In recent years, Middle Eastern sales of Ferrari and Porsche grew faster than in the US and Europe. Aston Martin, now partly owned by Kuwaitis, is also focusing its attention on the region to help boost its sales. Even car manufacturers that are traditionally considered to fall into the ‘affordable vehicle’ bracket have been catching up with their luxury market segments, following the money trail. As an example, sales of luxury Hyundai cars rose by 12-15% last year, while in 2006 sales of smaller cars had dropped by 15%. A June 2008 Reuters report quoted Julian Millward-Hopkins, Middle East and Levant press manager for German luxury brand Mercedes-Benz, as saying, “If you look at sales worldwide it is a pyramid. At the bottom are smaller cars and at the top are luxury sports cars. In the Middle East it’s an inverted pyramid. Luxury cars do proportionately better here than elsewhere.”
While in Gulf economies sales of luxury cars are driven by high growth rates, high revenues, low gas prices and low tariffs on imported cars — even ones that fall into the higher end bracket — in Syria, Lebanon and Jordan the situation greatly differs. In Lebanon, Hadi, the owner of a brand-new Ferrari, explained that he imported his car from the Gulf and is using a UAE license plate in order to avoid the high taxes imposed by the Lebanese government. “My car was worth $180,000 and I would have paid $100,000 more if had opted to buy it locally,” he said. Hadi believes that many Lebanese prefer to purchase their luxury automobiles from the Gulf and re-export them to Lebanon to avoid a high mark-up on the car value. The same scenario can be found in Jordan and Syria, where car dealers said that taxes imposed on cars could vary from 80% to 175% of the car value, depending on the type of car, number of options and size of the engine.
Luxury sells
In Jordan, Zaid al-Abdallat, general manager of the Abu Khader group, exclusive dealers for Cadillac, GMC and Hummer, said that nevertheless he has been enthralled by the rising demand for luxury vehicles such as the CTS, in spite of unfavorable conditions such as soaring oil prices and high tariffs. He believes the luxury market is equally divided between four-by-four models such as the Cadillac Escalade and luxury sedans, with all cars imported fully loaded. “We have witnessed double-digit growth in the luxury segment in the last few years. Cadillac remains, however, a value driver, more than a volume driver for our company. Although gas prices have affected the automotive sector to a certain extent, new technologies applied to American cars, allowing for dramatically reduce fuel consumption as well as changes in consumer behavior — with most of our clients owning more than one car — have reduced the adverse effect,” added al-Abdallat. In Jordan, sales of luxury vehicles constitute 11% of total sales.
In Syria, Bassam Saadi, general manager for Bahi Motors, exclusive dealers for BMW and Mini Cooper, said that buyers of luxury cars have been relatively immune to the increase in the price of oil, which in any case is highly subsidized. Omar Shallah, managing director of Rakhaa, Nissan dealers in Syria, described the luxury segment to be essentially driven by fashion trends, contrary to what can be seen in the entry level car category. “Our luxury models, starting with the Murano, tend to witness high growth levels essentially in the first year after their launch. Luxury vehicles seem to have short life cycles here in Syria, and still lack customer’s brand loyalty.”
