Niva has grown at upwards of 250% per year in recent years. What has allowed you to reach these numbers?
Niva has been fortunate to witness such growth between 2011 and now. The growth has been due to a number of reasons. One of the central factors has been our marketing strategy. We have implemented and adopted an aggressive, and thus far, successful, campaign to make ourselves broadly known by customers in the country. Moreover, we have improved our after-sales services, such as service, maintenance, and parts. We have also increased and improved our sales team by hiring more and more sales professionals and retraining those that we have at global standards. We opened a call center last year that allows us to call each and every client that comes to buy a car, and most of those who service their vehicles with Niva. Feedback from our call center is reviewed each month, and we use the information to improve our sales and services. Regarding the sustainability of our growth trajectory, we will keep growing quickly. Perhaps not at 250% per year, but we expect three-digit growth to continue for the coming years.
Can you tell us about your expansion strategy within the country?
We are currently expanding into new markets in federal Iraq, including Baghdad and Basra, where we believe there is still a lot of potential for new growth. In Baghdad, we have registered with Gamco, which is the federal agency in charge of purchasing vehicles for federal entities. We hope to serve many of the federal Iraqi public sector entities in coming years. Our Basra branch opened in early June, which has cemented our presence in the southern Iraqi market. Between all of our regional branches, we will serve the entire Iraqi market. Our strategy is to open most of our showrooms, supply hubs, and service facilities ourselves, to remain fully integrated. In Baghdad, Basra, Sulaimani and Erbil, we have already done this, and we will do the same in Duhok soon. In smaller markets, we will work with sub-dealers. We can supply the cars and parts and support their services, while fostering local business in smaller towns.
Which demographics and segments of the market do you find most promising for the growth of car ownership in the Kurdistan Region?
The country in the past few years has displayed very fast growth; it has been the fastest growing country in the region. As GDP per capita increases to approximately $5,000 per year, we will begin to see more and more families and individuals buying cars with better quality—more than just a means of transportation. People begin to look at cars as a means of entertainment, and seek smart, green, and luxurious automobiles. We broadly cover the market from the lower end up to the higher end. Ford suits this strategy very well. It is not cheap, but it is not expensive, and it offers very high value for the money. We start with small, entry-level cars and move up to higher-end luxury cars and trucks. In coming years, we expect for overall increases demand for luxury, safety, intelligence and comfort, and we are well positioned to provide that.
Financing through banks still is somewhat below our expectations and ambitions, because retail financing is crucial to car sales, we believe that as financing improves, our sales numbers will also grow.
Importing thousands of cars into Kurdistan and Iraq must present logistical challenges. In what ways have you streamlined the process of getting cars into the country?
Logistics does present major challenges. For our cars coming to the Kurdistan Region, we import cars through Turkish ports and truck them to our local showrooms. Because of regulatory differences between the KRG and Baghdad, these cars can only be sold in the Kurdistan Region. Safety and quality standards in the KRG are very strict. While our cars all meet these standards, the compliance procedure is expensive and time consuming. When importing cars into the country this procedure is not yet implemented. However, once it is, Ford cars comply with international standards, regardless of regulation or local policy. This becomes problematic if demand shifts between the regions, because we cannot move vehicles between the Kurdistan Region and federal Iraq. I hope that eventually there will be some sort of a free zone between the two or between neighboring countries, so that we can import the vehicles directly into the free zone, and then we can move cars to Kurdistan or federal Iraq as per actual demand. This would make our operations much more efficient, to the ultimate benefit of our end customer.
In what ways do you collaborate with Ford to realize your mutual goals?
There is a lot of collaboration between Ford, Niva and other Middle East Ford dealerships. Ford has a Middle East office based in Dubai that coordinates all of the regional distributors. They send representatives here each month to help in training our sales team and ensure continuity and consistency between different dealers. Additionally, we have quarterly meetings with all of the Ford dealers in the region, to share insights and collaborate on seasonal marketing campaigns. For example, we roll out a Ramadan campaign in July, in collaboration with other Middle East Ford dealers. Of course, we do our own unique campaigns as well—our Newroz campaign in Kurdistan, for example—but our synergies with other Ford dealers are very important in promoting the brand.
Financing presents challenges to many firms in the Kurdistan Region. To what extent does access to finance limit people’s ability to buy cars in Kurdistan? Is this changing?
Access to finance is one of our major challenges, both as a company and as retail finance for our customers. Retail financing is somewhat unique to car sales. Some local banks do offer retail financing for car loans. These are at high rates, and short repayment periods. However, it is inconsistent at this stage. Some loans are easy to acquire, some very difficult. Financing through banks still is somewhat below our expectations and ambitions, because retail financing is crucial to car sales, we believe that as financing improves, our sales numbers will also grow.
Car insurance is only recently becoming available, and is still not widely used in the Kurdistan Region. What is your take on the future of the auto insurance sector?
When our customers purchase cars, we heavily encourage them to buy car insurance. The sector itself is growing, with Asia Insurance serving much of the market. However, the culture of using insurance has not yet been integrated in society, for social reasons or simple lack of understanding. Of course, shifting risk to insurance companies is preferable to carrying it yourself, but at this point it is still relatively rare. There is a potential, I believe, for significant growth in this sector. Asia Insurance is the biggest and most professional insurance company in the country. The company is only three years old- insurance is still a very young industry here.