Interview with Thomas Milz about VW market position

We sat down with Mr. Thomas Milz - Managing Director of VW Middle East - to know about the current state of VW and whats in store for the future. Special thanks to Moe Shehada for conducting the interview.

Bestselling model in Qatar / GCC

GCC - I think next year as a first full year of the Tiguan 2016 is going to be the Tiguan model. The year after it is going to be a tight race between the all new Touareg (planned to be launched next year), the Tiguan (launched this year) and probably the new generation of the GTi. 

For 2015, in the GCC it was surprising for us, our best selling model was the GTi. Over 2,400 GTi units were sold, which is an all-time high. We could have sold more if we would have had more. Followed by the Touareg and then the Tiguan, Jetta and Passat pretty much had equal sales.

Qatar had a similar situation, Mr. Milz continued highlighting that the Tiguan in Qatar is very popular, but emphasized that the Jetta sold very well. 

Performance worldwide and market focus?

We can safely say that we do not focus on one market or another at all. VW in particular after what we have learned last year and what we caused in one of the market, we have to focus on our customers regardless of where this customer is and regardless of which market is the customer part of. Having said that, we do not have a focus market. From a general speaking, we have to see how markets develop and monitor their growth. What is important to us now and I am pretty sure we have learned this lesson is how do we focus on the customer needs and listen to the customer. At the end of the day if the customer is satisfied, values our product and we deliver what we promise that is that key for success – if that then we will equate to volumes that may make us the biggest manufacturer of the world. 

Future model roadmap in the GCC and approximate pricing of upcoming models

We are in a good situation because VW has invested so much in new products. We have 3 new cars each year. This year we have the GTi Clubsport we have the new Tiguan and we have just launched the new Passat. Next year you are going to witness the new Touareg and probably the 7-seater SUV which we have shown the concept so far, there will be more from an SUV point of view and the next generation of the GTi. Basically, over the next 2-3 years we are launching very competitive models for the main segments here in the Middle East.

Plans for facing oil crisis in Qatar / GCC

From a consumer perspective, first of all VW is known for lower fuel consumption. Therefore, it does not matter how the oil prices will affect fuel prices for the consumer. We are market leaders in Germany and in Europe were there are the highest fuel prices globally. Therefore, fuel prices are not a concern for us at all. I think it is more the overall economy. There are some countries within the GCC that are very well diversified already in terms of economy and not that much affected by the oil crisis. But then we have other economic situations like exchange rates which affects countries in the region. I think what is important is either countries here go back to sustainable oil prices to sustain their budgets or speed up diversification and reduce reliability on oil. Eventually there will be an end for oil.

Future of electric / hybrid cars in Qatar / GCC

We are having right now in Dubai a pilot with Dubai municipality, we supplied 10 Golf GT plug-in hybrid vehicles for them to test them in superhot country environment. We really want to make sure that we answer the needs of our customers. Right now the need is not really there for a hybrid because gas prices are very low, however, long-term we do see opportunities with plug-in hybrid. It is not going to be a pure electric vehicle, due to the superhot country requirements here. But defiantly there is a mid to long term opportunity for hybrid in the region.

Views on car market of Qatar v/s GCC

I think mid-term there is still some potential in the entire region. Qatar in particular for the investments and the 2022, there is a big potential here. Of course short term right now it is really hard to predict because of – as we all know – the very low oil prices budgets are tight, companies already laid-off people that is what we read on the news. It is going to be difficult in the next few months but I hope midterm for the Qatari Market we see a growth again.

Let us put it this way, the oil crisis did not affect our investment budget because we are ready for growth and we aim to conquest even more. We – at Volkswagen – in the last 3 years when I came here in October 2012, we managed an average growth of about 10% year over year with some instances hitting 30% growth in one year in our sales. I see for now a little bit of stabilization. The first half of this year will most probably be flat. However, we are continuously investing, as well as our partners, here in Qatar Q-Auto built a state of the art showroom, we have a brand new unbelievable service facility and a brand new body shop being built in the industrial area in Qatar. So investments from a budgeted plan towards customer satisfaction we do not sacrifice that at all. From a volume perspective I think the first half of 2016 will be tough no doubt about it. We will have our products like the GTi Clubsport, despite the market conditions, these cars are sold out. The GTi still two years after launch and we are in a demand situation. On vehicles like fleet for example we will see some challenges.

VW production for the Middle East? How VW vehicles introduced in the Gulf market differ from their counters in the European market?

That is one reason why we do not have VW’s full product portfolio here in the GCC. VW offers more products worldwide than we offer here in the GCC. We do a special “Superhot Country Testing”. Our cars have to deliver the same quality here than in Germany or elsewhere in the world in the superhot country requirements. A huge amount of dust all the time, and temperatures that exceed almost 50 degrees. When we say 50 degrees that can go up to almost 75 degrees interior. That’s how we test our cars and their interiors. Our cars are tested in the harsh environments of the desert left under the sun before they are introduced to the market. In many cases, unfortunately I must admit, our cars are launched later in the GCC countries than it is in Europe as the test cycle takes a little bit longer. We redefine the air conditioning, the engine cooling system and we make sure that the fitted finish and interior lasts in such environment.