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United Arab Emirates Autos Report Q1 2014 - New Report Available

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2014-01-05 21:54:59 - Fast Market Research recommends "United Arab Emirates Autos Report Q1 2014" from Business Monitor International, now available

BMI has revised up its forecasts for 2013 new vehicle sales in the UAE, from 14.1% to a rise of 16.7% growth. This would see new vehicle sales total 362,013 units. The most recent data (7M13) show that new vehicle sales were reportedly up by 16% year-on-year (y-o-y), at 201,122 units. Looking forward, BMI retains an optimistic outlook on new vehicle sales, forecasting further growth of nearly 20% over the 2014-17 period.

Underpinning our upbeat stance is BMI's increasingly positive view on the medium-term outlook for the UAE economy. At the end of November 2013, we revised up our forecasts for Dubai's economy on the back of the emirate winning the nomination to host the World Expo 2020. We now forecast

Dubai's real GDP growth to average 4.3% over the period to 2017, up from our previous estimate of 4.1%. For the UAE as a whole, we are targeting 3.4% GDP growth in 2014 and we expect economic activity across the country to remain relatively robust over the coming quarters.

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Encouragingly for the auto sector, consumer sentiment is picking up, with prices across real estate and equity markets having started to head sharply higher in recent months, which bodes well for the prospects for a positive wealth effect. One final encouraging factor for the autos market is the increase in migration from neighbouring states following the Arab Spring. With public transport still inadequate in Dubai, car purchases are being seen as immediate priorities for new residents.

One potential downside risk to our forecasts is posed by rising inflation, which BMI forecasts to average 2.2% across 2014. According to latest data from the National Bureau of Statistics (NBS), CPI across the country stood at 1.3% in August. 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.

However, BMI's base case is for further continued steady growth over the forecast period. This stance has been given further support by the news in October 2013 that the Ministry of Economy has asked local auto dealerships to cut car prices in order to close the price disparity between their cars and those imported directly from other countries in the Gulf region through unofficial channels. Local media report that the government has set up a committee dedicated to determining how UAE car dealers can reduce prices, with a study due to be published by the end of 2013. The ministry says the price gap can be as large as US$8,000 for some vehicles, leading to a competitive advantage for unauthorised vehicle import agencies. Should the government manage to persuade local dealers to cut their prices, this would likely lead to greater numbers of official new car sales, which would provide further upside to our forecasts.

One other key development over the past quarter was the unveiling of the Devel Sixteen super car. In November 2013, the locally-owned Defining Extreme Vehicles Car Industry (DEVCI) company unveiled the new 5,000 horsepower, eight cylinder V16 turbocharged Devel Sixteen supercar at the Dubai International Motor Show. This new sports car - which its backers believe could reach top speeds in excess of 400 km/h - was reportedly entirely developed and produced within Dubai, thereby making it the first vehicle production project for the UAE. With full-scale domestic vehicle production having also commenced recently in neighbouring Saudi Arabia, BMI believes that the Sixteen could herald a similar path for the UAE, which would see the UAE and Saudi Arabia compete or complement in terms of their production segments.

The UAE has become a haven for high-end luxury brands, with Ferrari choosing Abu Dhabi for its 'Ferrari World' attraction centre and Audi planning to base its biggest workshop worldwide in Dubai. It could be fitting, therefore, if the industry specialised in production of high-end cars, while Saudi Arabia produces bigger volumes. Until the Sixteen's limited edition run starts in 2014, however, the domestic sector's capabilities are still unproven.

Separately, a rival UAE-based supercar manufacturer, W Motors, has announced plans to open a car factory by the end of 2014, Zawya reported in November 2013. With the firm's designers already located in Dubai, the factory is expected to be used for production of the Lykan Supersport model. Once the plant is operational, W Motors says that it will be used to construct all future car models.

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.

About Business Monitor International

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

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