United Arab Emirates Autos Report Q4 2010Business IntelligenceSeptember 23, 2010 65 Pages - SKU: BTAI2831138 |
| Countries covered: United Arab Emirates The recovery in the UAE has steadily been taking hold, helping the auto sector rebound from the disastrous fallout from the financial crisis in 2009. Recent sales reports from both established and emerging brands have been encouraging. Al-Futtaim - which is the sole distributor of Toyota Motor vehicles, including the premium Lexus brand, in the UAE - announced total sales in H110 rose 32% yearon- year (y-o-y), driven by strong growth in passenger car sales. South Korean car brand Kia Motors, meanwhile, posted a 44% y-o-y rise in sales in May 2010, helping boost the carmaker’s sales for the first five months of 2010, which rose14% y-o-y, to over 3,000 units. The global economic crisis dealt a big blow to the industry last year. In Dubai, new passenger vehicle registrations fell 31.5%, to 149,730. But analysts largely believe the worst is over for the industry, and this is supported by the rebound in sales seen so far in 2010. The outlook for economic growth in the UAE continues to improve. The central bank governor, Sultan Bin Nasser al-Suaidi, said the UAE economy may expand an average 4% in 2010 and 2011, according to a Bloomberg report in July 2010. That is better than the 2010 growth forecast of 3.2% Economy Minister Sultan bin Saeed al-Mansouri offered in May 2010. After the substantial dip in sales last year, we expect total vehicle sales to jump 8.5% y-o-y to reach 352,913 units in 2010. We believe the UAE is well positioned to make a more wide-ranging recovery than other markets in the Middle East. Barring another worldwide economic crisis, we expect vehicle sales in the UAE to exceed pre-crisis levels by the end of 2011 with growth reaching double-digits over the forecast period. There are still many factors that could interrupt the industry’s growth. A major threat is the pace of the global economic recovery, which remains fragile. Another worldwide recession would deal a major blow to the UAE, where credit is still hard to come by. Indeed, auto financing remains a major challenge to a pick-up in vehicle sales. Banks are still being cautious when it comes to making loans. As recently as August 2010, the dearth of financing was still being cited as a problem holding back sales. Bolstering our upbeat outlook is the investment that has been made into making the UAE a leading auto hub in the Middle East. Abu Dhabi unveiled in June 2010 plans to develop an automotive industry zone. Meanwhile, Dubai-based conglomerate Al Yousuf Group’s July 2010 purchase of US electric car producer Phoenix Motorcars is encouraging in terms of production potential. Group president Eqbal Al Yousuf said after the acquisition was announced that the vehicle could possibly be built in the UAE if a suitable partner is found. |
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