Cypriots have ‘mania’ for premium cars
VW Group distributors Unicars have introduced their own financing scheme, Volkswagen Bank, to help a growing number of Cypriots buy a new car or upgrade to the next level of premium models.
“Premium car sales are doing very well, accounting for a 24-25% share of all new cars sold, rising to 40% if we include the used car imports,” explained Unicars CEO Alexandros Diogenous.
By comparison, premium cars in Greece usually account for 12% of sales, while even in manufacturer Germany, the market share is not as high.
Diogenous told the Financial Mirror in an interview that “Cypriots are gripped with a mania for premium cars,” sometimes at the expense of volume brands.
He said that all car sales have seen a downturn since October-November 2008 and that from the start of the year, the pressure on prices is downward, due to lack of financing in the market.
“Banks closed the tap from October last year to March this year,” he added, made worse with the abolition of pre-approved finance. But things started to pick up by April.
“That is when we started our cooperation with Volkswagen Bank, with a soft-introduction of the service and about 50 customers have so far opted for this financing scheme, which is currently being handled through Alpha Bank.”
Diogenous said that initially the ‘in-house’ financing started with Golf sales, as the benefits include a one-stop-shop and insurance from the Tseriotis Group subsidiary, TGA brokerage, agents of Commercial Union and Laiki.
“We plan to differentiate our product through value added services, while a competitive interest rate is not necessarily a criterion,” he said.
Diogenous said that other novel services in the future include the option for extended warranty for up to five years (from the standard three years) only in the case of new car purchases, while there is also a provision for the payment of any shortfall on the loan if a car is written off as a total loss, due to an accident.
AUDI BEST SELLER
Diogenous explained that the jump from volume cars to more expensive models started more than two years ago with a radical drop in prices set by manufacturers, like Mercedes-Benz, and a sometime vicious competition among dealers and parallel importers, including near-new used imports.
The same pattern followed with BMW lowering its prices, while the tax incentives announced in 2003 and 2006 gave a short-lived boost to all car sales.
Audi has increased its market share to 4%, aiming for a share of 6% next year.
The best selling models for Unicars are the A3 and A4, the A5 and Q5 in 1.8-litre and 2.0-litre versions.
“Among such premium brand prices, we might be the cheapest in the EU (excluding local taxes),” Diogenous said.
“We have sold seven Lamborghinis so far and maintain two specially trained service mechanics, as there are another 7-8 of these cars already on the Cyprus roads.”
The next brand to receive a strong campaign in order to boost sales is the new VW Golf that arrived in February, judging from the responses the company had from its ‘open days’ promotional drive in early May when 5,000 people visited the garage and showrooms and a total of 1,000 test drives took place.
“We had good results from the event,” Diogenous said, adding that one of the visitors was the winner of an all-expenses-paid trip to the Lamborghini factory in Italy who will be going next week.
The global financial crisis has also dictated that until the end of 2009 and early 2010, Unicars must put in a greater effort and host more events with smaller resources. Next on the agenda is a special event in Limassol for a single brand at the end of June, while another road show may be possible by the end of the year.
LEASING, NEW MODELS
To the disappointment of corporates that own large fleets, leasing still hasn’t started in Cyprus as long as the authorities do not accept writing off certain expenses in company books such as VAT and depreciation of the car value. “We still have a long way to go,” said Diogenous.
On the other hand, fleet managers are not prepared to undertake the hassle of buying, maintaining and then replacing cars.
“Which is why we can offer long-term rental through our sister company, Sixt, which is Number One in Europe in corporate and business leasing,” he said.
As regards the smooth supply of new models in Cyprus, Diogenous said that “all production issues (at VW Group plants) have been resolved and there are no long waiting lists anymore.”
Quite the contrary, sales in Germany are up 4% due mainly to the success of the replacement scheme taking old crocks off the roads.
“We need to do more in Cyprus as the three rounds of collection of old cars only involved Grade I cars (i.e. those falling apart). The scheme did not reduce any of the gas guzzlers from the roads,” Diogenous said, adding that it will not cost the state anything.
“The programme is self-financed because the subsidy for a new car purchase will mean higher tax revenues. The cost on the state is zero.”
Looking ahead, the Unicars CEO expects to see a new VW Polo in November, a new Seat Ibiza and the Skoda Yeti SUV, available in 1.2 litre with 105hp in 4X2 drive with automatic gearbox, as well as the top-of-the-range 4X4 2.0-litre Diesel.
“From Audi we will have the new A5 Cabrio, the A5 Sportback in October that will also come as a 4-door, and a facelift for the Q7 in September. By early 2010 we expect to see the new A8.”
For commercial fleets, the Golf Van will be available in September as a 1.6-litre diesel model “at very competitive price, output and consumption levels.”
Finally, as regards Unicars’ reputation in the market, Diogenous said that “we have been building up our after-sales service which is doing very well in all towns, and our oldest facility now is only three years old.”
