GENAVCO president Isam Abu Nabah tells James Morgan that in order to effectively anticipate upcoming market trends, dealers must meet frequently with contractors to gain valuable industry intel.
A new equipment manufacturer sceptical of the value that can be added by an effective local dealer would do well to meet with GENAVCO president Isam Abu Nabah. Whilst Nabah is certainly a man in the middle, he is by no means just a middleman.
He and his team have to perform a delicate balancing act consisting of three major components. Firstly, GENAVCO must deliver high standards of local representation for its partnered brands.
Secondly, the firm must serve the best interests of local customers by constantly working to optimise its product portfolio. All the while, the UAE dealer has to plan ahead to ensure that it is well positioned to cater to an ever-changing market.
The UAE construction sector is in the throes of an upsurge in optimism, driven in part by the decision to award Expo 2020 to Dubai. Since the November 2013 announcement, Nabah and his colleagues have been meeting with local contractors to gauge how the sector is likely to progress during the coming years.
“It’s very important for GENAVCO to meet with end users,” he told PMV. “Firstly, we must maintain the strong relationships that we have built with large contractors. Secondly, we need to be aware of the major projects that are due to be awarded. Through our discussions with local contractors, we come to know how the market is progressing.
This helps us to create accurate forecasts and to prepare ourselves for upcoming market events. From a contractor’s perspective, the availability of equipment can mean the difference between winning and losing a deal.”
Essentially, Nabah has to predict which way the market is likely to turn, and adjust GENAVCO’s strategy accordingly. By accurately identifying customer requirements ahead of time, he can ensure that his company is not caught unawares when a spike in demand arises.
Nabah is also constantly looking for opportunities to strengthen GENAVCO’s product portfolio. One of his major priorities is to ensure that when a prospective customer arrives, the GENAVCO team is able to supply the equipment needed to get the job done.
“In order to maintain our diverse range of products, we are always on the lookout for complementary equipment lines,” he explained.
“Of course, we begin by deciding whether an asset would add value to our existing range. Once such an asset has been identified, the second stage is to evaluate all available proposals. GENAVCO has to be very selective here.
We evaluate offers in terms of brand strength, customer perception, price competitiveness, quality, and the manufacturer’s willingness to offer support from an after-sales perspective.
“Each of these factors is important when considering whether to partner with a brand,” continued Nabah.
“We then conduct an in-depth feasibility study to see whether a proposal will offer a suitable return on investment.
For any newly acquired product, GENAVCO must commit to personnel, facilities, parts, training, and marketing. My colleagues and I then sit down to negotiate with the potential partner, and try to formulate a plan that serves the best interests of our companies.”
As this meticulous process would indicate, it is not sufficient for dealers to simply ensure that they have a particular product in stock. When it comes to megaprojects, contractors cannot afford to settle for equipment just because it happens to be available. GENAVCO must also ensure that its product portfolio remains attractive to end users, and this involves partnering with premium brands that complement its philosophy.
“If we identify a product line that will add value to our range, we sometimes make the first move,” Nabah explained.
“We typically approach manufacturers when we know that they are not being represented in the UAE. Some of them, for example, might be operating independently without an official agent. On other occasions, we might learn that a manufacturer is unsatisfied with its existing agent, and that it is seeking stronger representation.
Conversely, manufacturers often approach GENAVCO because of its strong reputation in the region. It can work both ways.”
For original equipment manufacturers (OEMs) without representation in the Middle East, securing an effective local partner can be challenging. Many dealers and distributors must honour existing deals with established manufacturers, and are therefore unable to consider proposals from competitors, regardless of the quality of the equipment on offer.
In a comment piece published in last month’s issue of PMV, I asked whether a relaxation of exclusivity arrangements would strengthen the dealer model currently used in the Middle East. My contention was that such a move would facilitate competition within the region’s PMV sector, and in turn, prevent established OEMs from becoming complacent.
I asked Nabah whether or not, from a dealer’s perspective, he thinks that the current system is problematic. Do exclusivity deals make it too difficult for new brands to make inroads in the Middle East’s construction market?
“It all depends on the agreement that is in place,” he replied. “Some manufacturers have exclusive dealerships, whilst others do not. Some manufacturers insist that a dealer does not have a similar product in its line-up – a competitive product, let’s say. However, this is not always the case.
Even within the same product line, brands are categorised – and categorise themselves – at different levels. A premium brand, for example, might not consider itself to be in direct competition with a ‘lower’ brand, even if that brand produces the same product type.
These tend to be the cases in which manufacturers don’t object to their dealers representing new brands. Of course, this will be on the condition that the dealer maintains a dedicated staff for their products, and continues to fulfil their requirements in terms of growth and market share.
“Naturally, some manufacturers do object,” Nabah continued. “It all depends on the partner in question; how he rates himself in comparison with his competitors. It also depends on what is stated in the original agreement. The situation will vary from case to case.”
GENAVCO represents a huge range of products in the UAE, from commercial vehicles to crushers, and many things in between.
To use the jargon of the day, dealers must strive to become ‘full-solutions providers’, and whilst no single company can supply everything, Nabah’s product offering is broader than most. Even so, I was interested to learn whether GENAVCO has identified any gaps in its line-up, and if so, what it is doing to fill them.
“As I said, we are always looking for opportunities to add value to our existing range,” explained Nabah.
“This forms part of our strategy to be a comprehensive service provider for our customers. In order to achieve this goal, we must work hard to create a range that caters to every requirement that a contractor might encounter when taking on a new project.
“As you know, projects necessitate many different types of machinery, from earthmoving equipment to generator sets,” he continued.
“In this region especially, the range of equipment that is in demand is very wide indeed. Having said that, I think that GENAVCO currently has an expansive product line-up. We can supply the equipment necessary to meet the vast majority of requirements.
There are always opportunities to improve, so I would never rule out the option of adding new products to our portfolio, so long as they are the right products. Neither, however, would I be hasty in adding to our existing range.”
It seems that the GENAVCO product portfolio has reached a point whereby it caters to the majority of customer requirements. It is now just a matter of fine tuning. However, is this process ever likely to end? Does Nabah think that there will come a point when the dealer’s regional offering is complete?
“In my view, this process shouldn’t stop at any point,” he concluded. “To remain competitive, a dealer must continuously evaluate its internal resources and be ready to make new moves.
You don’t want to become saturated with a line-up that you are incapable of handling due to a lack of resources.
This is why when it comes to acquisitions, GENAVCO operates in parallel with the market. We work hard to align our staff and facilities with our existing range and industry trends. As long as we continue to do this, I would argue that there is no limit to how far we can grow.”
