There are two or more ways of looking at most things. Traffic is no exception. In terms of everyday lifestyle, large numbers of cars and other vehicles are a problem, particularly in downtown Dubai. The flipside is the business being done by vehicle manufacturers and dealers, as well as ancillary service companies.
From both perspectives, improvement in road infrastructure is a welcome promise. In the meantime, we can only marvel at the rising number of cars, whether flying past at dangerous speeds or puffing quietly in a jam, and its reflection on this mone-spinning region.
The 8th Middle East International Motor Show which runs this week from December 12 to 16 showcases the industry underlying this phenomenon. It's going to be bigger and better, of course, and feeds the insatiable appetite of mankind for the latest, shiniest way to get from A to B.
There's no doubt the automotive sector is revving up. An industry report from Business Monitor International this month explains why. In a region liquid with petrodollars, increased disposable incomes create a favourable background. When oil prices are high, vehicle sales rise. The luxury and SUV segments have been especially buoyant.
Conversely, because we're talking about discretionary spending, the auto sector loses heavily if and when oil prices drop. Yet, even then, as long as world growth and trade continue to grow strongly, there's an underpinning which should be able to provide a cushioning effect. For instance, the used vehicle market is also said to be strengthening, boosting critical re-export business. Utilising data from the Dubai Chamber of Commerce and Industry, and major automakers, BMI reports high levels of turnover in the first three-quarters of 2005. Domestic sales are expected to rise by 14 per cent to 52,000 units for the year, and are forecast to average double-digit growth until 2009. It's welcome news, also, that the UAE "will continue to establish itself as the regional retail hub", with vehicle re-exports continuing to represent over half total sales, and producing business which may exceed $2 billion within a few years. On that score, trade liberalisation within the GCC will be a stimulating factor.
Minimal production
All these positive points sit in the context of the UAE's own production being minimal, with no passenger car manufacturing, and only limited commercial vehicle assembly. That does imply a certain dependence not only on international trends but on the terms offered by international suppliers. Investing in foreign manufacturers (such as DIC's venture into Daimler-Chrysler) is a means of diluting that weakness.
It's not just about vehicle sales, however. The physical characteristics of the region, in terms of climatic conditions and challenging terrain, have created a growing market for accessories and spare parts, where an industrial footprint has been established, albeit one which is rather fragmented as yet.
For the moment, for the regional auto industry as a whole, the sun is out and the sky is blue. There are reasons to suppose it will stay that way, if oil prices stay firm at least, and if the UAE and the GCC states collectively pursue diversification with success. BMI's forecasts carry the important caveat that "lack of data makes forecasting difficult", a familiar story. But the subtext is clear: the trend is this region's friend.
As a report this year from oil consultancy PEL put it, "consumers around the world aspire to the freedom bestowed by personalised transport". Unless you're a public transport devotee, it's difficult to argue with that. We might moan about congestion, we might beat the steering wheel in frustration, but too many of us love our motorized metal box to make the connection.
What's more, apparently the organisers this year have improved access and taxi management in and around the venue. See you at the Motor Show.
Q&A with David Venticich, Marketing & Planning Director, General Motors Middle East
How have sales been in the Middle East over the past year?
We have just celebrated a historical milestone in the region, surpassing 100,000 unit sales for 2005 by the end of November.
GM has now enjoyed 25 consecutive months of record sales. The company has seen its regional sales more than double in the last two years in an automotive market estimated at around 855,000 units annually.
Do you expect sales to improve/deteriorate over the next year and why?
GM's outlook for 2006 is very positive. With 12 major launches planned for 2006, we have set ourselves ambitious sales targets as we strive to match our global market leadership in this region.
What is the state of the market like now?
The regional automotive market is growing. It is already very competitive customer experience makes a real difference in this part of the world and the manufacturer with gets this right is the one with the winning edge.
Are there any structural changes to the types of cars being bought and why?
The market is witnessing growth in almost every segment, which is why we are committed to offering top products in every segment, particularly through our foundation brand, Chevrolet.
What should we look out for on your stand at the Dubai Auto Show?
The General Motors stand is again going to be the largest stand at the exhibition we will have 13 premieres and 3 concept vehicles on display. Whatever you're looking for, there's something at the GM stand to excite you, from the Cadillac V-series to the Sport Aveo.
Q&A with Jim Benintende, Managing Director, Ford Middle East
How have sales been in the Middle East over the past year?
Ford Motor Company will sell 50,000 in the region this year. 2005 has been a landmark year for Ford in the Middle East: Record sales, new product launches featuring the all-new Focus, Mustang and Lincoln Navigator, an expanding dealership network.
Do you expect sales to improve/deteriorate over the next year and why?
We plan to launch exciting products over the next two years which we believe will extend the base of our customers. This, together with our dealers' constant investment, means we are right on track towards achieving record growth.
What is the state of the market now?
The Middle East is a growth market, with most of the growth occurring in segments from less expensive sources like Korea.
The Middle East is also a young market, and this represents an opportunity for Ford and its youth-focused product line-up. Vehicles like the all-new Ford Focus, the Fiesta, Mondeo ST220 and the new generation Mustang show that Ford is in tune with what young customers want.
Are there any changes to the types of cars being bought and why?
Mid to full-size luxury SUVs are still what people are vying for despite the high petrol prices. The increasing regional popularity of our SUV line-up are prime examples. But on the other hand, the industry is growing mainly in the low priced, small car segments. An estimated 67 per cent of the GCC population is under the age of 29. The majority of the young generation also has disposable income, therefore the popularity of the small and mid-size cars is soaring.
Keeping this in mind, Ford's strategy this year has been to connect strongly with the younger customer. The Focus, all-new Mustang, the Fiesta and the Mondeo ST220 are key in substantiating the refreshed, youth oriented platform that Ford is embarking on in the region.
What should we look out for at the Dubai Auto Show?
The legendary Ford GT's production version returns after a prelude by the GT concept during the 2003 show, together with the Ford Mustang. The Ford Explorer, will also be displayed in its new 2006 version, marking yet another benchmark in its segment with class-leading features. Another star attraction this year is Lincoln's all-new mid-size luxury sedan, the Zephyr, which debuts aside its luxury truck, the Mark LT. As for Mercury, this year's show will feature all-new models making their Middle Eastern debut, including the Milan mid-size sedan, Monterey mini-van and the new 2006 Mountaineer mid-size SUV.
Q&A with Nibal Slim, Marketing Manager at Nissan Middle East
What have sales been like over the last year?
The market situation is encouraging. Total demand shows a healthy growth in GCC. The customers in the region are very mature and keen in quality and value of the cars. Rapid growth of the young generation driver is creating and leading new trend in the market.
Our performance has been outstanding this year. Some months have registered a record 30 per cent growth in a year to date comparison. Nissan and Infiniti have expanded their line-up substantially resulting in achieving our target of over 100,000 units in the GCC markets by September 2005. This target was part of GCC's contribution towards the Global Nissan 180 plan that aimed to sell an additional 1 million cars worldwide.
Do you expect sales to improve/deteriorate over the next year and why?
We expect Nissan sales to grow this year due to the expanded line-up of vehicles that were launched over the last 18 months, including the Middle East's largest SUV (4x4) line-up as well as the new line-up from our luxury division Infiniti. This is also due to the increase in oil revenues that have meant increased liquidity in the GCC market.
What is the state of the market now?
The Middle East as part of Asia is one of the fastest growing auto markets in the world. While other more markets like Europe and Japan are seeing flatter growth, the Middle East is growing at a much more dramatic rate.
What do you expect for next year?
Nissan expects continued steady growth of the automotive market in the Middle East. The current conditions are likely to continue. Nissan and Infiniti will continue to add new vehicles to the GCC market to satisfy the unmet needs of customers across the region. The public can continue to expect the best from Nissan.
Are there any structural changes to the types of cars being bought and why?
We see an increase in demand for crossover type vehicles as well as hatchback cars. Nissan and Infiniti have both launched exciting new crossover vehicles in the Middle East recently such as the Nissan Murano and the Infiniti FX. To cater to the growing demand for hatchback cars Nissan introduced the new Tiida while also offering a sedan version of this vehicle.
What should we look out for at the Dubai Auto Show?
The stars of the show will be our products on both our Nissan and Infiniti stands. We will be revealing new Pathfinder from Nissan and M45 from Infiniti. We will of course showcase all the latest model line-up at the motor show.
GCC facts
- Although accounting for only a fraction of global vehicle sales, the Middle East is one of the fastest-growing markets.
- The Gulf countries are estimated to have 6.25 million vehicles.
- Trade liberalisation with the EU should bring European brands to GCC markets.
- Gulf states have built a reputation for auto part manufacture and supply, with more than 300 plants and over $1 billion of investments, mainly in Saudi Arabia.
UAE facts
- Automobiles are one of theUAE's fastest growing sectors, attributable to economic growth, an increasing population, relatively cheap fuel and easy access to financing facilities.
- There are about 2 million vehicles registered in the UAE, projected to grow by 10 per cent annually.
- Two-thirds of the UAE's cars are of Japanese origin.
- About 22 per cent of imported new cars are intended for re-export.
UAE facts
- The UAE has a strong auto finance market, with more than 60 per cent of sales financed through instalment schemes.
- As world leader in Islamic finance products, Dubai has driven consumer credit for car buying.
- The UAE's high national wealth creates a niche market for sales of imported vehicles, while its regional status facilitates re-exports.
- Besides Saudi Arabia, other Middle East suppliers (Egypt, Turkey, Iran and India) may bring a competitive challenge, especially in the used vehicle segment.
Revving up
What: Dubai Motor Show
When: From December 12 to 16
Where: Dubai International Convention and Exhibition Centre (DICEC).
What can you see: Largest display of cars in the Middle East ? more than 90 automobile manufacturers, customisers, designers and tuners will take part.
Manufacturers exhibiting include: BMW, Mercedes-Benz, Maybach, Chrysler, General Motors, Ford, Ferrari, Bugatti, Lamborghini, Aston Martin, Bentley, Rolls-Royce, Jaguar, Maserati, Porsche, Pagani, Land Rover, Toyota, Volvo, Volkswagen, Audi, Nissan, Mitsubishi, Suzuki and Peugeot plus many more.
Bigger than last year: 32 per cent growth in exhibitors to cross the 200 mark.
Size of the show: 48,000 square metres, across 11 exhibition halls, the concourses and the outside space at the DICEC complex.
Middle East launches: 30
Mercedes
Mercedes-Benz will be display vehicles worth a total of $2.5 million. The show marks the first showing in the Middle East of the new Maybach 57 S ("S" standing for Special). Acceleration from standstill to 100 km/h takes just 5.0 seconds.
Also making its Middle East debut is the new R-Class, Grand Sports Tourer. The Mercedes Car Group will show the the Mercedes SLR McLaren supercar, a range of Mercedes-AMG performance vehicles and the versatile Viano MPV.
BMW
The BMW Group will debut new cars and engine variants to existing models.
New to the region from the BMW brand are the BMW 650i, and BMW 540i, In addition BMW Group will showcase the BMW 740Li and 750Li Individual, the BMW X5 4.8is, BMW X3 2.5i and the BMW 330i.
Land Rover
Land Rover will have will show a new premium range of Land Rover products. In addition, there will also be an Autobiography Range Rover. Autobiography is a personalised programme that enables Land Rover customers to select their own palette of special colours, body kit, leather trim, wood veneers and other luxury features.
Another attraction will be the Armoured Range Rover, a protected version of the new Range Rover loaded with features that equip the model to provide maximum passenger security against any external threat.
