Emirates Automotive Market is moderately negative with year to date September figures at 184.464 (-7%) projecting the year to be the third loser in a row. The outlook is improving thanks to economic reforms and demand is expected to soar in the next months.
Following a likely solid second quarter for the non-oil sector, the economy appears poised to be gaining steam in the third quarter. This is notably thanks to the increase of OPEC oil production targets in June as reflected by a noticeable increase in oil output in July and August. Furthermore, although the PMI softened somewhat in the same period—indicating waning momentum in the non-oil economy—a swath of recent reforms enacted throughout the Emirates should be starting to bear fruit in Q4 and beyond, further buttressing economic activity.
Higher investment and public spending are likely to drive growth higher this year and next. Particularly, infrastructure investment related to the country’s preparation to host the 2020 World Expo will support the outlook, buttressing the construction sector. Furthermore, recent business-friendly reforms and a new investment law to be unveiled in Q4—which will authorize complete foreign ownership of firms in select sectors—are poised to boost investor confidence and support higher FDI inflows.
UAE vehicles market is running across the hardest crisis of last decades, following a long period of robust expansion. Indeed, in recent years sales grew from 291.000 in the 2012 to the all time record of 408.252 established in the 2015. The demand contraction related to the oil price decline in the international market hit the country more than any other in the region. In addition, it must be considered the relevance of trading activity for vehicles registered in the Emirates and then exported (others GCCs and Africa).
This activity has been hit as well, due to low demand from Africa and others GCC countries. The effect was a huge fall in the 2016 and again in the 2017, when full year sales fell down at 276.081 (-11.2% ) despite the sales boom reported in December.
On January 2018 a Value Added Tax (VAT) has been introduced in Saudi Arabia and the United Arab Emirates for the first time, breaking a milestone, if considering Gulf states have long attracted foreign workers and capitals with the promise of tax-free living. But governments want to increase revenue in the face of lower oil prices and a 5% levy is being applied to the majority of goods and services. For “technical reasons” other members of the Gulf Co-operation Council – Bahrain, Kuwait, Oman, and Qatar -, also committed to introduce VAT, have delayed plans until at least 2019.
Starting the 2018, the effects of VAT introduction had been sharp in both KSA and UAE. However, while in the Saudi Market sales are reported heavily negative, in the UAE strong economic evolution sustained vehicles demand recovery since the Q2. Indeed, light vehicles sales year to date September were 184.464 (-7.2%) projecting the year down for the third year in a row.
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Brand wise, the leader Toyota sold 47.615 vehicles (-19.3%) with market share at 25.1%, the lowest in this decade.
In second place Nissan with 40.422 units (+23.6%) followed by Mitsubishi with 19.186 (-0.5%) and BMW with 12.034 (-10.1%).
Research, Consulting, Data & Forecast
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