2013-10-25 19:23:42 - New Transportation research report from Business Monitor International is now available from Fast Market Research
Over H113, UAE new car sales were up by a reported 12% y-o-y, at 166,290 units. This leaves the country well on course to hit BMI's forecast of 14% growth for the full year. Looking forward, BMI retains an optimistic outlook on new vehicle sales, forecasting further growth of 33.7% over the 2013-17 period.
Underpinning our upbeat stance is BMI's positive view on the UAE economy, which we see expanding by 3.2% in real terms in 2013, rising to 3.8% in 2014. Although we expect growth in the UAE to slow in H213, as net exports fall on the back of lower oil prices over the rest of the year. However, there are bright spots for the economy as property prices
in Dubai appear to have bottomed, and fixed investment continues apace Encouragingly for auto sector demand, both consumer and business sentiment towards the UAE have improved significantly since the start of 2013, with real estate and equity markets showing the most notable signs of improvement. Dubai's DFMGI and Abu Dhabi's ADX are the two best performing equity markets in the Middle East since the start of the year, having posted gains of 33.1% and 32.5% respectively and boding well for a positive wealth effect. While there has been a pullback of late, as part of a wider move away from equities globally, we remain bullish towards both indices, given positive underlying fundamentals.
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One slight downside risk to our forecasts is posed by rising inflation, which BMI forecasts to reach 2.3% by end-2013. We expect this trend to continue over the coming months, as a solid macroeconomic backdrop and an improving housing market in Dubai take hold. According to latest data from the National Bureau of Statistics (NBS), CPI across the country came in at a 25-month high of 1.3% y-o-y in July, up from 1.2% and 1.0% in June and May respectively. This could potentially see the Central Bank of the UAE look to move rates up from their current record low of 1% which, in turn, could impact on those UAE residents requiring loans to make vehicle purchases.
At the lower end of the market. Chinese manufacturers are looking to tap into the growing potential of the UAE market. In August 2013, local dealer Al Habtoor Motors announced that it is to launch Chinese automaker JAC Motors' passenger cars and trucks in the UAE. The move came after a dealership agreement was signed by Sultan Al Habtoor, the president of Al Habtoor Motors, and Carl She, the general manager of JAC Motors. As part of the deal, JAC will launch its passenger, light commercial and heavy commercial vehicles in the UAE market. Al Habtoor Motors is planning to open the first JAC Motors showroom in Dubai, followed by Abu Dhabi in H114.
Earlier, in June 2013, Al Habtoor signed a similar agreement w to sell Chery branded vehicles in the UAE. As part of the agreement, Al Habtoor Motors will introduce Chery's complete range of passenger and commercial vehicles in the UAE. The company is likely to launch the Chery showroom in Dubai in September and will formally unveil the range at the Dubai International Motor Show.
Optimism also remains high in the luxury and super luxury segments, and industry players are positioning themselves to tap this growth. In July 2013, British luxury car brand Rolls-Royce said that Abu Dhabi is its biggest auto market in the world, reflecting the popularity of its vehicles in the UAE, according to a report on Zawya.com. Abu Dhabi reportedly sold more Rolls-Royce vehicles than in New York, London and Beijing in H113. Abu Dhabi is also the world's biggest market for bespoke Rolls-Royce vehicles. Rolls- Royce vehicles are only sold by Abu Dhabi dealer Abu Dhabi Motors, which was named the carmaker's global dealer of the year in 2012.
Looking at sales trends over H113, Toyota Motor remains the dominant player on the UAE new car sales market, selling 60,857 units for a market share of 36.6%. The Japanese carmaker sold the four most popular models in the emirate over the half-year period (Prado, Hilux, Corolla and Land Cruiser), with these four models, plus the Camry, making up the Top 5 for the month of June 2013.
In second place is Nissan Motor, which sold 28,025 units for a market share of 16.9%, followed by fellow Japanese manufacturer Mitsubishi Motors, which sold 12,633 units for a market share of 7.6%. The top three manufacturers accounted for over 60% of total new car sales over H113.
In fourth place was Hyundai Motors on 10,821 units (6.5% share), followed by US carmaker Ford Motor on 7,051 (4.2%).
In summary, the overall outlook for the UAE's auto sector is positive, with demand for new commercial vehicles set to be bolstered by continuing investment in infrastructure projects and improvements to public transport networks. Government spending, particularly aimed at the non-oil sector in Abu Dhabi, is driving construction projects.
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Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010
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