Auto Industry Makes Breakthroughs in 21st Century

The automotive sector, comprising of the automobile and auto component sub sectors, is one of the key segments of the economy having extensive forward and backward linkages with other key segments of the economy.

Middle East in general and UAE in particular are fast growing markets for automotive industry. This region has a high ratio of cars per household. Gulf Cooperation Council countries (GCC) with their high GDP is a high consumption vehicle market and present enormous untapped opportunities for the manufacture of vehicles and its components. UAE is the second largest automotive market (including cars, parts as accessories, trailers and semi-trailers, trucks, public transport vehicles, tractors, other) in GCC after Saudi Arabia. UAE relies heavily on imports with virtually the entire supply of cars and light vehicles being imported. UAE’s efficient transport infrastructure (road, train, maritime, air) and strong logistics network are accommodating factors for any investment decision in automotive manufacturing. UAE’s strong protection of intellectual property in technical or design solutions as well as efficient and fair bureaucracy can safeguard the essential conditions for innovation in the automotive industry.

automotive_industry_in_UAE

UAE market constituted 30% of the GCC total. The major suppliers in UAE auto market are Toyota, Nissan, Mitsubishi, Honda, Mercedes, BMW, Volkswagen, Ford and General Motors.

The automotive component segment is also growing rapidly in UAE. In 2008, the UAE automotive parts and accessories market was estimated to be worth approximately $2.83bl. About 29% of the auto parts and accessories that have been imported are re-exported to other countries.  In 2014, UAE’s automotive trade value reached $20.7 bn, up 43% from 2010, 94% of which was imports. Cars represented 63% of UAE’s automotive imports from the world followed by parts and accessories (12.6%) and trucks (12.1%). Auto components are among the top 10 re-export products of UAE. UAE market for automotive parts is open and highly competitive. UAE automotive component market remains an import driven market, supply of spurious components is the main threat affecting this sector.

Assemblers

UAE Auto Industry SWOT

Strengths

  • The luxury car market is strong and growing on the back of rising levels of disposable income.
  • Investment in European auto firms lays the foundation for future partnerships

Weaknesses

  • There is no local production of passenger cars, and only a small number of commercial vehicles are assembled locally
  • The domestic market is largely dependent on international car manufactures for the style and design of autos, and its profitability is dictated by their demands.

Opportunities

  • As a result of climatic conditions and a rugged terrain, there is a vibrant and growing market for accessories and spare parts
  • Trade liberalization between the GCC states of Saudi Arabia, UAE, Kuwait, Oman, Qatar and Bahrain and the EU will open regional markets to more European imports
  • Plans for a car assembly plant could help spawn a local automotive manufacturing industry
  • Car leasing is becoming more attractive with residents preferring to hire a car rather than take out loans

Threats

  • The rising cost of living is putting pressure on sales and could lead to a decline in the market share of luxury brands, which have led growth in recent years.

Source: http://vnmanpower.com/en/services-categories/manufacturing-manpower.html

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s