BMI's Executive Summary

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Growth in the UAE's automotive market is set to slow over the next five years as the market reaches saturation point. However, the market is unlikely to be negatively affected by the downturn in oil revenues or any turbulence in the local bourses. BMI forecasts 7.0% sales growth in 2008, down from 12.0% in 2007. By 2012, passenger car sales should total around 340,000 units, a 26% rise over 2007 levels. Much of the growth will be led by SUV and luxury car sales, which have experienced aboveaverage growth. Luxury car sales led growth in 2007. Although luxury car sales performed strongly, nonpremium brand sales grew by just 8% in 2007, with European brands placed under pressure due to the appreciation of the euro against the US dollar.

Consumer trends point towards growth in SUVs and entry-level luxury cars, which is likely to be sustained over the next five years. Nevertheless, in a country where the cost of living is accelerating, the market will be increasingly price responsive, giving non-luxury brands potential for growth through their top-of-the-range models, which tend to be priced lower than their luxury brand equivalents. BMI expects price discounting in an increasingly competitive market, with the exchange rate set to determine demand. At the same time, the euro is set to depreciate by around 8% against the US dollar over the next five years, putting European brands such as Mercedes-Benz and BMW in a better competitive position. However, with US carmakers establishing production operations in China, there is the prospect of Chinese-manufactured luxury branded cars entering the UAE. The one thing that is certain about the UAE is that brand loyalty cannot be taken for granted and local consumers will seriously consider purchasing cheaper models with the same level of comfort and amenities as the more expensive equivalents. However, lower-cost entry-level luxury cars will have to compete with a surging used car market, which grew by around 50% in 2007.

A major development facing the UAE is the establishment of a car assembly plant in Dubai, which is planned by locally owned Praktiko GT. From a new production plant in Dubai Investment Park, the company plans to produce the Tiger Kub budget model for export to Africa and India. While the car is destined for emerging markets, a lack of a strategic partner or investor means that the plant may produce only in relatively small volumes. Praktiko has been reluctant to disclose plant capacity and BMI doubts the company will be a serious contender in the low-cost micro-car sector, in which Daimler's Smart car has gained popularity. Nevertheless, BMI believes the Praktiko car assembly project will generate interest from foreign autos majors, with the possibility of a local tie-up with a foreign car manufacturer seeking to tap into growing demand for low-cost cars in the developing world. The UAE's geographical position, low labour costs and relatively liberal investment regime make it an attractive investment destination, although high construction costs could deter some investors.

Contents

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Chapter 1 – SWOT Analysis

UAE Autos Industry SWOT

UAE Economic SWOT

UAE Business Environment SWOT

Chapter 2 – Middle East and Africa Overview

Table: Middle East and Africa Autos Production – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: Middle East and Africa Autos Sales – Historical Data & Forecasts (CBUs unless otherwise stated)

Suppliers

Table: Africa Autos Sales 2005 By Segment

Table: Middle East Autos Sales 2005 By Segment

Middle East Commercial Vehicle Market Overview

Table: Regional Commercial Vehicle Market: Country Ranking, Sales

Table: Regional Commercial Vehicle Market: Country Ranking, Production

Table: Regional Commercial Vehicle Market: Company Ranking Of Significant Regional Manufacturers

Table: Recent And Planned Investments In The Middle East And Africa

Special Focus – Automotive Parts In The GCC

Special Focus: Islam and The Automotive Sector

Special Topic: Sports Utility Vehicles

Special Topic: Used vehicles

Special Topic: Luxury Vehicles

Chapter 3 – Business Environment Rankings

Economics – Long-term Risk

Politics – Long-term Risk

CBU Output Growth

Vehicle Ownership/Penetration Potential

Regulation

Competitive Environment

Chapter 4 – Industry Forecast Scenario

Table: UAE Automotive Sector – Historical Data & Forecasts (CBUs new vehicles unless otherwise stated)

Chapter 5 – Macroeconomic Forecast Scenario

Table: Economic Indicators

Country Snapshot: UAE Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Consumption And Stratification

Chapter 6 – Competitive Landscape

Manufacturing

Dubai

Abu Dhabi

Northern Emirates

Table: Dealers In Dubai And Northern Emirates

Table: Dealers In Abu Dhabi

Table: Key Players: UAE Auto Sector

Gulf commercial vehicles market overview

Table: Size Of Commercial Vehicle Market: Gulf States (CBUs)

Table: Value of Commercial Vehicle Market: Gulf States (US$mn)

Table: Forecast Commercial Vehicle Market: Gulf States (CBUs)

Table: Forecast Commercial Vehicle Market: Gulf States (US$mn)

After-Sales Business

Trade Expos

Fleet And Rental Contracts

Company Strategy

Company Sales Performance

Chapter 7 – Company Monitor

Regional Case Study: Volkswagen

Production

Sales

Table: Volkswagen dealers in Middle East and Africa

Company Profiles

Ford

General Motors

Nissan

BMI Forecast Modelling

Automobile Industry

Sources

Appendix: Regional Demographic Data

Table: The Long View: Data Over The Economic Cycle (2000-2007)

Table: Population

Table: Household Spending Per Capita, US$

Table: Private Consumption Per Capita, US$ PPP

Table: Market Size, GDP, US$bn

Competitive Landscape for Middle Eastern Automotives: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Automotive Sources

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BMI's Middle Eastern Automotives Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: