Car market moves up a gear

Car sales in the Middle East are booming and marketing efforts have been accelerated as the competition intensifies. Richard Abbott gets under the bonnet of the automotive market.

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By  Richard Abbott Published  September 4, 2005

‘The ME, with its wide diversity of cultures, is a very sophisticated market with a range of very diverse demands’ Hani Wassim, marketing manager - advertising, for Audi Middle East.

The Middle East has never been big on public transport. Forget the planes and trains, this region loves its automobiles. Manufacturers will spend millions of dollars to make their car the one that motorists want to drive, which is why marketing is so crucial.

Data from Ipsos-Statex for June this year shows that ‘cars’ was the single biggest advertising category in the GCC, with US$25.2 million spent.

This figure is higher than the amount invested in advertising real estate, mobile phones or banking during the same month.

Motoring is big business whichever way you look at it — car manufacturers must promote their brands, dealers must advertise to the local community and rent-a-car businesses must fight for the tourist dollar.

And with Western markets becoming increasingly saturated by cars, the focus has shifted to the emerging markets of South East Asia, China and the Middle East.

New car sales in the Middle East are going through the roof, with manufacturers reporting sales increases of up to 80% year-on-year in the first quarter of 2005. And the upward trajectory shows no sign of stopping.

Hani Wassim, marketing manager – advertising, for Audi Middle East, says sales have jumped by about 60% for the first half of 2005 compared with the previous year.

He says the Middle East car market offers unique challenges compared to most markets around the world, especially Western Europe, which is traditionally Audi’s strongest market.

“The Middle East, with its wide diversity of cultures, is a very sophisticated market with a range of very diverse demands — from the highly economical car to the top-of-the-range luxury car,” says Wassim.

“However, the focus is very much on larger size saloons like the A8, which amounts to almost 50% of Audi’s total sales in the Middle East, SUVs (sport utility vehicles) and sports cars. This makes the market more comparable the US market for example.

“Relatively low insurance and maintenance cost make these trends more affordable than, for example,
in Europe.”

The glowing outlook is echoed by those working for motoring magazines.

“The market is growing in an
enormous way,” says Damien Reid, editor of Autocar magazine, which is
published by Dubai-based The Media Factory under licence from its UK owner Haymarket.

“Think about it. You really do need to have a car to get around here. And there is a large ex-pat market that is familiar with the industry.”

The market may only be a blip on the radar of the huge multi-national manufacturers, but sales are increasing to such a level that global executives are now being flown in for launches and complex PR campaigns are built around them.
Philip Moore, publishing director at Real Marketing Solutions, who publishes Middle East Car, says the demand is there — and so is the quality.

“There just aren’t any bad cars in the showroom,” he says. “It is boom time — there are no two ways about it.
“It is a real growth market. The Middle East automotive scene is experiencing large growth with sales records galore being broken by manufacturers. New vehicles are being launched all over the place.

“Saudi is a huge market and the UAE is very strong — for some manufacturers it is the largest. Iran is coming on stream as a major player.”

The boom in the automotive market has also been music to the ears of the exhibition industry. The Dubai Motor Show, to be held from December 12-16 at the Dubai International Exhibition Centre, is expected to see a record-breaking number of deals. Last year’s show saw deals in excess of US$20 million struck.

In the car-crazy UAE, cars was the second biggest advertising category in 2004, according to data from Ipsos-Stat, with a total ad spend of US$31.9 million, which was only topped by
advertising for real estate. Among the biggest investors were Nissan and Toyota.

It’s a similar story in Saudi Arabia, where figures from the Pan-Arab Research Center show that ‘vehicles’ was the third biggest advertising category in 2003, with spend of US$116.7 million. Chevrolet and Hyundai were among the biggest spenders. In Lebanon, cars was the ninth biggest advertising category, with a spend of US$6.9 million.

All of this demonstrates that marketing is an integral part of the business plan for car manufacturers. They need to know their audience and hit them with a targeted, relevant message that makes the car appealing.

Different types of car use different types of messages. At the lower end of the market value is important, while for some people safety is a key factor. For serious petrol heads, performance is the selling point — speed, durability and sex appeal.

TV is usually at the heart of a car campaign as the consumer can see the vehicle in action. Print and outdoor campaigns reinforce the brand message. Increasingly, ‘live’ advertising is finding its way into the media plan — cars parked in shopping malls, cinemas, exhibition halls, anywhere where there is a high consumer footfall.

“Marketing is hugely professional now,” says Moore. “For a new launch, they may take journalists abroad to test the car or they might do a regional event. They often bring in high powered executives to launch new brands, such as Carols Ghosn, head of Nissan.”

Autocar’s Reid adds: “Print media is the largest medium. There is a reasonable amount of billboard signage but not very much sponsorship.”

Audi’s Wassim subscribes to the ‘outside the box’ thinking that has steered some automotive advertising budget away from TV and into events and sponsorship.

“In times of increasing advertising cost, Audi has moved into a more focused and targeted advertising strategy using diverse channels, depending on the communication targets,” he says. “Depending on the target group and model, a sponsored sports event, for example, could create as much
impact as a direct mail campaign, for
example, for a limited luxury edition of the A8.”

Audi’s latest marketing initiative, the Vorsprung campaign, plays on Audi’s time-honoured slogan “Vorsprung durch Technik”, which focuses primarily on print advertising.
“However, we also tried new tools like a radio competition and online multimedia features,” says Wassim. “We are closely monitoring the results in order to make our future campaigns even more successful.”

But, as with many advertising categories, PR is beginning to become an integrated part of the communications mix, rather than just the obligatory “bolt on” at the time of product launch. Manufacturers talk to magazines and other media channels through an increasingly professional PR setup.

Nowadays, large manufacturers need to be capable of generating publicity when it is required. Audi’s Wassim says PR has become crucial to Audi’s business, especially in generating all-important test drive reviews. The company now has its own dedicated PR department.

“In a world virtually flooded with advertising, PR becomes increasingly important, especially for Audi,” he says. “PR not only allows a company to inform consumers about the brand and its products in a very cost effective way, it also provides consumers with an independent third party view.”

Motoring coverage in the media tends to focus on print — glossy magazines with images of cars in action, accompanied by test drive reviews and newspaper sections that are driven by new and used car advertising.

But while the market may be getting more professional in its marketing, magazine publishers in the Middle East are still hedging their bets.

While Western markets have seen the car magazine category spawn several niches, catering for everyone from classic car enthusiasts to young men who want to soup up their Ford Fiestas, this region still favours the ‘one size fits all’ approach.
The Middle East, it seems, is not yet ready for the multiple niche approach that has become the norm in markets like the UK and US.

“It is not as refined as Western markets and people aren’t as knowledgeable about their cars but they are enthusiastic,” says Reid.

“It is a testing market to gauge. On the one hand you have the people who just want a Nissan Sunny. On the other there are the serious car people who are into BMWs.

“In some markets you can focus on a niche but here you have to cover all bases, so we will have some features on dream cars and also a very well used classified section for used cars.”

Moore agrees: “The automotive publications in the Middle East tend to be more for the industry rather than the petrol head. Elsewhere it is for both.”

Censorship and rules on editorial content make it unlikely that the mix of sporty cars and scantily-clad ladies — used to great effect by magazines like the UK’s Max Power — will reach this part of the world. Instead, the emphasis is on practical advice.

“Publications like ours aren’t there to tear cars to shreds. It is about showing readers which cars might suit them,” says Moore.

The buyer has become more sophisticated. So the industry itself has become more sophisticated and the auto press has had to lift its game.

There may be talk of building new public transport networks in the Middle East but it seems that the car will be the star in the Middle East for many years to come.

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