INTERVIEW: Ahmed Al-Habtoor - portrait of a driven auto executive

Illustration by Luis Grañena
Updated 19 May 2019
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INTERVIEW: Ahmed Al-Habtoor - portrait of a driven auto executive

  • There is no country on this planet where you will see Bentleys, McLarens and Bugattis as much as in the UAE.

DUBAI: Over the course of a morning in his office in Deira, Dubai’s traditional business district, Ahmed Al-Habtoor talked eloquently and expertly about the motor business in the UAE and the Arabian Gulf, about customers’ likes and dislikes, about the tough times the industry has faced recently, about his best-selling models, and about the importance of the sector within the UAE economy.
Then, he dropped a small bombshell. He is always chauffeurdriven, and seldom gets behind the wheel of any of the luxury vehicles he trades daily. “I don’t care about driving cars, I care about selling them,” he revealed.
From the youthful chief executive officer of Al Habtoor Motors, who could have his pick of Bugattis, Bentleys, McLarens and other “fast boys toys,” that was quite a revelation.
“I don’t like driving, I like to be on my phone checking emails and messages. I don’t have the patience to look for parking, and anybody who can afford to have a driver should do so,” he added.
So Al-Habtoor is, in more senses than one, a driven executive. The motor division is a key part of the Al Habtoor conglomerate, started by his father, the group chairman Khalaf, in the 1970s as an engineering business but which has expanded through real estate, hotels and hospitality, to education and entertainment.
Motors has been an integral pillar of the Habtoor portfolio since it was set up in 1983 to handle the Mitsubishi franchise in the UAE. “We have strict corporate governance, law, a constitution in the company. The rules are set and we are here to implement the directions of the chairman. We have our own ideas, we try to be creative, but it is a well-established, solid company with very strong roots,” he said.
here is still a large number of workers — whom he called “partners” — who can date their employment back to the very beginning of the Mitsubishi franchise.
He admits to two alternative frustrations in his job, depending on the economic climate.
“When the market is active and business is fantastic, I get frustrated at the pressure of delivering to my clients. I’m just busy, trying to meet the expectation of delivering the right product at the right time,” he explained. “The other frustration is when the market is challenging and low, I’m busy trying to be busy, trying to find business. It’s all about being busy.”
For the past few years, the “challenging” market has been to the fore, as he candidly admitted. The fall in the oil price in 2014-15 began to affect the economies of the energy exporters of the Arabian Gulf toward the end of the following year, and the motor sector was seriously hit. Sales volumes declined sharply — compounded by government spending cuts and some policy decisions.
“I think in 2017 the volume was acceptable. In 2018, it dropped when the government implemented VAT. I don’t think VAT was the wrong decision, but it had a negative effect. It was implemented when the market was in a weak situation. If the market was booming, it would have been much easier for us,” he said.
Al Habtoor Motors’ longevity gives its CEO a perspective on the forces that shape the industry. “It’s a cycle. There is always a cycle every 6-8 years. When oil prices started to fall it had an effect. In our region, government spending is the key to moving the economy. Not only in Dubai, but the whole of the UAE.”
He estimated that the motor industry was the second biggest sector in the UAE’s non-oil economy, behind real estate, but saw no real linkage in the simultaneous downturns in property and motor sales.
The other factor that affected car sales — especially in the high volume and fleet car business — was the increasing reluctance of banks in the UAE to continue previous levels of finance to small and medium enterprises (SMEs) during the worst of the downturn.

“It was not a very wise decision to withdraw support from SMEs. The economy depends on large companies, but at the end of the day, consumption comes out of the (medium) and small businesses. Uncertainty and insecurity in the market made a lot of people stay away from buying,” he said.
Al-Habtoor estimated that car sales volumes in the fleet business were down by 50 percent from the highs of 2015, as they were across the whole of the volume motor business. “Last year was very challenging, but thankfully we managed all the challenges,” he said, on the back of an upturn in business measured across the whole of last year.
He has reason to be more optimistic in the current year. “There has been stimulus to the economy, Expo 2020, and the confidence in the market improved. The changes to visa arrangements, the reduction of license fees — all these are having an effect,” he said.
On the “Expo effect” — the expected boost to the UAE economy from the huge business fair planned for next autumn — he was cautiously positive. “We’ve seen that coming through already. Now it is nominal, but we are seeing green shoots. It is not a big effect yet but it is happening, and the more we go toward October next year the more benefit will come,” Al-Habtoor said, adding that he was confident of getting back to 2015 levels eventually.
That is good news for the Mitsubishi, Fuso, Jac and Chery marks that are Habtoor’s staple. But the group also has an impressive stable of luxury cars, with the dealerships for Bentley, the McLaren sports brand, and the super-car Bugatti, in the UAE
The UAE’s reputation for glamorous, extravagant cars — even down to the Dubai police fleet — is a global phenomenon, and Al-Habtoor does not think it will change any time soon, even in challenging economic circumstances.
“A lot of people want beautiful cars and the best. It always was like that, it still is now and it will be in the future. The UAE and Dubai is always about the best. It’s in the culture of the city. There is no country on this planet where you will see Bentleys, McLarens and Bugattis as much as in the UAE,” he said.
The economics are different in the luxury brands, which were not as badly hit by the oil-related slump as the volume business. “The luxury end was affected by the downturn, but it’s more resilient, it’s OK,” he said.
“In the first four months of this year, we’re the number one dealer in the world for Bentley, and have consistently been among the biggest Bentley dealers in the world, if not the biggest. When luxury goods are moving, not just cars, but jewelry and other things, I feel that the economy will come back soon,” he said.
Bentley sales have been given a boost by the introduction at the end of last year of a new Continental GT, and by the continued appeal of the Bentayga, the company’s first move into the SUV market, which has huge appeal for motorists in the region. Deliberately priced at below 1 million dirhams ($272,250), the luxury SUV aims to take on other upmarket four-wheel-drive vehicles.
He seemed especially pleased with the performance of the McLaren range within his portfolio, vying with other more famous brands in the lucrative but very competitive sports car segment — another best seller in the region.
At the top end, McLaren competes with the best in the sports car market, and its BP23 model sells at more than 10 million dirhams. “There are only 116 vehicles around the world and we have six of them. In that ultimate series sector, McLaren is dominating,” Al-Habtoor said.
Then there is Bugatti, the French super-sports car whose Chiron model is one of the most expensive seen on the UAE’s roads, selling at around 12 million dirhams. Last year, the company sold 12 of them, Al-Habtoor said, but any ideas that McLaren is competing with, and cannibalizing sales, of Bugatti were dismissed.
“That’s like comparing a normal plane with a UFO. I once drove a Bugatti on a track at over 200km and it was as if I was having a picnic in the garden — you don’t even feel it,” he said.
Occasional high-speed track driving, apparently, is one of the few occasions he likes to give the chauffeur a day off.


Closing Bell: Saudi main index closes in red at 12,014

Updated 4 sec ago
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Closing Bell: Saudi main index closes in red at 12,014

RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Tuesday, losing 24.37 points, or 0.20 percent, to close at 12,014.94.

The total trading turnover of the benchmark index was SR5.73 billion ($1.52 billion), as 86 of the listed stocks advanced, while 140 retreated.   

The MSCI Tadawul Index decreased by 4.65 points, or 0.31 percent, to close at 1,507.83.

The Kingdom’s parallel market Nomu surged, gaining 768.81 points, or 2.74 percent, to close at 28,831.58. This comes as 42 of the listed stocks advanced while 32 retreated.

The best-performing stock of the day was Riyadh Cables Group Co., with its share price surging by 6.95 percent to SR117.  

Other top performers included Arabian Cement Co., which saw its share price rise by 4.51 percent to SR25.50, and Al Moammar Information Systems Co., which saw a 4.38 percent increase to SR185.80. 

The worst performer of the day was Wataniya Insurance Co., whose share price fell by 9.96 percent to SR24.04.

Al-Etihad Cooperative Insurance Co. and Shatirah House Restaurant Co. also saw declines, with their shares dropping by 9.34 percent and 5.77 percent to SR18.44 and SR21.22, respectively.  

On the announcements front, Saudi Public Transport Co. announced its interim consolidated financial results for the first nine months of the current year. SAPTCO’s shares dropped in today’s trading session, dipping by 1.01 percent to reach SR21.58.

According to a Tadawul statement, the firm recorded a net loss of SR20.8 million in this period of the year, reflecting a 53.3 percent dip compared to the same term in 2023.

The decline in net profit for the current period, compared to the same period last year, is due to lower operating revenue from reduced public transportation operations, along with higher general and administrative expenses, increased finance costs, and higher zakat and tax, combined with a decrease in finance income.

The Saudi Arabian Cooperative Insurance Co. also announced its interim financial results for the same period ending on Sept. 30. SAICO’s shares dropped in today’s trading session, decreasing by 2.89 percent to SR14.78.

Net profit before zakat attributable to the shareholders for the current period amounted to SR43.2 million compared to SR65 million during the same period of the previous year, which was mainly due to a decrease of 44.9 percent in the net insurance service, which was affected by a decrease in medical business.

​​For the first nine months of this year, Abdullah Al Othaim Markets Co. revealed its results for the first nine months of this year, with total comprehensive income amounting to SR220.6 million – a year-on-year decrease of 30.4 percent.

Abdullah Al Othaim Markets Co.’s shares decreased in today’s trading session by 1.92 percent to reach SR11.24.

Gulf Insurance Group’s income over the same period also dropped – with the SR78.2 million it registered representing an annual fall of 19.7 percent.

GIG’s shares also saw declines by 0.84 percent to reach SR29.50. 

The individual investor subscription for Tamkeen Human Resources’ initial public offering on the Saudi stock market started Nov. 5 and runs until Nov. 6. 

According to a statement from the company, a total of 1.59 million shares, representing 20 percent of the offering, are allocated to individual investors at SR50 per share. 

The deadline for subscription and payment is Nov. 6, with the final allocation announced on Nov. 11. The minimum subscription is 10 shares, and the maximum is 250,000. Saudi Fransi Capital managed the initial public offering, which saw an institutional demand of SR55 billion, with coverage 138.2 times.


China to issue $2bn bonds in Saudi Arabia amid deepening bilateral ties

Updated 29 min 20 sec ago
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China to issue $2bn bonds in Saudi Arabia amid deepening bilateral ties

RIYADH: China has announced plans to issue dollar-denominated bonds in Saudi Arabia starting the week of Nov. 11, marking its first debt issuance in US currency since 2021. 

The Asian country’s Ministry of Finance disclosed on Nov. 5 that it will sell up to $2 billion in bonds in Riyadh.

This issuance comes as China and the Kingdom are strengthening a multifaceted alliance that extends across multiple spheres.

In recent years, both nations have sought to broaden their economic cooperation, aligning strategic initiatives such as China’s Belt and Road Initiative with Saudi Arabia’s Vision 2030 plan.

“With the approval of the State Council, the Ministry of Finance will issue US dollar sovereign bonds of no more than $2 billion in Saudi Arabia in the week of November 11, 2024. The specific issuance arrangements will be announced separately before the release,” the ministry’s statement read.

This step will positively impact the Kingdom’s financial market, “especially when considering that the Financial Development Program is playing a crucial role in shaping the future of Saudi Arabia’s financial sector,” according to Talat Hafiz, a Saudi-based economist. 

Talking to Arab News, he said such issuance supports one of the main pillars of Vision 2030, to advance the Saudi economy through diversification and enhancing the local financial market.

Strengthening Saudi-Chinese relations

“The issuance is part of China’s efforts to strengthen the relationship between the two friendly countries, which is witnessing huge improvements in several fields,” Hafiz said.

In September,Saudi Crown Prince Mohammed bin Salman and Chinese Premier Li Qiang co-chaired a pivotal meeting of the High-Level Saudi-Chinese Committee, where they reviewed aspects of joint cooperation and addressed regional and international developments. 

The session in Riyadh emphasized opportunities in energy, trade, and investment, as well as well as technology and security, while laying the groundwork for enhanced coordination across these sectors.

Expanding tourism and education links

Tourism has emerged as a significant focus in Saudi-Chinese relations. In October, Saudi officials, including the Minister of Tourism Ahmed Al-Khateeb, engaged with Chinese counterparts to expand travel and investment ties.

The Kingdom received the designation of “Approved Destination Status” from Beijing earlier this year, following participation in key events in China. 

To attract 5 million visitors from the Asian country by 2030, Saudi Arabia has introduced Chinese payment processing options, launched tailored tourism campaigns, and increased direct flights between the two countries.

Growing trade and investment

China has been Saudi Arabia’s largest trade partner since 2014, with bilateral trade reaching $97 billion in 2023. This figure includes $54 billion in Saudi exports and $43 billion in imports from China. 

This issuance will benefit both the Kingdom’s financial market and businesses in Saudi Arabia and China, especially with their strong economic ties and alignment with Vision 2030 and the Belt and Road Initiative, according to Hafiz.

The economist said “the Saudi-Chinese Business Council has a major role to play in promoting business between Saudi Arabia and China.”

He highlighted the trade size amounting to “about $96.5 billion in 2023, representing 18 percent of the total volume of Saudi trade globally.”

Investments between the two nations have also surged, with Chinese investments in the Kingdom rising from $1.5 billion in 2022 to $16.8 billion in 2023. Saudi investments in China are also substantial, totaling $75 billion.

Saudi Arabia and China are exploring new avenues for collaboration, including joint investments in renewable energy, infrastructure, and technology, with a focus on sustainable development. 

The crown prince’s 2019 visit to Beijing set a foundation for this strategic partnership, resulting in 12 agreements and memoranda of understanding that continue to shape bilateral cooperation.


Saudi Arabia awards 11 mining exploration permits under accelerated program

Updated 05 November 2024
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Saudi Arabia awards 11 mining exploration permits under accelerated program

JEDDAH: Saudi Arabia has granted 11 mining exploration permits to local and international companies for six sites under its Accelerated Exploration Program, which aims to unlock the Kingdom’s underutilized mineral resources.

On Nov. 5, the Ministry of Industry and Mineral Resources announced that the permits, covering a total area of 850 sq. kim across Riyadh, Makkah, and Asir, were awarded as part of a competitive licensing round designed to boost the country’s mineral sector. This initiative is aligned with Saudi Arabia’s Vision 2030 and the National Industry Development and Logistics Program.

The recent competition concluded with one national company and five alliances consisting of 10 local and international firms being awarded the exploration rights. The competition was designed to maximize the value of the country’s mineral resources and expand the mining industry as a key pillar of the economy.

Transforming the mining sector

Saudi Arabia is aiming to transform mining into the third pillar of its industrial base, alongside oil and petrochemicals. The Kingdom is home to more than 5,300 mineral sites, estimated to be worth around SR5 trillion ($1.33 trillion), and the ministry is actively seeking to harness these resources to fuel economic growth.

Among the winners, the alliance of ANS Exploration and Odyssey Metal Ltd. was granted an exploration license for the Umm Qasr site in Riyadh, known for its deposits of gold, silver, lead, and zinc. Gold and Minerals Co. secured a license for the Wadi Doush site in Asir, an area rich in gold, silver, and copper ore deposits, covering 157 square kilometers.

The alliance of AuKing Mining Ltd. and Barg Al-Saman Mining Co. received a license for the Shuaib Marqan site in Riyadh, spanning 92 square kilometers and noted for its copper, silver, and gold resources. Meanwhile, Metal Bank Ltd. and the Mining Holding Co. were awarded the Wadi Al-Jouna site in Asir, which covers 425 square kilometers and contains copper, zinc, silver, and gold.

Other awarded licenses include the Hazm Shubat site in Asir, granted to the Rawkad and Masharef alliance, which is known for its gold deposits. The Midad Al-Muna for Mining and Tinka Resources alliance was given the license for the Huwaimdhan exploration site in Makkah, which also holds significant gold resources.

Commitment to local development

A total of 44 bids were received from 22 companies — many of them new to the Saudi market—during the competition. Bids were evaluated based on technical expertise, proposed work programs, and social and environmental considerations. As part of their commitment, the winning companies have pledged to invest SR75 million ($20 million) in exploration activities and SR5 million toward community development, aiming to create jobs and opportunities for citizens in underserved areas.

This licensing round marks a significant milestone for Saudi Arabia’s mining sector, with four companies receiving exploration licenses for the first time, further cementing the Kingdom’s appeal as a leading investment destination for mining.

Aligning with Vision 2030

The ministry highlighted that this initiative reflects investors' confidence in Saudi Arabia’s mining investment framework, which adheres to the highest standards of transparency and environmental responsibility. It also underscores the country’s commitment to diversifying its economy in line with Vision 2030, which aims to develop the mining sector as a key economic driver.

In a related development, the ministry recently announced another competition for seven mining exploration licenses, covering regions in Makkah and Riyadh and targeting a range of precious and base metals, including gold, copper, zinc, lead, and silver. The deadline for submitting technical proposals for this new licensing round is at the end of November.


Private sector drives 6.1% rise in Saudi capital investment for Q2

Updated 05 November 2024
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Private sector drives 6.1% rise in Saudi capital investment for Q2

RIYADH: Saudi Arabia’s gross fixed capital formation reached SR296 billion ($79 billion) in the second quarter of 2024, marking a 6.1 percent year-on-year increase, according to recent data. 

The Ministry of Investment attributed this growth primarily to the non-government sector, which holds an 86.45 percent share of total GFCF.  

This sector saw an 8.2 percent increase, reaching SR255.9 billion, reflecting robust private-sector activity aligned with Vision 2030’s targets to boost private investment. Conversely, GFCF in the government sector declined by 5.2 percent to SR40.1 billion.   

GFCF, which measures net investments in assets like infrastructure, machinery, and construction, is a key indicator of long-term economic potential, as it reflects capacity-building investments that drive productivity and growth. 

Saudi Arabia’s appeal as a top investment destination continues to grow, with the Ministry of Investment issuing 3,810 licenses in the third quarter — a 73.7 percent annual rise, excluding permits from the Tasattur anti-concealment initiative.  

This strong performance highlights the Kingdom’s successful positioning as a competitive market, driven by an increasingly stable and business-friendly environment, according to the report. 

The ministry’s October report, which aligns its data with the latest IMF guidelines, showed that Saudi Arabia’s foreign direct investment stock reached SR897 billion in 2023, a 13.4 percent increase from 2022.  

Excluding the one-time SR55 billion Aramco pipeline deal, the data showed that net inflows — representing the total new foreign capital coming into the country after accounting for outflows — also surged by 91 percent during this period, reaching SR86 billion. 

As Saudi Arabia pushes toward its goal of making FDI 5.7 percent of its gross domestic product by 2030, this upswing in foreign capital not only strengthens the Kingdom’s position as a global investment hub but also reinforces the ongoing expansion in GFCF, contributing to sustainable economic growth.  

Saudi Arabia has been advancing a range of initiatives to attract and deepen foreign investment, positioning itself as a hub for international business in the Middle East. 

One such measure, announced in 2021, requires foreign companies bidding for government contracts to establish regional headquarters within the Kingdom by 2024. 

This mandate has already encouraged major firms to set up shops in Riyadh, underscoring the Saudi government’s commitment to drawing long-term investment. 

The Public Investment Fund has also played a critical role in bolstering the investment landscape. 

Recently, PIF signed a memorandum of understanding with Brookfield Asset Management to become an anchor investor in Brookfield Middle East Partners. 

This private equity platform plans to raise $2 billion to invest in various high-growth sectors, such as technology, healthcare, and industrials. Additionally, at least half of BMEP’s capital will be allocated to Saudi-based companies, facilitating FDI inflows directly into the Kingdom. 

Another major win came with BlackRock, the world’s largest asset manager, which recently secured approval to establish a regional headquarters in Riyadh. 

This move is set to expand BlackRock’s Middle East operations significantly, reinforcing Saudi Arabia’ appeal as an investment destination for global financial firms. 


Energy sector drives GCC IPO gains in Q3, positive year-end outlook: PwC 

Updated 05 November 2024
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Energy sector drives GCC IPO gains in Q3, positive year-end outlook: PwC 

RIYADH: Initial public offerings across the Gulf Cooperation Council region registered a year-on-year increase in proceeds in the third quarter of 2024 despite a decline in the number of listings, according to a new report. 

The energy sector spearheaded this quarter’s growth, led by NMDC Energy’s listing, which raised $877 million — the largest IPO in the UAE this year, stated PwC Middle East. 

Saudi Arabia’s parallel market, Nomu, also contributed to the quarter’s performance with three listings. 

PwC forecasts strong aftermarket performance for companies completing IPOs in 2024, predicting that most of the top 10 IPOs by deal size will trade above their initial offering prices. 

This outlook suggests a favorable market reception for large IPOs in the coming year, with strong investor demand potentially driving post-IPO stock prices higher. 

“As has been the case in recent years, Q3 has seen relatively few companies come to market. Since the end of the quarter, we have seen a number of IPOs either completed or announced across the GCC, including OQ Exploration and Production, Oman’s largest ever IPO, supporting the positive outlook for the remainder of 2024,” said Muhammad Hassan, capital markets leader at PwC Middle East. 

In the third quarter, bond issuances in the GCC raised $4.4 billion, marking an almost 30 percent increase over the previous year. 

Additionally, $5.2 billion was raised through sukuk issuances, with 88 percent of these bonds listed on the Qatar Stock Exchange or Nasdaq Dubai. 

Governments in the region accounted for nearly 65 percent of total bond and sukuk issuances. 

“Looking forward, the outlook for the GCC IPO market remains positive with a healthy IPO pipeline of companies from a diverse range of sectors busy preparing for their upcoming IPOs across the region,” the report stated.

According to another report by the Kuwait Financial Center, also known as Markaz, Saudi Arabia and the UAE led IPO activity in the GCC with $1.7 billion raised in the third quarter, a 6 percent increase from the year before.

The analysis highlighted that the UAE dominated the quarter’s activity, leading the region with $1.1 billion in IPO proceeds from a single listing, accounting for 69 percent of the total raised across the GCC.  

Saudi Arabia followed with $512 million from its IPOs in the third quarter, contributing 31 percent to the regional total.

In the Kingdom, the food and beverage sector saw wheat milling company Arabian Mills for Food Products raise $271 million, accounting for 16 percent of the quarter’s proceeds.  

Meanwhile, perfume maker Al Majed for Oud, a key player in the consumer cyclical sector, raised $188 million, contributing 11 percent.  

The materials sector had a smaller presence, with ASG Plastic Factory Co. raising $8.8 million on Tadawul’s parallel Nomu market.  

The commercial and professional services sector witnessed three IPOs, including First Avenue Real Estate Development Co., Altharwah Albashariyyah Co., and Al Ashghal Al Moysra Co., which collectively raised $44.4 million.