Movement in the market: auto OEMs get active
Exciting times are ahread for the truck industry in the Gulf as OEMs continue to focus on developing their regional networks and product
Heavy commercial vehicles are a staple of the region’s logistics, transport and construction sectors in the region, and their consumption in the markets, unless buoyed by very specific projects, tends more towards constant and consistent activity as commercial fleets go through the cycles of obsolescence and replacement.
While this might not seem like the most appetising form of business during a global boom, at a time when many markets around the world are quiet the tangibility of the business associated with the renewal of large commercial fleets can prove alluring.
It is in this context that we see nearly all major truck manufacturers involved in significant activities to develop their presence in the market, whether by updating their product or by expanding or developing their sales and aftersales network in the region.
Among the most dramatic of the changes that we have seen over the last 12 months has been the activity of trucks brands shaking up and re-consolidating their distribution networks in the Gulf countries.
The UAE’s FAMCO held several 2016 events officially relaunching the Iveco and Astra trucks brands in Saudi Arabia under Orient Marketing & Trading Co. (OMATRA).
Both from and for the UAE, Swaidan Trading has begun distributing prominent European truck brand DAF Trucks, taking over the brand franchise from Al Tayer Motors, which, since 2014, has also been represented Ford Trucks.
While such actions are not at all unusual globally, until recently there have been precious few examples of big brands suddenly changing their partner in the GCC — in part because many brands signed binding distribution agreements when they first entered the region many decades ago.
Fast forward to today and there are plenty of examples of companies that for one reason or another would rather dispense with some of their regional partners, but for contractual reasons might find it difficult to do so.
Another step that several manufacturers have now taken in Saudi Arabia is the establishment of local assembly facilities. The first company to do this was Mercedes-Benz, which established a joint venture with E.A. Juffali & Brothers in 1974 for the production of commercial vehicles in Jeddah.
This year, however, the Volvo Group also saw the launch of the first Volvo and Renault trucks assembly line in Saudi Arabia, operated by Arabian Vehicles & Trucks Industry (AVI) in King Abdullah Economic City (KAEC).
In the increasingly cut-throat market, such measures help premium truck brands cut down on import tariffs and stay competitive.
One final dynamic observable in the region is the tailoring of trucks to local requirements. Over the last year, UD Trucks, Ford Trucks and Tata Daewoo have all released products that — they claim — edge just the little bit closer to the customer’s needs than the competition.
Whether or not it is true, the trend is a world away from the more ‘one model fits all’ approach of the past. It should, in theory, raise standards in the market, as the widening gulf between premium product and second-hand imports coaxes operators to choose performance over cut-price purchases.