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Bahrain Autos Report Q2 2008Published by: Business Monitor International Published: Apr. 4, 2008 - 34 Pages Table of Contents
AbstractAn economic slowdown will force Bahrain’s automotive sales growth down to 5.0% from 2009,according to BMI’s latest Bahrain Automotives Report.According to the few automotive sales results available, 2007 was a year of strong car sales growth inBahrain, on the back of 6.8% GDP growth. These figures confirm BMI’s sales estimate of 42,000 unitswith annual growth at around 13%, up by one percentage point during 2006, helped by low car financerates and buoyant consumer demand. Overall economic growth is set to decline to 5.4% in 2008 and 4.5%for the rest of the forecast period due to a decline in the oil sector. The effects on the automotive marketwill be offset by economic diversification. While average interest rates are likely to remain at around 8.5% over the next five years, car finance ratesare likely to be in the region of 4-6% in Bahrain’s highly competitive car market. In H207, KuwaitFinance House offered the lowest car finance rate in the country, at 4.25%. Low car finance rates willprovide an impetus to consumer demand for passenger cars. At the same time, we do not envisage asignificant adjustment in the exchange rate, even if the Emirati dirham is revalued against the US dollar tocounter the effects of depreciation against the euro. This gives US carmakers a competitive advantage onthe Bahraini market against European and Japanese firms, which are suffering as a result of theappreciation of the euro and the yen. Overall market performance will be affected by saturation and declining GDP growth, which is forecastto decline to around 4.6% by the end of the forecast period. Consumer demand will also be limited by theproblem of congestion in Bahrain and high rates of car ownership. In terms of segment performance,SUVs are likely to see the most robust growth, particularly given the likelihood of domestic SUVproduction. By 2012, the automotive market should be at least one-third larger than in 2007, with annual salesreaching around 56,500 units. We expect a soft landing rather than a problematic downturn, since oilprices will remain high by historical levels, while oil-fuelled investment has boosted non-oil outputcapacity. Moreover, diversification efforts mean that Bahrain is less dependent on the oil market thanmost other Gulf States. Get Full Details About This Report >> |
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