Al Futtaim Honda makes up for delivery disruptions

There's nothing like a crisis to help people shift focus to options that may be available. The car dealership Al Futtaim Honda has done just that and is now reaping the benefits. Since June it has introduced a financing programme that eases the payment burden on buyers. It has put in place a used-car scheme for Honda while going after the corporate fleet market. All three initiatives have come in handy as the dealership deals with delivery disruptions caused by the March tsunami in Japan that completely disrupted Japan's automotive production capacities. This has forced local dealerships to think on their wheels, so to speak, in an attempt to create new revenue streams. "This year we could have surpassed the 2010 numbers for Honda in the UAE if we had the product availability," said Mark Kass, regional managing director at Al Futtaim Honda, which also handles the brand in Oman, Qatar and Bahrain. "The fallout of what happened in March set us back six months and we will not be back to full stock levels until the year-end. Only then will I have my house back in order. "At the same time, it has allowed us to spend more time on things we had forgotten about — like fleet, PCP (personal contract purchase) and used cars." In the UAE and across the GCC, the Honda marquee has not had much of a standing among corporate fleet operators, who have historically preferred the other Japanese labels. Kass believes the time is ripe for change, especially now that its most popular model — the Accord — will be shipped in from a plant in the US. "Whether the cars are produced in the US or in Japan, we want the models to appeal to fleet operators here," he said. "For many of these customers we did not have anything in the ballpark for some time. Producing the cars in larger numbers outside Japan makes it easier for us now. "We are not aiming for the rentals business; corporate leasing is going to be our target audience. And we are also prepared to take the products back." Fleet sales could make up 25 per cent of the dealer's volumes in the next two years or so, according to projections. But one thing will not change whatever the state of the market — Honda will not sell to taxi fleets. On used cars the dealership is seeing momentum. "Earlier, it's true we didn't embrace the scheme," said Kass. "What we are seeing now is it attracts buyers to the brand that we never had before — it brings people on the brand's ladder. Now, to come in and buy a City that is 12 months old for Dh40,000 is attractive." "We have been running the programme since June, and because of the constraints we had on new car deliveries, our used cars are selling as quickly as we can get them out there." By early next year, the used-car programme would have been rolled out to Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah as well. In line with all these plans, each of the facilities will get an extensive upgrade as the dealer bids to qualitatively enhance the customer experience. "We are talking about an A to Z redevelopment and by 2014 all our facilities will have been upgraded to the level we aimed for," said Kass. Successful strategy Sales of new Honda models in the UAE financed through the dealership's personal contract purchase (PCP) programme are getting the right numbers. Currently, such sales make up 17 per cent since it the programme was introduced in June and looks set to touch 20 per cent by the end of the year. One reason why Al Futtaim Honda fast-tracked the PCP programme was the decision by the UAE Central Bank to peg the maximum limit on vehicle financing to 80 per cent. After this came into effect in May, new car sales slipped significantly. PCP programmes offer buyers the option to commit to optimum monthly instalments for periods of up to three years.