they need to be as dependable as construction equipment,” highlights Lahutte.

“The Astra is like the ultimate fighter of trucks, a super heavy-weight, in terms of the conditions in which it is designed to operate. We say that where the road stops, Astra starts.”

PERFECT PARTNER

Al Fairuz as a company has been in the market for more than four decades as distributors of trucks, heavy construction equipment and machinery, including the popular but comparatively lightweight and diminutive Hino.

In terms of the strategy with Astra, Sudhakaran explains: “With the relationship that we had with the market, we pushed a couple of trucks to strong clients, like Galfar. We also have a relationship with the government, and we were also worked with them on a trial basis.

“Then based on performance, people started coming back and buying more. So this was the strategy that we followed: we had key accounts already with us, we were working with major companies, so it was not very difficult for us to move in and discuss the product.”

As CNH Industrial realised the full potential of the Astra brand in the Omani market, it quickly moved to develop an increasingly symbiotic relationship with Al Fairuz — fuelling itself with the feedback from the market.

Sudhakaran continues: “We started off with the previous series of Astra trucks, the HD8, and as soon as they were introduced, through continuous monitoring of performance parameters through the customers, we provided feedback to Astra — which helped them develop the HD9 that we are now selling.”

He adds: “Astra has been very perceptive, and most of the suggestions that we have made have been taken up by the designers at the company. Likewise, as we have grown with Astra, our feedback has become more and more important to them. Today, they immediately come back to us on any feedback that we give them to crosscheck it. So our relationship is helping the product as well as the customers — and that’s where our strength is today.”

ONGOING INVESTMENT

Al Fairuz is currently investing $12m to $15m into the development of new infrastructure for its service network, including a showroom, parts storage and a maintenance workshop, to bolster its sales and aftersales provision.

“Looking at 2016 and the Middle East market with respect to the current oil prices, it does look a little bit sceptical. So it may sound funny, but because people are getting more sceptical, this is the time to reflect on how we can strengthen our infrastructure and service provision to the customers,” says Sudhakaran.

“You will not find the majority of your customers planning to continue their investments into new equipment, so our customers are definitely looking to get more out of what they have — and so our investment in infrastructure is a key strategy.

“Oman has always been a very cost-conscious market compared to the rest of the GCC, and at least 60% of the customers we approach will talk about total cost of ownership.”

In terms of delivering value to the customer, Lahutte adds: “Here we bring the Euro III — so a regular engine with no complex exhaust gas recirculation or deposition system: a very efficient engine in terms of fuel economy — even though we know fuel economy is relatively cheap and not the issue — with excellent performance overall.

“As a group, Iveco probably has the best Euro VI solution on the market today, with selective catalytic reduction (SCR) systems rather than an exhaust gas recirculation (EGR) systems.

“At Euro VI, Iveco is the only brand delivering a full vehicle range where the engine is purely consuming fuel and producing power — and when you’re capable of doing that, your fuel economy is best at Euro II or Euro III standard — which is exactly what we are doing here.”

Fate of Fairuz

Over the last 50 years, Al Fairuz has established itself as a prominent Omani company, growing steadily and playing a pioneering role in the Sultanate’s socio-economic development. It was registered as a company in 1972, but played an active role in the country as early as 1960.

Prior to the reign of HM Sultan Qaboos, Al Fairuz Trading & Contracting exported wood from Oman to various countries in the Gulf region. From the early 1970s, the company then started importing water pumps, diesel engines, spare parts and other equipment for farmers, before expanding into the distribution of Japanese and European cars, trucks and heavy machinery.

The early 1980s then saw the emergence of Al Fairuz as one of the leading construction companies in Oman, engaged in infrastructure building projects, as well as the largest banana plantation in the Middle East.

Al Fairuz has diversified into boat manufacture, the fertilizer industry, fish processing and iron ore and copper mining.

At the same time, Al Fairuz has reinforced its equipment business by continuing to enter into distributor agreements with major manufacturers of construction equipment, heavy duty trucks and military vehicles.

Today, the company is well known in the Sultanate for providing high quality products, supported by a strong after sales service and spare parts network.

The founder’s message states: “Under the wise leadership of HM Sultan Qaboos Bin Said Al Said, Oman is marching confidently into the 21st Century, with a vibrant economy that promises a bright future for all its citizens. Al Fairuz continues to be a crucial contributor in this plan.”

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