TWO-LANE BLACKTOP
With an ever-increasing number of cars in Kuwait, the country's burgeoning automotive segment is entrenched by both an affluent consumer base as well as established partnerships between MNCs and Kuwaiti family holdings.
In mid-October 2016, HH the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah dissolved Kuwait's parliament as a consequence of a long-lasting political gridlock over fuel price increases. Announced as part of the government's strategy to meet its deficit targets in a low oil price environment, fuel prices increased by roughly 80% in September 2016, eventually triggering the resignation of the cabinet and the dissolution of the national parliament. Although the gridlock over fuel price increases followed a number of policy disputes over subsidy cuts, it should come as no surprise that Kuwait's automotive segment and its burgeoning consumer base have become key economic players.
According to the 2015 Annual Statistical Bulletin of Transport, the number of operating vehicles has been estimated at more than 1.9 million in 2015. With more than 75% of vehicles in private ownership, the 10-year trend suggests that the number of vehicles has not only incrementally risen over the past 10 years, but will further increase until 2020 at the very least. These numbers are further reflected in the regional automotive industry, given that the GCC car fleet steadily increases at a growth rate of 5%. In fact, the UAE, Saudi Arabia, and Kuwait are expected to make up nearly 75% of the GCC's car fleet until 2020.
These positive developments have been crucially facilitated by long-standing distribution authorizations and import dealerships between international automobile manufacturers and a number of family-owned companies. As the authorized distributor of Toyota's cars—the most popular automotives in Kuwait—Al Sayer Group, for instance, has obtained a significant share in the Kuwaiti automotive segment. The group has not only sold Toyota's cars for more than 50 years, but has also cemented its leading position in the car rental industry—a market segment that is expected to reach overall revenues of almost USD300 million until 2020. Most notably, however, a number of family conglomerates such as Alghanim, Behbehani, Al-Mulla, and Al-Babtain either started off in the automotive segment or eventually managed to obtain a crucial market share. In an interview with TBY, Al-Babtain's Group CEO Saleh A. Al-Babtain described how a car dealership with Nissan marked Al-Babtain Group's rise to success: “Operating for 65 years now, we are one of the oldest groups in Kuwait. We started in the automotive business in the late 1940s and, after that, we grew along with the discovery of oil in Kuwait. Eventually, we diversified and invested in automotive and real estate development which aligned with the business needs of the country. […] It is important in terms of size and revenue and I would put it as over 50% of our business but the other sectors of the group's investments should not be undermined. With regard to the automotive business, however, we are the agents for Nissan and are the second-biggest dealer in the world after Thailand.”
With international automobile manufacturers having cemented a top-performing supply chain with local family businesses over the years, various macroeconomic factors have facilitated a continuously rising demand for cars. While Kuwait's strong currency and its population's high disposable, tax-free income encourages high consumption patterns, the country's vast retail banking segment provides favorable loan and insurance options. Moreover, despite the recent surge in fuel prices, gas still remains at an affordable cost. Although Kuwait's infrastructure has been rather unprepared for the vast increase in operating vehicles over the years, a wealth of large-scale infrastructure projects, particularly new roads and bridges, are further set to significantly reduce traffic congestion in Kuwait. What finally remains unaddressed, however, is a comprehensive strategy to deal with the most fatal consequence that the burgeoning automotive industry has brought about: Over the past 10 years, the Ministry of Interior registered more than 4,265 motor vehicle casualties—a staggering number that is unfortunately set to further increase in light of the automotive industry's upward momentum.
TWO-LANE BLACKTOP
TABLE OF CONTENTS
Guest Speaker
Dato’ Sri Haji Mohammad Najib bin Tun Haji Abdul Razak, Prime Minister , Malaysia
TBY talks to Dato' Sri Haji Mohammad Najib bin Tun Haji Abdul Razak, Prime Minister of Malaysia, on the growing contribution that Islamic countries are making to the global economy and how Islamic financing can offer new opportunities to industry and academia.
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HE Khaled Nasser Abdullah Al-Roudan, Minister, Commerce and Industry (MoCI)
TBY talks to HE Khaled Nasser Abdullah Al-Roudan, Minister of Commerce and Industry (MoCI), on tools and strategies for diversifying the economy, the role of international players in supporting a wider range of sectors, and the rapidly developing food industry.
read articleInterview
HE Yousef Al-Ebraheem, Advisor , Al-Diwan Al-Amiri
TBY talks to HE Yousef Al-Ebraheem, Economic Advisor to the Al-Diwan Al-Amiri, on the need for a rejuvenation of Kuwait's infrastructure to support an economy that has come a long way and the role education will play in delivering the expertise required by the society.
read articleInterview
Dr. Khaled A. Mahdi, Secretary-General , Supreme Council for Planning & Development (GSSCPD)
TBY talks to Dr. Khaled A. Mahdi, Secretary General of the Supreme Council for Planning & Development (GSSCPD), on the breakdown of Kuwait's long-term economic plan, the KPIs that will benchmark its success, and what Vision 2035 means for the nature of the economy.
read articleInterview
Sheikh Dr. Meshaal Jaber Al Ahmed Al Sabah, Director General, Kuwait Direct Investment Promotion Authority (KDIPA)
TBY talks to Sheikh Dr. Meshaal Jaber Al Ahmed Al Sabah, Director General of the Kuwait Direct Investment Promotion Authority (KDIPA), on launching an investment promotion conference, attracting the right partners for PPP, and expectations for the year ahead.
read articleInterview
HE Dr. Mohammad M. Al-Zuhair, Executive Chairman, Kuwait National Fund for Small and Medium Enterprise Development
TBY talks to HE Dr. Mohammad M. Al-Zuhair, Executive Chairman of the Kuwait National Fund for Small and Medium Enterprise Development, on empowering young Kuwaitis, IT and entrepreneurialism, and the growth of fintech.
read articleFocus: Still all in the family?
Merchant families in Kuwait
Family-owned businesses play a major role in the Kuwaiti economy. However, with many approaching the third generation of management, they are starting to come across unique problems that may pose issues for the greater economy.
read articleInterview
HE Sheikh Abdullah Ahmad Al-Humoud Al-Sabah, Director, Environmental Public Authority (EPA)
TBY talks to HE Sheikh Abdullah Ahmad Al-Humoud Al-Sabah, Director of Environmental Public Authority (EPA), on how oil companies can contribute to Kuwait's vision on sustainability and the various projects that are coming to fruition.
read articleInterview
Dr. Samira S. Omar Asem, Director General, Kuwait Institute for Scientific Research (KISR)
TBY talks to Dr. Samira S. Omar Asem, Director General of the Kuwait Institute for Scientific Research (KISR), on commercializing the green innovations coming from R&D initiatives, the role of collaboration across multiple sectors, and projects that we should expect to see more of in the future.
read articleInterview
Khaled Abdulrazzaq Al Khaled, Vice-Chairman and CEO, Boursa Kuwait Company
TBY talks to Khaled Abdulrazzaq Al Khaled, Vice-Chairman and CEO of Boursa Kuwait Company, on the takeover of the Kuwait Stock Exchange and the role the bourse plays in both the privatization of government entities and as a source of capital for family businesses.
read articleInterview
HE Essam Abdul Mohsen Al-Marzouq, Minister, Oil & Minister of Electricity and Water
TBY talks to HE Essam Abdul Mohsen Al-Marzouq, Minister of Oil & Minister of Electricity and Water, on cooperation with other ministries, the private sector's role in energy, and upcoming regulations.
read articleInterview
Ghalib Shlash Safouq, Assistant Undersecretary for the Construction Projects Sector, Ministry of Public Works
TBY talks to Ghalib Shlash Safouq, Assistant Undersecretary for the Construction Projects Sector at the Ministry of Public Works, on Kuwaiti companies, the country's healthcare facilities, and the role of international companies.
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Khaled K. Al Mashaan, Vice-Chairman & CEO, ALARGAN International Real Estate Company
TBY talks to Khaled K. Al Mashaan, Vice-Chairman & CEO of ALARGAN International Real Estate Company, on drivers of growth, operating throughout the region, and real estate prices in Kuwait.
read articleInterview
Tawfiq Ahmed Bin Sultan, Chairman, Middle East Telecommunications Company (METCO)
TBY talks to Tawfiq Ahmed Bin Sultan, Chairman of the Middle East Telecommunications Company (METCO), on e-government potential, the future of the economy, and the state of technology uptake in Kuwait.
read articleInterview
Sheikh Yousef Abdullah Sabah Al-Nasser Al-Sabah, Director General, Kuwait Ports Authority (KPA)
TBY talks to Sheikh Yousef Abdullah Sabah Al-Nasser Al-Sabah, Director General of Kuwait Ports Authority (KPA), on his operational plans for the near future and turning Kuwait into a regional logistics hub.
read articleInterview
HE Khaled Nasser Abdullah Al-Roudan, Acting Minister, State for Youth Affairs
TBY talks to HE Khaled Nasser Abdullah Al-Roudan, Acting Minister of State for Youth Affairs, on e-platforms and blended learning programs, developing ICT skills, and preparing young people for tomorrow.
read articleInterview
Eng. Ali Hussein Al Youha, Secretary-General, National Council for Culture, Arts and Letters
TBY talks to Eng. Ali Hussein Al Youha, Secretary-General of the National Council for Culture, Arts and Letters, on the activities of the Council and works to preserve and enhance Kuwait's cultural heritage.
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