The future of Ford (page 1 of 2)

Ford's top man in the Middle East, Jim Benintende, has been rewarded for his efforts over the past seven years as one of the company's senior managers in the region. In the last two years, Ford resolved a costly legal battle with its former dealer in the UAE, which is the second most important automobile market in the Middle East, and started to make its presence felt through two new partners.

In the last 12 months, Ford has backed up new model launches with some of the most aggressive pricing campaigns seen in recent times. And it is paying off. Ford sales in the UAE during 2002 are said to be "comfortably placed" in what have been difficult market conditions. A repeat performance in 2003 is definitely a possibility, according to Ford sources.

During Ford's legal battle in the UAE, no one would have expected such a turn of events. Before the issue went to the courts, Ford's market share in the UAE had eroded, partly due to poor model launches, but mostly because of the lax attitude at Galadari Automobiles, the company's UAE dealership. Between 1999, when it went to court, and late 2001, when the issue was resolved, Ford stopped all shipments of its models into the country.

In a seminal case involving the UAE's archaic Commercial Agencies Law, a final verdict was never delivered by the local courts. The dispute was eventually resolved through an out of court settlement.

"What Ford showed through the duration of legal route was that it was willing to go the distance to correct what was a hopeless situation," said
a senior official at a rival carmaker.

"Ford has indeed come in from the cold. Not many other companies would have the guts to do what they did in a similar situation. More importantly, since the dispute came to public attention, the relationship between the manufacturer and dealership in the region will never be the same. After what Ford did to Galadari, no regional dealership can say for sure that a similar thing will not happen to them. It is the best thing to have happened to the industry in years."

Ford did not focus all its energies on the UAE market. In Saudi Arabia, its biggest market, the company decided to have separate dealerships for
the Ford and Mercury brands. The transformation was effected without the acrimony that accompanied the dealership changes in the UAE. Again, the move paid off, and the Saudi market has performed well over the last two years. By the end of 2002, Ford unit sales in the Middle East were estimated at 25,000, a solid growth rate of 10 percent over the previous year.

However, there are reports that volumes in the first quarter of 2003 were five percent lower than in the same period in 2002. Markets such as Saudi Arabia and Kuwait bore the brunt of the losses. Retail activity in Kuwait had nearly ground to a halt during the hostilities in Iraq. And consumer spending is not expected to pick up anytime soon.

A senior Ford official in Riyadh, however, remains optimistic. "The political scenario in the region has changed," he says, "and there is now every reason to believe that an upturn will be had on the economic side as well, even if there is a slight softening in oil prices.