TBY talks to Kanat Akishev, Director of Mercur Auto, on market demand, premium brands, and his strategies for the future.
TBY What is the background of Mercur Auto?
KANAT AKISHEV We’re a 100% local private company. We started in 1994, mainly selling and servicing the Russian Lada. Since 1995 we’ve had a dealership contract with Volkswagen, and today our company is the official Volkswagen importer in Kazakhstan. We are also responsible for Audi, which we got in 1997, for Porsche since 2004, and Mitsubishi since 2006. In addition, we launched a joint venture for Uz-Daewoo and we operate sales as well as provide servicing and spare parts. We have three branches in Kazakhstan: in Astana, Shymkent, and Atyrau, and we have three independent dealers in Kostanay, Uralsk, and Karaganda. Our target for 2012 is to open a dealership in Aktyubinsk. The last three years were not easy for our company and for the automotive sector in general due to the crisis. However, we have invested more money in human development over this period through training, studios, and workshops. We are doing our best to become the leader in the automotive business in Kazakhstan.
What levels of demand are you seeing?
Volkswagen is a top-selling brand aimed at the general market, while Audi and Porsche are a more premium segment that also have substantial customers. Mitsubishi is well known in the market. For Audi and Porsche vehicles we need premium showrooms, premium gifts, and high-quality service. Volkswagen and Mitsubishi get the same treatment, but are pushed more in terms of retail as we naturally sell more of those brands.
Are the cars you import modified to suit Kazakhstani conditions?
Yes. The engines are modified to our fuel. To comply with European standards cars must have electronic engine management systems.
For spare parts, do you provide your own logistics or do you work with logistics companies?
We have our own logistics company called Mercur Trans, which transports cars. For spare parts we have a partnership with different logistics companies.
Why did you opt for more premium brands like Audi and Porsche when expanding your portfolio?
At that time only Mercedes, Volvo, and BMW were present in the premium range in our market. It was a time of economic growth and there was demand for big premium brands. The market seemed ripe for these particular brands. Audi has a superb development process and we decided we wanted to work with them. Previously the brand was ranked just above Volkswagen and a step behind Mercedes and BMW, but now it is on a par with these
luxury brands. We built a new image for Audi cars in Kazakhstan, and we have had great results. When we applied for Porsche, its managers were very surprised to learn the amount of their vehicles on Kazakhstan’s roads. That’s why it was decided that those cars needed servicing and spare parts. And there was a good opportunity to sell the vehicles.
We took the job on and had great success over the first couple of years, proving that it was the right move for Porsche. We were also Mitsubishi’s first dealership in Kazakhstan, and we took the job on due to the existing popularity of the brand here.
What is the market like for premium brands following the global economic crisis?
The financial crisis affected sales, but in 2011 we expect to fully recover. In 2007 our company sold more than 5,000 cars, and getting back to these figures is our target. Mercedes and BMW are the top sellers, followed by Audi and Porsche. We believe the premium sector will grow by 30% to 40% in the next few years, and that will include growth in the sales of Audi and Porsche vehicles. In 2011 we expect to sell 80 Porsche, 140 Audi, and more than 1,000 Volkswagen units. Additionally, we would like to make Volkswagen the number one brand in the country by 2015.
What is your strategy for the growth and development of the business?
We focus a lot on quality of service. The better you take care of your customers, the more they come back.
Where will the company go from here in terms of its portfolio?
Our portfolio is set for the next two years and we don’t plan further expansion in the near future. Our aim is to strengthen the brands we have now.
What’s your outlook for 2011?
We plan to work on our partnership with Volkswagen in Russia. It will be good for our customers as there are no import duties thanks to the Customs Union. We are looking to bring in the new Passat and Jetta. Additionally, we would like to bring in the Touareg and Amarok. Besides passenger vehicles, we’ll also bring in commercial vehicles.
© The Business Year