Is it time for MENA’s car retail industry to finally shift online?
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Is it time for MENA’s car retail industry to finally shift online?

The global pandemic has drastically accelerated digitisation in consumer-facing industries, offering vendors an opportunity to survive the current slump but also pave the way for sustained future growth.

DUBAI | Ahmed Gabr

Global car sales were forecast to shrink by 9.4% by the end of 2020. Many factors have contributed to this slide, including the COVID-19 pandemic and the subsequent decline in consumer purchasing power, plus weaker economies, a reduced need for transportation, and crashing oil prices.

The automotive market in MENA has naturally been equally impacted. For example, Saudi Arabia – which used to have one of the world’s fastest-growing motor industries between 2010 and 2015, had a harsh time in 2020. Between March and June, new car sales in Saudi Arabia decreased by 60%, and visits to showrooms dropped by 80%. This has had serious repercussions for the service and aftermarket sectors, with the average spend per vehicle declining by 25%, periodic maintenance plunging by 75% and spare parts sales slumping by 70%.

With the need to digitise being more important than ever - is it finally time for the region’s car retail industry to shift online?

It’s certainly something to think about; looking at other markets, online tools have come to the rescue of ailing auto dealers. In the United States, where car sales are estimated at $840 billion, online transactions still account for only around 1% of the total, but their share has started to grow following COVID-19 restrictions.

"With coronavirus, we've seen an additional shift in the desire to purchase vehicles online," Ernie Garcia, CEO of Arizona-based online used car retailer Carvana, told Reuters last August.


Some MENA auto retailers are beginning to recognise the value of online tools, suggesting that the “handshake deal”, which has long defined the regional marketplace, might not be the only way to do business in this sector going forward.

Last June, Mohamed Yousuf Naghi Motors (MYNM) launched its first-ever virtual showroom for BMW cars in Saudi Arabia, allowing customers to remotely explore and compare models from both new and certified pre-owned car collections. MYNM managing director Mark Notkin has described the move as “a step in the right direction.”

Kia Motors followed suit by launching its “Live Stream Showroom” service, which offers personalised real-time video tours of select Kia dealerships in Saudi Arabia, Qatar and Pakistan. Customers can schedule live one-on-one sessions with a company representative to have their questions answered. Kia is expected to expand the service throughout MENA.


Seeking to lure wary car owners back into service centres and fuel the car aftermarket, Nissan started offering a new door-to-door service in Saudi Arabia through a dedicated mobile app. Customers can arrange to have their vehicles picked up from a location of their choice and then delivered back to their doorstep serviced and sterilised.

“Vehicle maintenance trends are becoming more convenience-oriented, and customers are now more inclined to avail [themselves] of services at their home or at their workplace rather than invest time in a service centre,” Subhash Joshi of market research group Frost & Sullivan told a UAE daily.

It is still early to assess properly customer adoption of the new technologies offered by car retailers in the region. A recent study by YallaMotor surveyed 1,200 respondents from the GCC countries about their car buying preferences after the COVID-19 pandemic. According to the results, 60% of the car buyers polled would now prefer to buy online rather than from a showroom.

This might provide an early indication of shifting consumer and business attitudes in the region for a market segment that has long been resistant to online sales, but it is hard to predict whether this shift is here to stay.

“Although we are unsure how long this uncertainty will last, we hope that these initial results will help guide the automotive sector towards their next plan of action,” YallaMotor general manager Jorge Bialade says in a statement.

Irrespective of the long-term success of these newly launched online tools, the changes sparked by the pandemic and declining sales have pushed the auto industry to explore ways of reinventing its traditional experience. As a result, the post-COVID car marketplace in MENA is likely to differ from the one in pre-pandemic times.