Al Naboodah Group Enterprises and DAF Trucks explain how they each bring value to the recently announced partnership between the two companies, and what it means for the UAE truck industry…
DAF Trucks saw sizeable sales in the Gulf in the 1990s, until upheaval at home caused it to retrench its operations. In the last five years, however, the brand has been planning a comeback, with new dealers in tow in Saudi Arabia, Jordan, and now the UAE.
In the UAE, DAF Trucks has partnered with Al Naboodah Group Enterprises (ANGE), and it was at an ANGE event that PMV Middle East caught up with the both companies to discuss this dramatic re-entry into the region — a little over two decades since DAF trucks and buses were last major contenders in the UAE’s commercial vehicles market, when they were well represented in governmental fleets.
As Ajit Kumar, COO for the commercial vehicle division at ANGE, notes: “DAF trucks previously contributed significantly to the UAE economy. The first buses to be operated as UAE public transport 20 years ago were from DAF, and some of those are still in operation.”
DAF trucks were also sold to municipal fleets in the UAE in significant numbers, and when ANGE conducted a survey of the active population of the vehicles — which again dated back to the 1990s — it found 1,000 vehicles still being operated across the emirates.
Indeed, even in the absence of direct support in the region from DAF Trucks, the trucks that had previously been sold stood as testament to the hardiness of the vehicles.
The late 1980s and early 1990s, however, were a troubled time for DAF that saw it sell DAF Bus to United Bus in 1990, before filing for bankruptcy in 1993, following difficulties in the British market. The brand was then bought in its entirety by Paccar, the Fortune 500, US-based commercial vehicle manufacturer.
The subsequent decade saw DAF Trucks, under the aegis of Paccar, refocus its efforts in the European market. Michiel Kuijs, director of sales operations for DAF Trucks, says: “We have to be honest: we neglected the Middle East a little bit at the end of the 2000s, because the organisation was so busy with its ramping up of production in Europe.
“But a lot has since changed in the Paccar organisation: we now have clear focus on the Middle East — as demonstrated through our development of a dedicated product programme for the region.”
TAILORED TECH
This product programme for the region involves the distribution by DAF of heavy-duty variants of its LF, CF and XF lines, which cater to light and heavy duty applications — from urban distribution through to construction and long or heavy haulage operations.
Kuijs explains: “The CF is our top performer in general applications, and is suited to everything from garbage collection to bulk transportation and heavy duty work in the construction industry. Smooth roads or rough terrain, it’s all the same to the CF series, and the trucks are available either as tractors or rigid body chassis, in two-, three- or four-axle versions.
“The XF is DAF’s flagship truck for long-distance operations, and presents the best value proposition in the market today. It has the most spacious cab in the industry, offers superb comfort to the driver, and a low cost per kilometre for the operator.”
Ten years ago, DAF was one of the smallest players in Europe, notes Kuijs, but today — thanks to it refocused efforts — it now boasts a 16% market share in European markets. He adds that DAF is now the top tractor supplier in Europe, where it has won numerous accolades. Last year, DAF Trucks was named ‘Truck Fleet Manufacturer of the Year’ at the 2016 Commercial Fleet Awards in the UK, while the XF was named ‘Fleet Truck of the Year 2016’ at the separate Motor Transport Awards.
Now, sales in the Middle East are also growing, as Kuijs notes: “Jordan has been picking up the quickest. With the diesel prices being higher in Jordan than in the rest of the GCC, truck efficiency, uptime and profitability are important for them. Once we get the trucks in, the next deal is easy. We are very confident on the quality of the product and they have really proven themselves over the last four, five years.
“Initially in Saudi Arabia, we sold a majority of CF 85 4×2 and 6×4 tractors, but for the last two years we have seen the XF 4×2 tractors picking up as well. We have been trying to secure a foothold in the 8×4 concrete mixer segment as well, but with the construction market as it is, it is not a particularly good time to go aggressively after that segment.”
Nevertheless, looking at the various markets in the region from a broader perspective, he continues: “We’ve brought a full range of 4×2 and 6×4 tractor heads into the region, and we gradually want to extend that with the 6×4 and 8×4 rigids for the constructions segment.
“That whole range comes in an extra-heavy-duty version for the Middle East, with a high-strength chassis with full-length reinforcement: the steel pistons on the engines and the gearbox are bigger; the propshaft, air intake and exhaust are all different; and the cooling systems are also more efficient.
“We have steel bumpers on all local DAFs — again to reduce the downtime and total cost of ownership by having small damage or plastic bumpers falling off. So the product that we are selling here is made for this particular market.”
In terms of emissions, DAF Trucks can deliver a full Euro III range, although it will also be offering Euro V vehicles in the UAE, since the country officially transitioned to Euro IV in July 2017 and because, as Kuijs notes, the differences between Euro IV and V are technically quite marginal: DAF itself transitioned directly from Euro III to Euro V.
The DAF range can also be flexibly tailored to the end users’ needs, and Kuijs notes that customers can also opt for the XF chassis mounted with the smaller CF cab options, especially if they are worried about the increased cost of the larger XF cab, or if they wish to minimise air conditioning costs.
But he adds: “We see fleets used for long-distance haulage where two drivers live in the cab, and those are the fleets that are usually willing to invest in the XF. There are Saudi fleets where the drivers don’t have housing allowance, so they just live in the cab.”
PRIMED PARTNER
The rollout of regionally tailored products alone, however, would be of limited value without the support of the right distribution and service network in the UAE, just as in Jordan and Saudi Arabia. As to why ANGE was chosen, Kumar says it was the “long journey” and took “years of discussions” to persuade DAF Trucks that his teams had the necessary sales and aftersales network to facilitate the brand’s re-entry into the UAE market.
He notes: “It has been a challenge for us to meet their stringent standards, but the Al Naboodah Group is well placed to secure DAF Trucks the best possible market share.
“We have an extended aftersales facility across the country, and we are able to reach our in less than 30 minutes in any part of the UAE through our network of service centres and mobile service facilities.”
From the perspective of technical understanding and the servicing of the product, ANGE already has nearly a decade of experience working with DAF engines, which are equipped on the 518 VDL buses bought by the Dubai government in 2008 under a 10-year comprehensive maintenance agreement.
Kumar highlights: “We have been handling DAF engines for the past nine years. During this period, we have been continuously trained and supported by DAF as an organisation, and have been providing part and services to DAF customers, whenever required, even though we have not been the official DAF distributor.”
The VDL order, he adds, has “demonstrated the quality of the DAF engines”, with some of the engines nearing a million kilometres, with 50% idling time, and yet without a failure. He highlights: “That’s an amazing performance, for any engine, and it’s testament to the kind of products that DAF Trucks builds.”
And for when maintenance is required, ANGE is ensuring that 100% of fast moving parts and 95% of running parts are in stock and immediately available. The main exception to this being body parts, for which there is an air order programme being worked out with DAF to minimise any downtime.
Kuijs adds: “They have worked hard and made large investments, and the results are here to see for everyone: beautiful dealer facilities; a dedicated, eager, professional and fully trained DAF team for sales and service; a varied inventory of vehicles; and, a very healthy level of parts.”
As Buti Al Naboodah, the deputy CEO for commercial at ANGE, comments: “We have the same vision and the same understanding of where we want to go. The product quality of DAF Trucks is an added value to Al Naboodah, and with our professional team behind the product, both sides stand to benefit.
Despite the immediate challenges in the Gulf markets — given the disruption that lower oil prices have wrought on the heavy commercial vehicle segment in recent years — Kuijs continues: “For sure the market will comes back again at some point, and we want to get ourselves established, to make sure that our partners’ aftersales is perfect, their guys are trained, and they have the parts available — so that when the market picks up again, we can enjoy the maximum advantage.”
So far this year, Al Naboodah has already distributed 70 DAF Trucks — with around 40 vehicles taking up roles with in ANGE’s own fleets, and a further 30 vehicles already being sold to paying customers keen to either begin or restart a working relationship with DAF.
With a construction operation employing 14,000 people across various segments, the placement of DAF vehicles among the ANGE fleet is a shot in the arm to the group’s on-the-ground visibility across the emirates.
Kuijs notes: “In the last year, Al Naboodah Group has done a great job already to seed units in different fleets and building the population of DAFs within its own companies.”
As it brings new customers on board, ANGE also plans to encourage customers to take up comprehensive maintenance agreements, just like the decade-long deal it signed with the RTA for the servicing of its VDL bus fleet.
Kumar comments: “We want to be a game changer in the market by giving our customers a 10-year, up-front cost of ownership, because we’re willing to take the risk and tell them what it’s going to cost them in 10 years.
“We are going to approach people that are looking for value and partnership and take it step by step. It’s about the value proposition and customer satisfaction, because a satisfied customer always comes back to you.
“We will never be a cheap truck — ever — and we don’t want to take that position.”
