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Tue 10 May 2011 06:39 PM

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France's Renault leads GCC growth in non-luxury cars

Analysts say volume car brands becoming more popular amid French firm's 214% Q1 growth

France's Renault leads GCC growth in non-luxury cars
(ERIC PIERMONT/AFP/Getty Images)

Renault is leading the march for volume car brands in the Gulf as analysts see a trend emerging away from luxury marques in the region.

The French car maker was the third biggest selling European brand in the GCC in the first quarter of 2011, with 214 percent growth year on year.

Business Monitor International said the soaring sales for Renault supported its view that the luxury brands' domination of the regional market was waning.

"BMI's view on the growing demand for volume brands in the GCC markets has been supported by Renault being named the fastest growing automotive brand in the region in Q1 2011 by the Middle East Automobile Council," it said in a new report.

"Its regional growth for the quarter has made it one of the leading European brands in several GCC markets, taking its place among the luxury brands that have long dominated," it added.

BMI also said it believed the Middle East was becoming a "focal point" of Renault's global strategy to move away from its reliance on Europe.

According to Katsumi Nakamura, Renault's executive vice president for Asia and Africa, the brand's return to Saudi Arabia and the expansion into Iraq are "of equal importance" in achieving the company's goal of 50 percent of global sales outside Europe by 2013.

A major factor in Renault's growth in the first quarter was its return to Saudi Arabia, which BMI said it considers a major growth market in the region, particularly for smaller cars.

The French carmaker became the leading European brand in Q1 after being back in the kingdom for just nine months, BMI's report said.

According to provisional sales data from Renault, Saudi Arabia was the company's largest market in volume terms in Q1, with sales of 1,091 units.

Achieving high sales volumes in growing markets in Q1 led to Renault becoming the third highest selling European brand in the GCC, behind BMW and Mercedes, making it the leading non-premium brand in the region.

BMI said that in some markets Renault outsold its luxury rivals to be the leading European brand overall.

This was the case in Oman, where it finished 2010 as the top European carmaker. It ranked third among European brands in Qatar, where it achieved growth of 378 percent in Q1, compared to the same period in 2010.

Renault's GCC dealership network is expected to grow by 45 percent by the end of 2011 as it looks to benefit from the improved sales.

In April 2011 Renault GCC took its first step outside the GCC, when it appointed a distributor in Iraq.

"BMI believes Iraq offers significant potential for carmakers, as relative stability is encouraging consumers to buy new vehicles," the report said.

In March, the Dubai Chamber of Business and Industry said in a study that important drivers of growth for the automotive market in the UAE would include the development of energy efficient and low-cost vehicles.

"While the demand for luxury cars is on the rise, so is the need for low cost vehicles required by budget consumers. In the future we could see cheaper vehicles with newer brand names gain market share in the UAE," it said.

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