Al Naboodah Group plans further global expansion
Buti Juma Al Naboodah, deputy CEO–commercial, Al Naboodah Group Enterprises, speaks to PMV Middle East about the company’s 60-year milestones, readiness for change and market development plans
A 60th anniversary is a defining moment in a company’s journey, especially when it has been shared with the founding and growth of its country. In the last six decades, Al Naboodah Group has grown into one of the biggest diversified conglomerates in the UAE.
Founded in 1958 by brothers Saeed and Mohammed Al Naboodah, the Group started with trading in agricultural machines before expanding into construction, travel and real estate in its first two decades of operation.
In 1979, Swaidan Trading was established, and since then, it has become a multi-brand distributor in the commercial vehicle, heavy equipment, automotive, motorcycle and agriculture sectors. Milestones during the next four decades included an exclusive partnership with Goodyear tyres, expansion in the construction business with MEP and specialist services.
In 2016, Al Naboodah Group Enterprises (ANGE) was established to undertake the management of the company’s operating businesses.
Currently, ANGE represents a diverse portfolio of global brands through its heavy equipment and commercial vehicle divisions, such as Terex, Kaeser, Sennebogen, Sacme, Clark, Hubtex, DAF, Peugeot, Maxus, Great Wall, Ashok Leyland, VDL, Sunwin, and Goodyear.
Looking towards the future, Buti Juma Al Naboodah, one of the third generation leaders within the Group is spearheading an expansion strategy for ANGE’s commercial business beyond the UAE. Having made a mark in Oman and Saudi Arabia with its commercial vehicles, electrical, and travel businesses, and spreading its wings as far as Vietnam, the Group is exploring market entry in African and Asian countries.
In 2016, Swaidan Trading, which supplies buses to the RTA as well as a significant portion of the school market in UAE, expanded its business into Oman with the sale of 40 buses to the Oman National Transport Company. The success of ANGE’s commercial vehicle business in Oman has presented new opportunities. It is now the company’s most promising growth market, followed by Saudi Arabia. In 2018, ANGE will expand its Oman business with an agricultural division.
In Vietnam, Al Naboodah International Company is the sole importer of Harley-Davidson motorcycles. In 2017, the company added the Royal Enfield and Triumph brands to its portfolio.
“As an established player in the UAE, we cannot rest on our laurels. We see ourselves as a 60-year young company filled with pride and yet humble by accepting that there’s a lot more achieve in the future. We want to replicate our success in other markets. As ambitious as we are, we cannot enter all our target markets at once. So we rely on market research to indicate gaps in offerings and timing of entry in new markets. For example, we entered Saudi Arabia with the electrical and travel business, and Oman with commercial vehicles. We entered Vietnam as a 100% foreign owned company with motorcycle brands. In future, we’d like to expand into Africa because of its huge opportunities,” says Buti.
Swaidan Trading is a leading supplier of school buses in the UAE.
Reminiscing the early days of doing business in the UAE, Ajit Kumar, COO, commercial, transport, and electrical divisions, Al Naboodah Group Enterprises, points out the company’s path forward will maintain and reflect the steely resolve and ambition of its founders and build on their entrepreneurship drive.
“During the early years of the company when local industries were underdeveloped, international companies selected local partners based on their entrepreneurship qualities and pioneering abilities above their business acumen. We could only provide our long-term commitment, which later translated into trust and strong partner relationships. Those qualities helped us enter into strong business partnerships that changed the course of our company,” says Ajit.
ANGE grew with the rapid growth of the UAE economy and took investment decisions based on long-term opportunities, which the company found in industries such as agriculture, construction, power and logistics.
“We started by catering to local requirements. Every vehicle we introduced at the time was aimed at solving basic transportation problems. We also realised that there’ll always be demand for moving goods and people, which will drive the public transportation, logistics and construction industries,” says Ajit.
Initially, one of the company’s biggest challenges was to acquire the right products and talent to cater to increasing market demand. Now, it’s faced with a wave of business agility challenges with the emergence of new technologies, regulations, and customer demands.
“Factors that will affect the introduction of new vehicles and their utilisation will be regulations for higher efficiency and low emissions. Alternative energy has already taken off in some form or the other in many developed countries. With regard early adoption, it’s a question of market expectations and government regulations. As the UAE market matures, we expect new regulations on axle load, passenger capacity, minimum seating capacity and emissions, taking into account passenger comfort, safety and the environment. We’re taking all the necessary steps along with our partners to ensure that we’re staying ahead of these regulations,” says Ajit.
In 2017, the Roads and Transport Authority (RTA) launched the test run of a VDL bus compliant with Euro 6 standards. The six-month trial operation assessed the economic feasibility and environmental benefits of the bus by examining the reduction in carbon emission rate, engine efficiency, and maintenance costs.
“We’re the first company to introduce Euro 5 and Euro 6 compliant vehicles in the UAE. We expect Euro 4 emissions standards to become mainstream. There will be an initial delay in adoption due to slight increase in costs and technology upgrades required for compliance. At some point in the near future, Euro 3 will be phased out around the world and replaced with Euro 4 compliant vehicles. Every on-road vehicle that we import from this year will confirm to either Euro 4 or higher standards,” says Ajit.
Ajit Kumar, COO, commercial, transport and electrical divisions, Al Naboodah Group Enterprises.
Ajit praises the UAE government for pioneering and driving the adoption of these technologies. According to him, the government strategy gives UAE companies the advantage of having a clear direction for sustainable mobility and working towards early market adoption.
“The government itself is the biggest driver of the sustainable mobility agenda. UAE government agencies have started testing electric and autonomous vehicles for deployment in passenger transportation. Public transport and school bus fleets in the UAE boast the most advanced, energy efficient and safe vehicles in the world. This has been possible because we had the opportunity to engage with the government early on to identify challenges specific to the Middle East region and determine the right specifications for the buses. Accordingly, our partners incorporated our suggestions for product development. As a result of these developments, we have become the go-to-for public and school transportation in the Middle East region,” says Ajit.
Contrary to the trends affecting vehicles, tyres remain a steady growth market for ANGE, unaffected by whether vehicles become more emission-free, hybrid or all-electric. Looking beyond product features, ANGE is expanding its distribution network and offering tyre and fleet management solutions.
“We are pioneers in offering tyre management solutions. The conventional approach, which was to sell a tire suited to vehicle, has changed to educating customers about how tyres can mitigate risks and save costs. Product features are evaluated according to how they address customer concerns such as cost per km and total cost of ownership. We’re taking this a step further by helping customer focus on their competencies. They should be in a position to carry out their core business activities without worrying about their vehicles, performance or costs. We take all such responsibilities as per our service level agreements,” says Ajit.
Anticipating future market trends, Ajit elaborates on how the company is preparing itself to become agile and futuristic.
“We see artificial intelligence, electric and autonomous technologies disrupting the automotive industry, which in turn, will affect our business. The fast pace of technological development will require our business models to be transformed. The current processes and skills may not be relevant in the near future. Therefore, we are asking big questions like how relevant would we be in a few years and how we could evolve into a futuristic company. There could be a time when customers will need less maintenance as the reliability and efficiency of vehicles increase to such high levels. Artificial intelligence will change the way we do business, our interactions with vehicles, customers, and partners throughout the supply chain. To be prepared in advance, we’ve set up incubation hubs within the company that have the responsibility to figure out how new technologies can fit into our business and how they can help drive our business,” says Ajit.
This is also driving the group toward an organisational transformation required for customer relationship management.
“One of the big lessons we learnt over the years is that customer engagement is the key to success. Dealers tend to sell vehicles and forget about real customer needs. With growth in customers, we learnt how crucial it is to nurture relationships and support them continuously. In the B2B business, people-to-people relationships count above all other interactions. With customer touchpoints increasing across physical and digital platforms, it’s more important than ever to monitor their needs and feedback and engage with them. There’s a clear mandate for the entire company to enhance customer engagement across all touchpoints. This has required us to upgrade our IT and CRM systems, improve our internal processes and staff and customer training to be able to achieve our future CRM goals,” he explains.
As a multi-brand dealership that aims to become a complete solutions provider, and with no shortage of companies knocking on its doors, ANGE remains highly selective of its brand portfolio. The company is talking with its current partners to expand into other GCC markets as well as new manufacturers to enter the GCC.
“We continue to seek new opportunities, partners and products relevant to today’s market needs. We evaluate potential partnerships on the basis of several criteria, namely the quality of products and how they could address gaps in the market. It is equally important that we should be able to enhance a product’s value proposition and help achieve a partner’s targeted market share,” says Buti.
“A 60-year presence in a market gives us the leadership advantage and expertise that other companies don’t have. Products will come and go, but the partner relationships we’ve nurtured will help us drive new growth opportunities in global markets. I envision Al Naboodah Group to be not only a UAE company but a global company.” says Buti.