Insights on Volkswagen's Future in the GCC with Thomas Milz

We sat down with Mr. Thomas Milz, the Managing Director of VW Middle East, to discuss the current state of VW and what’s in store for the future. Special thanks to Moe Shehada for conducting the interview.

Bestselling Model in Qatar / GCC

GCC: I believe that the first full year of the Tiguan 2016 will see it become the bestselling model. The following year, there will likely be a tight race between the all-new Touareg (planned for launch next year), the Tiguan, and possibly the new generation of the GTi.

In 2015, it was surprising for us that our best-selling model in the GCC was the GTi, with over 2,400 units sold, marking an all-time high. We could have sold more if we had sufficient stock. Following the GTi, the Touareg was next, with the Tiguan, Jetta, and Passat having roughly equal sales.

Qatar had a similar scenario, with Mr. Milz emphasizing the popularity of the Tiguan in Qatar, while the Jetta also sold very well.

Performance Worldwide and Market Focus

We can confidently say that we do not focus on one market over another. VW, particularly after the lessons learned last year, has to prioritize our customers regardless of their location. Thus, we do not have a specific focus market. Our strategy is to observe market developments and monitor their growth.

What matters now is how we cater to customer needs and listen closely to them. Ultimately, customer satisfaction and delivering on our promises are key to our success. This will help us become one of the largest manufacturers globally.

Future Model Roadmap in the GCC and Pricing of Upcoming Models

We are in a fortunate position because VW has invested significantly in new products. We plan to launch three new cars each year. This year, we introduced the GTi Clubsport, the new Tiguan, and just launched the new Passat. Next year, you can expect to see the new Touareg and likely a 7-seater SUV that we have shown in concept form, along with the next generation of the GTi. Over the next 2-3 years, we aim to launch competitive models across key segments in the Middle East.

Plans for Facing Oil Crisis in Qatar / GCC

From a consumer perspective, VW is recognized for its lower fuel consumption. Therefore, fluctuations in oil prices will not significantly impact fuel costs for consumers. We are market leaders in Germany and Europe, where fuel prices are among the highest globally. Hence, fuel prices are not a concern for us.

The overall economy, however, is more of a concern. Some GCC countries have diversified their economies and are less affected by the oil crisis, while others face challenges due to exchange rates. It is crucial that countries either return to sustainable oil prices to maintain their budgets or accelerate diversification efforts to reduce reliance on oil, as there will eventually be a conclusion to oil dependency.

Future of Electric / Hybrid Cars in Qatar / GCC

Currently, we have a pilot program in Dubai with the municipality, supplying 10 Golf GT plug-in hybrid vehicles for testing in the extreme heat. We aim to meet our customers' needs. While there is currently low demand for hybrids due to low gas prices, we foresee long-term opportunities for plug-in hybrids. However, pure electric vehicles may not be viable due to the extremely hot climate, but there is definitely a mid to long-term potential for hybrids in the region.

Views on Car Market of Qatar vs. GCC

In the mid-term, there is still potential across the entire region. Qatar, in particular, holds significant investment opportunities, especially with the upcoming 2022 events. However, the short-term outlook is challenging due to low oil prices, tight budgets, and companies laying off employees, as reported in the news. It will be tough in the coming months, but I am optimistic for mid-term growth in the Qatari market.

Despite the oil crisis, our investment budget remains intact as we prepare for growth. Over the last three years, since my arrival in October 2012, we have achieved an average growth of approximately 10% year over year, with some years seeing growth as high as 30%. Currently, we are experiencing a stabilization period. The first half of the year may be flat, but we are continually investing. Our partners, such as Q-Auto in Qatar, are also investing in state-of-the-art showrooms and service facilities. Therefore, we do not compromise on customer satisfaction in our budgeted plans.

VW Production for the Middle East

One reason we do not offer VW's full product portfolio in the GCC is that VW has a wider range of products globally. We conduct specialized “Superhot Country Testing” to ensure our cars meet the same quality standards here as they do in Germany or elsewhere, particularly under extreme conditions such as high dust levels and temperatures exceeding 50 degrees.

Our vehicles undergo rigorous testing in desert environments, often exposed to the sun before market introduction. Unfortunately, this means our cars sometimes launch later in the GCC than in Europe due to the extended testing cycle. We redefine air conditioning systems, enhance engine cooling, and ensure interior durability to withstand such environments.