Artyom Petrosyan: “Armenia is like a transport graveyard”

12.11.2013 | 10:03 Home / News / Articles /

Interview of the head of Marketing Department of the official representative of Nissan in Armenia “Muran” company to portal

- “Muran” has been acting in the Armenian market for already 10 years representing Nissan brand. How was the demand for Nissan formed over this period and how did the taste of Armenian car lovers change?

- I think that the Armenian car market has formed in last 10 years. Prior to it, mainly Russian or random cars were generally imported to Armenia. Actually, any foreign car itself was a novelty then. From this point of view, Nissan was one of those who dictated taste in the market, as well as being the leader in terms of volumes.

As for the change of demand, here I should speak about the dynamics of sales, which has decreased since the first quarter of 2009, and the pre-crisis sales level hasn’t restored so far. The main reason for the decrease of sales volumes was the reduction of incomes during the crisis, when the consumers were mainly focused on basic goods rather than on cars. Besides, the banks are gradually toughening the lending conditions. The pessimistic attitude of the economically active population to the economic situation in the country can be also considered among the important factors. These people are guided by a more pragmatic approach and simply avoid long-term financial commitments.

The other reason is the entrance of new players to the market, whose brands don’t significantly differ from ours both by their class and price.

- You’ve mentioned the toughening competition. How can this affect the further strategy of “Muran”?

 - The average price of cars suggested by “Muran” is the most competitive one. In fact, 70 percent of cars on the market are in this price segment. On the other hand, the Armenian car market is very small, and we don’t expect sharp growth of demand. The anticipated fluctuation in demand for the next year makes maximum 5-7 percent. This is why the effective competitive strategy is the only realistic tool to bolster sales in our case.

Generally, the competitive strategy can be pursued in two directions. The first is the flexible price policy, which, unfortunately, is not realistic for us due to several reasons, including the high customs duties and VAT. Thus, VAT is paid parallel to the customs registration of the imported vehicle, which creates an extra financial burden for the company.

The second direction is the increase of the service quality, particularly in terms of warranty and post sales service. Naturally, the higher the service level is, the more desirable and reliable the car is.

Nissan is a universal brand from the point of view of model diversity, and this creates additional problems for us in terms of service.

According to general statistics, a person who has once bought a car from the showroom, next time will again buy it from there. The probability is 80%. And although it’s hard to have permanent clients in our case, we are nevertheless working in this direction too.

- The secondary car market is obviously dominant in Armenia. What is the real proportion between the secondary and the first markets in Armenia and which are the main reasons for disproportion?

- The disproportion is more than unhealthy in case of the Armenian market, since only 10-15 percent of the cars in the market are new. I have never seen anything like this in any other country during my work experience. One of the reasons is the absence of a local car production as well as the low level of solvency of the population. Armenia is like a transport graveyard: every car that enters the Armenian market dies here and leaves the country only as a scrap.

- On what criteria is the official representative in a particular country chosen, and how are the relations with the mother company regulated?

- We have been the initiators of opening a representation of Nissan in Armenia, taking into account the fact that our country is a small market for large corporations. Before getting the status of an official representation, we imported and sold Nissan, which was something like a probation period on the way of gaining confidence and becoming an official representative.

As for the relations with the mother company, financial commitments are mainly limited to buying vehicles and spare parts. However, there are also non-financial relations. In this regard we have a number of commitments connected with external communications, structural units, inner and outer design of sales and service centers. There are some standards that are mandatory for all representations of Nissan worldwide.

The mother company renders us marketing support, providing market tools whose effectiveness is proved by experience. We only have to bring these tools in line with the Armenian market. We are also using Nissan promo ads and commercials, since it would be expensive to make them in Armenia.

From time to time we also receive direct financial assistance for conducting advertising campaigns. Financial assistance, for example, may involve buying cars or spare parts at a discount.

- During your 10-year activity, the sales volumes have reached about 5000. Can this figure be compared to similar markets of other countries where Nissan is officially represented?

- You are right. “Muran” has sold about 5000 vehicles during 10 years, which makes an average of 500 cars per year. I think this is a serious figure for the Armenian market.

I should say that in comparison with similar markets Armenia has been the leader in the region by the sales volumes of Nissan until the last two years. Now Azerbaijan is leading which, I think, is connected with the oil money and governmental programs for such cars carried out in Azerbaijan. According to our data, Georgia falls behind both Armenia and Azerbaijan by the sales volumes of Nissan.

- How do the car loan programs contribute to the sales growth of Nissan? Are your customers free to choose their bank or you have a “shortlist” of banks?

- As a standard banking package the car loans are available throughout the year and can be issued at every bank. However, from time to time, we come up with a joint offer with a particular bank (for example simplifying the procedure of loan processing and issuance). These are short-term offers and are made once or twice a year. On the whole, such programs are beneficial also for the banks as a tool for promoting their product, since car loan ads theoretically are costly and have no target.

Judging from our experience I can say that such offers contribute to the increase of car sales by 20-30 percent.

- How would you assess the cooperation with financial institutions from the point of view of a corporate client? In particular, do you think the banks offer a full the set of tools (factoring, letters of credit, international guarantees, etc.) in the sphere of trade financing?

- I should say that we work with the banks for at least half of every workday, starting from simple transactions to opening letters of credit and internal cooperation. It can be said that “Muran” is using almost the whole list of banking tools available in the market.  From the point of view of a corporate client, I think the set of tools offered by the banks is enough and allows carrying out all the necessary international trade deals. Moreover, every bank is always open for constructive offers, as money is the product that banks are trying to sell.

Artyom Petrosyan was interviewed by Shushan Margaryan

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