Lebanese auto dealers have had to handle a mixed bag of issues in 2009 as they worked to retain last year’s 45 percent rise in sales.
For the dealership Bassoul-Heneine, BMW sales were up 56 percent this year, the second highest growth for the German brand in the Middle East after Syria, with sales up 94 percent on 2008 — a stark contrast to the region, where sales dropped 8 percent in 2009.
“Our business plan was to sell 680 BMWs, but we will reach 1,000 units. In 2007 we sold 512 units, 624 in 2008 and this year until October, 824 units. For all our brands, our [total] target became 2009 units in 2009, and we’re going to do that,” said Nagy Heneine, general manager at Bassoul-Heneine, which is also the dealer for Mini, Alfa Romeo, Dacia and Renault.
Heneine attributed the rise in sales to the new X6 Sports Activity Vehicle, the broad range of BMW models and purchases by rental companies.
“The X6 had huge success. We were not expecting this and had budgeted on 120 cars at the beginning of the year, but we’ve sold 270 units as of November,” he said.
Fleet sales to car rental companies also boosted sales, since the summer months saw a boom for the sector.
“In this country nothing has changed, yet everything is upside down,” said Negib Debs, brand manager of Mercedes and Smart dealership T. Gargour & Fils.
“Usually the summer is the worst time [for sales] but in 2008 [they were] our best months ever, and this year too. And we are not selling cars to Saudi [summer tourists], but to Lebanese,” he added.
US troubles didn’t knock sales
For American brands, 2009 has been a tough year. United States manufacturers sought financial aid from their government and underwent severe restructuring of administration and production.
“At the beginning of the year we were a bit skeptical [about the year ahead] but after 10 months, sales are almost like last year,” said Cesar Aoun, manager of the Chrysler Car Group of Chrysler, Jeep and Dodge, which reported 25 percent growth in 2008. “This is despite everything the US brands went through — near bankruptcy, Chapter 11 [of US bankruptcy law] and all the turbulence.
“But this did affect the brands’ images and consumers were hesitant to buy US, [which is] why US brands have dropped by 16 percent to date in volume, although we will close the year at the same level as 2008.”
“However, compared to the rest of the Middle East, we are the only country maintaining the same level [of sales] as last year,” he added.
Ford is another American name to have seen an up-tick in sales, from 75 units overall last year and 63 units at end-October 2008 rising to 101 units sold this year at end-October.
Aoun said that Jeep sales have performed the best for the Chrysler group, followed by the Chrysler and Dodge brands.
“The four door Wrangler has been a hit, and the four cylinders have been doing well, as people are keen on engines with low fuel consumption. Sales are positive despite all the turbulence and we are optimistic about the Fiat partnership next year,” said Aoun.
Sales saved by advertising
Although sales have been buoyant this year, companies have had to invest heavily in advertising to entice customers; with mother companies having a tough year financially, Lebanese dealerships have had to dip into their own reserves to maintain ad spending.
“The marketing budget was cut, and we had to spend more from our own budget and move aggressively in offers and margins,” said Aoun.
But for companies like T. Gargour & Fils, it has not been the financial crisis that has affected marketing so much as the degree of advertising in Lebanon that assaults the public, on billboards, in magazines, in newspapers and on television.
“Advertising is increasingly crowded, so whatever you do has no effect, due to the mass out there. We are now focusing more on [organizing] special occasions and test drive events. And maybe we’ll try to shift to more below the line ads by [direct] mailing and by being more niche orientated,” said Debs. Advertising is shifting from the traditional product-based approach to focus on after-sales provisions and customer service.
“We are positive and are marketing very actively to position ourselves outside the box with the Jeep brand, improve customer service and at the same time have aggressive sales and pricing,” said Chrysler Car Group’s Aoun.
Middle class sales dip
While Lebanon appears to have weathered the global financial crisis without suffering major damage, the crisis has affected consumer habits — as have higher fuel prices, rising in cost this year to a dollar a liter.
Out of the three consumer layers in Lebanon — mid to low income, medium to high, and luxury consumers — it is the middle layer that has been “really affected,” said Fayez Rasamny, vice chairman of Rymco, dealer for Nissan, GMC, and Infiniti.
“The SUV consumer, who has been more affected by the financial meltdown, held off purchase decisions, whereas the Nissan Sunny buyer still needs a car,” he added. As a result, SUV sales have been fairly stagnant across the board, with sales strongest for sedans.
“Lebanese have not been affected much by the crisis but are conscious of fuel consumption and there is a trend for smaller cars,” said Aoun. “The SUV segment is [quite] stable, although not up much. People want small cars but also need to fit five.”
Smart cars, part of the Mercedes-Benz group, were hoping to tap into this market for smaller cars, but it has been a perception problem to shift units, said Debs.
“Customers don’t perceive the Smart S42 as it should be — it is a very safe car, able to crash into say an SUV without even a break in the windshield,” he said. “People have the notion that a small car is not safe, but it is expensive, at $19,000, because it is safe. However, we’re still selling 30 to 40 units per year.”
Italian opulence
Italy’s Lancia returned to Lebanon in November with the Delta, a 1.8-liter mid-size car, distributed by G.A Bazerji & Sons. A new version of Lancia’s Ypsilon is expected in 2010.
“Lancia interrupted production of mid-range cars since 1997 for a decade or so, and so was out of the Lebanese market,” said Managing Director Nabil Bazerji. “We are very optimistic, provided the situation in the country [remains] positive.”
G.A. Bazerji & Sons is also the distributor for Maserati, which saw sales grow by 75 percent from 8 units in 2008 to 14 units in 2009. All sales were to Lebanese, which Bazerji put down to confidence, unlike in the Gulf, where luxury sales have dipped 30 percent.
“The Gulf is a balloon, it was in good health for 30 years during which Lebanon was at war and in recovery,” he added. “Give Lebanon a chance, have normal production and everything will follow. Then we can compare the two regions.”
Association of Car Importers in Lebanon (AIA)
New cars registered in Lebanon by AIA members in 2009
