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Wed 6 Jul 2011 08:40 AM

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Wealthy Arabs set to buy record number of luxury cars this year

Sales of high-end cars in Gulf region seen to grow 20% despite political turmoil in Middle East

Wealthy Arabs set to buy record number of luxury cars this year
(Images: Supplied)

The Arabian Gulf region has become a hot market for luxury cars, even as political turmoil grips other parts of the Middle East.

With demand stoked by profits from oil prices near $100 a barrel, wealthy Arabs are set to buy a record number of vehicles from the likes of BMW’s Rolls-Royce, Fiat’s Maserati and Porsche SE this year.

Sales of high-end cars in Gulf countries, including the UAE will probably grow 20 percent this year, more than double the overall rate of 9.7 percent in the segment, according to data from IHS Automotive.

Buying luxury cars in the Gulf is “an extension of the ego,” said Pierluigi Bellini, associate director of Middle East research at IHS Automotive in Milan. Wealthy consumers like “showing off” more than Europeans and Americans, he said.

The sales spurt will probably continue, with IHS forecasting the market will more than double from 2010 to 2015, compared with a 51 percent increase globally.

The upbeat outlook for much of the Gulf contrasts with other areas of the Arab world, where uprisings have overthrown governments in Egypt and Tunisia and sparked a civil war in Libya and riots in Syria, Bahrain and Yemen.

 “Thanks to the UAE, we were able to counterbalance the slowdown in other parts of the region,” said Umberto Maria Cini, who oversees the Middle East and Africa for Maserati. If the sales pickup from May and April continues, the Fiat unit may “run out of cars” in the next few months, Cini said, predicting a gain of more than 10 percent for the rest of 2011.

Porsche is asking UAE buyers of the Cayenne SUV to wait at least three months to get delivery, while a 911 sportscar may take as long as seven months to arrive, George Wills, acting managing director for the region said in an e-mail. He predicted growth of at least 10 percent in the second quarter.

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Rolls-Royce’s sales through May surged 74 percent in the Middle East and Africa, with the UAE the largest market. BMW- brand deliveries jumped 42 percent in Abu Dhabi in the first quarter and 38 percent in Dubai, powered by high-end models like 5- and 7-Series sedans and X5 and X6 sport-utility vehicles, said Reiner Braun, BMW’s regional sales chief.

“High oil prices generally translate - with a lag - into second-round wealth effects,” said Philippe Dauba-Pantanacce, senior economist at Standard Chartered Bank in Dubai. “In this case, there is a marked bias toward luxury consumption.”

In addition to the growth, the mark-up on customised and special-edition vehicles is attracting investment from ultra- luxury nameplates. Bayerische Motoren Werke AG’s Rolls-Royce has its biggest showroom in the world in Abu Dhabi. An indoor Ferrari theme park, big enough to fit seven football fields end to end, opened there last year.

Maserati plans a showroom in Iran, where it once served Shah Reza Pahlavi, by early next year. Cini predicted that the country will become the brand’s second-largest in the region after the UAE

“In the Middle East, we see richer versions and customizations, which makes it a better market for margins for luxury-car makers,” said IHS’s Bellini. “It’s a region that traditionally likes luxury cars, making it a good bet.”

An inclination toward extravagance spurred the development of models like the Bugatti L’Or Blanc [photos], which is equipped with porcelain accents from Berlin-based KPM, a 248-year-old company that supplied King Frederick the Great of Prussia. The €1.65m ($2.4m) special edition of the Veyron Grand Sport, which features a caviar tray in the center console, was created by Volkswagen AG’s supercar brand for an unidentified Abu Dhabi businessman.

Then there’s the Rolls-Royce Phantom Coupe Baynunah with a price tag of AED2.05m ($558,142). The model features a leather rooftop and a color-combination inspired by the desert. That followed the Yas Eagle, the first Rolls Royce with a matte exterior color for AED1.95m.

Maserati introduced the limited edition GranTurismo S MC Sport Line for the Middle East in 2009, after selling half the global allotment of the AED685,000 Quattroporte Collezione Cento in the region.

The region’s wealthy aren’t satisfied with owning a limited edition of one of the world’s most elite cars. Many want something even more exclusive.

“There’s more customisation here than other parts of the world,” James Crichton, Rolls-Royce’s director for the Middle East and Africa, said in a phone interview. “Middle Eastern customers want to create something individual that’s unique to them. Other buyers are more standard and less adventurous.”

To grant the wish of an Abu Dhabi buyer, Rolls-Royce crafted a poetry verse out of diamonds, gold, and leather for the interior of a $450,000 Phantom extended wheelbase model. The Goodwood, England-based carmaker also created a color called “Astro Silver Matte” for the exterior of another Gulf Phantom. Such wishes aren’t free. The paint job cost $23,000, according to Rolls-Royce’s Crichton.

While sales volumes are relatively small, representing just 1.7 percent of global luxury-car deliveries last year, buyers here make it a lucrative market.

“Our top customers here change their cars every year,” said Kadhim Alhelli, Rolls-Royce brand manager at Abu Dhabi Motors. “Some even more often.”

 

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Ahsan 8 years ago

You Can't expect less from them. They would like to be intentionally not caring for the future of this region. Buying luxury cars is the best thing for them to have peace of mind. For now only!.

UAECAR.COM 8 years ago

When you see how much they pay for some of the numberplates the price of the cars look pretty cheap ;)