Buoyed by strong growth in region, GM revs up for more

US auto giant General Motors is not just outpacing the growth of the auto industry in the region, it is actually putting a lot of distance between itself and the rest of the competition while doing so. In the year to date, GM sold more than 103,000 vehicles in these markets and enjoyed double-digit growth each month. This compares with the more anaemic growth for the overall automotive industry in the region, which could close the year with sales of 1.2 million against 1.15 million last year. And GM is gunning for more. Backed by $200 million (Dh734.6 million) in investments by its dealerships, and more to come in network expansions and upgrades, the company has also reworked its retail strategy. The focus now and going forward will be on sales to individual buyers rather than emphasising heavily on fleet sales as it had in the past. This year, the results are showing through, with 70 per cent of the units sold being to individuals compared with 56 per cent last year. Earning market share "It's the key to sustaining profitability for GM and its dealerships in the region," said John Stadwick, president and managing director of GM's Middle East operations. "It's about earning market share rather than buying it through fleet sales." And GM hopes it will have the model line-up that will closely match what new car buyers are looking for. It has had a busy time with 15 model launches in the last 18 months and more to follow. "You have to continue to launch models that appeal to the hearts and minds of the buyer," said Stadwick. "And we hope to do that." Interestingly, Iraq is the second biggest market for the marque in the region behind Saudi Arabia, while the UAE is in the third spot. For 2012, the UAE car market is expected to grow by four per cent and GM hopes to derive sufficient volume gains from it. "Across the region, the key fundamentals that support growth for the automobile market are favourable — there's strong demand for oil globally and oil prices are holding up," Stadwick added. "It's also a fact that per capita car ownership in the region — at 181 per 1,000 persons — is much lower than in the US [800 per 1,000 persons] and elsewhere. That's a sure recipe for fantastic future growth." In the UAE, the ratio is 404 cars per 1,000, but in the rest of the region it's considerably lower. In fact, as a combined entity, the Middle East could be the second biggest automobile market after those of the BRIC (Brazil, Russia, India and China) by the end of the decade, according to GM projections. That GM will be there as a serious contender was unthinkable just two years ago as it slipped into bankruptcy and had to be rescued with US government support. Leaner and focused In the timeline since then, GM has made the transition into a much leaner organisation focusing solely on what it should know best — bringing out vehicles that sell. Its year to date sales in the US and China — up 20 and 14 per cent respectively to more than 1.6 million units in both — confirm that there is a broad buyer interest for its models. While the Chevrolet brand makes up more than 70 per cent of its Middle East sales, those of the luxury Cadillac models over the last year and more have come on quite well — so much so that sales have actually been ahead of projections, said John Stadwick, GM's regional head. "On some of the Cadillac models we ran short of the demand and we think Cadillac is finally hitting its stride," said Stadwick. In the year to date, the brand attained sales 11 per cent higher than in 2010, making the region one of its top-five worldwide. "We have focused resources on it and the brand is now well positioned to reclaim a fair share of the premium luxury end of the automotive market," said Stadwick. "It has as much to do with a broader range for the brand as well as the investments GM has made in the last two years to make it the luxury standard of the auto industry." Two models were introduced in recent months and will be topped up by two more in the next few weeks. "While I won't say that 2012 will be the breakthrough year for the brand, it will certainly be the one where it attains a certain momentum," Stadwick said. Standalone Cadillac showrooms are there in the UAE and Saudi Arabia, but the relatively small size of the other markets rules out the possibility of the lineup being introduced there. Saudi leads Saudi Arabia is by far the dominant market for General Motors in the region and accounted for more than 40 per cent of its volumes — of more than 103,000 units — in the year to date.