The U.A.E. automotive industry faced tough challenges again in 2018, but the trend is likely to reverse in 2019 due to increased demand for Construction and Freight Transport Sectors.
The U.A.E. will continue to be one of the most robust automotive markets in the GCC thanks to factors such as low fuel costs, low import tariffs, high per capita disposable income, and a favorable tax regime. Also, attractive insurance and finance options make it relatively easy for consumers to buy cars in the U.A.E. The outlook is particularly favorable for the sale of luxury cars, electric and hybrid vehicles, and motorcycles. And, due to a likely increase in migration from neighboring countries with inadequate public transport, new residents will show a preference for buying cars.
The U.A.E. relies heavily on imports, where virtually the entire supply of car and light vehicles is imported. The exceptions are a few companies such as, Zarooq Motors - the first Emirati car manufacturer; W Motors - UAE-based supercar manufacturer; Hafilat Industries - a joint venture between Specialized Investment Group, Emirates Link Group and Volgren; Ashok Leyland - a joint venture with the Ras Al Khaimah Investment Authority (RAKIA) is the only certified local bus factory in the UAE and GCC region. There are couple of other truck units assembling CKD components and few armored vehicles factories in the UAE but no other major automotive manufacturing activity here.
Passenger Cars
Approximately 80 percent of the U.A.E. automotive market is passenger cars and the remaining 20 percent is commercial vehicles (trucks, vans and buses). In 2017, Japanese manufacturers Toyota, Nissan and Mitsubishi were the leading sellers of passenger cars in the U.A.E. Toyota retained its position as the market leader with 30.5 percent share, followed by Nissan at 17.7 percent, and Mitsubishi at 9.0 percent. The top three brands comprised over 57 percent of total passenger car sales in the U.A.E. in 2017.
For luxury cars, the demand remained strong across the sub-segment and this trend is expected to continue through 2020. Demand for BMW, Lexus, Jaguar and Maserati remained strong in 2017 due to continued tourism-related activities and projects.
Customized/Modified Vehicles
The modified car market in the UAE has attracted massive investments over the past few years. To ensure more safety, regulating the modified car market and preventing modification of any cars in a way that poses a threat to public safety, a new technical regulatory system (developed in collaboration with the Specialty Equipment Market Association) specifying requirements for the modification of passenger vehicles in the UAE came into effect on June 1, 2017, to limit the modification of passenger vehicles in the UAE in a bid to improve safety. The new rules are applicable to used and new passenger vehicles modified by the addition, substitution, or alteration of vehicle equipment or systems and car service centers and workshops which introduce car modifications in the country have to comply with certain technical specifications. Excluded from this, however, are the motorcycles, trailers, caravans and tractors.
Summary
United Arab Emirates
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