Industry

In Sum of This

Auto Sales & Spare Parts

Growth in Dubai’s economy over the past few years has reflected strongly on auto sales. Auto parts manufacturers are also taking advantage of the Emirate’s location and infrastructure to export […]

Growth in Dubai’s economy over the past few years has reflected strongly on auto sales. Auto parts manufacturers are also taking advantage of the Emirate’s location and infrastructure to export to the region and beyond.

New car sales were up 27% year on year in the first two months of 2013 in the UAE, with 380,000 units expected to have been sold by the end of the year. This is up on the 305,000 vehicles sold in 2012 and 243,000 in 2011. Dubai took a large share of the pie, with the Roads and Transport Authority (RTA) reporting that 1.13 million cars were registered in the Emirate in 2012, up 106,000 since 2010. Business Monitor International now predicts that the sector will grow at 9% per year until 2017. Winners in 2012 included market leader Toyota, and its local distributor Al Futtaim Motors, which recorded a growth in sales of 32%. Ford Motor Company also saw sales rise by 55%, while Renault, through local distributor Arabian Automobiles, grew 67%. GM Middle East, which markets the Cadillac, Chevrolet, and GMC Truck brands in the region, is positive about the role Dubai is playing. “Dubai is really a gateway not just to the Middle East, but to North Africa as well,” said John Stadwick, President and Managing Director of GM Middle East. The luxury car market is also performing well, with AGMC, the local dealer for Rolls-Royce, posting sales growth of 22% in 1Q2013 compared to the same period in 2012.

Pre-2008 demand is also returning to the auto parts sector, which has begun to thrive in Dubai. Foreign trade in auto parts was valued at AED37 billion in 2012, up by a considerable AED8 billion since 2009, according to Dubai Customs. In terms of the region, the consumption of auto parts in the GCC was $8.85 billion (AED32.5 billion) in 2012, a figure that is expected to grow to $14.4 billion by 2016. The UAE, along with Saudi Arabia, are the two largest auto component markets in the region, accounting for a share of 78%. Demand comes mainly from the industrial sectors, especially trucks, which is reflective of the significance of logistics in the country’s economy. The domestic market is partly fuelled by imports, of which Japan is the top source—28% of imports came from the country, with a value of AED6.1 billion in 2012. Japan is followed by China, with AED2.8 billion, and South Korea, with AED2.3 billion. In export and re-export terms, Saudi Arabia is the largest destination for Dubai’s auto parts, at 11%, with a value of AED1.6 billion. This is followed by Afghanistan, with 5%, and Oman, on 4%.

As economic growth continues, the demand for cars is unlikely to slow down. Auto parts manufacturers will also continue to take advantage of the growing local fleet of private passenger cars and industrial vehicles, while exports will grow in line with the development of the Emirate’s logistics infrastructure and commercial hub status.