Qatar-backed Volkswagen targets Middle East SUV market

Supplied

• VW aims for 5% of region’s SUV sales
• Style remains popular with buyers
• 1m cars sold per year in GCC and Jordan

Volkswagen Middle East aims to nearly double its share of sport utility vehicle (SUV) sales in the Gulf and Jordan, its regional chief, Matthias Ziegler, told AGBI.

The German company, the world’s number two automaker by vehicle sales, and 10 percent owned by the government of Qatar, has numerous sub-brands, including Porsche, Audi, Bentley and Skoda.

For VW-badged vehicles, its regional focus is on its SUVs, which incorporate elements of road-going and off-road automobiles. The SUV range includes the T-roc, Tiguan, Teramont and Touareg.

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Ziegler, who is managing director of Volkswagen Middle East, said: “Customers love SUVs due to [their] flexibility, versatility [and] higher seating position.

“Our approach is to have a very lean portfolio. I love product efficiency. It doesn’t make sense to launch a car that only sells 100 units.” The minimum volume to launch a new model in a country is 1,000 units, he said.

VW aims to claim a 5 percent share of new SUV sales in the Middle East region within three to five years. Currently, it has a share of about 3 percent, Ziegler said. The company’s Middle East division covers the six-country Gulf Cooperation Council, plus Jordan.

Combined, around 1 million new passenger vehicles are sold each year across these territories, of which approximately half are in Saudi Arabia, Ziegler said.

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VW is competing to win more SUV market share against Chinese automakers who are expanding aggressively worldwide, especially in developing markets.

Chinese carmakers took about 12 percent of new car sales in the GCC last year, up from less than 1 percent in 2017. They were winning market share initially from South Korean brands such as Kia and Hyundai, and now increasingly from Japanese, American and European manufacturers.

Ziegler, who worked for VW in China from 2017 to 2021, said: “I respect how quickly they learned and what they can offer, but when it comes to engineering, it’s a completely different experience driving with a German-engineered car, because we control the development cycle from start to end.

“We have a lot of in-house components that are engineered, manufactured and assembled completely by Volkswagen, so we have control along the whole value chain.”

Subscription-based services are becoming increasingly commonplace across a host of industries, such as entertainment and communications. This is also changing consumers’ car-buying behaviour, with leasing taking a growing share of new car sales versus outright purchases, Ziegler said.

At the end of the leasing term, customers can either extend the contract, quit altogether, or, as is more common, get a replacement, new VW instead. Prior-leased VWs are sold second-hand by the company’s in-country dealer.

“People are asking more and more for attractive leasing conditions ,because they want to have only a commitment for maybe two years,” Ziegler said.