Increased Competition, Maturity, and a Flush Year Expected for GCC’s Automotive Sector

  • Vehicles on the road in UAE expected to reach 3.53 million or 18.5% of regional market share by 2020

The automotive industry in the UAE and GCC has been a resilient cornerstone of the economies in these countries for many years, so much so that the GCC has long been the largest automotive market in the MENA region. Although the sector seemed to show signs of slowing-down in 2016, the industry is expected to return to its commanding position due to a couple of factors.

On the periphery of the automotive industry too there is increased activity from companies manufacturing support products and services. For instance, the German origin Kärcher offers total cleaning solutions specific for the automotive industry, as well as general solutions that are appropriate for certain tasks across industries.

Across the GCC, 2017 is the final calendar year before the implementation of VAT is carried out across the region beginning in 2018. As such 2017 is expected to be a boom-year for car sales across the region, as individuals and companies rush to purchase pre-VAT priced vehicles. No doubt the sales of vehicles will contribute to the current estimate of 16.5 million vehicles on the roads across the GCC for 2017. This figure is estimated to rise to 19 million vehicles by 2020 according to a report by Frost & Sullivan, which also suggests that Saudi Arabia will be the regional market leader with a 52.5% market share. The same report suggests the UAE will have the second largest market share at 18.5% followed by Kuwait, Oman, and Qatar.

“The high-traffic that automotive dealer showrooms witness daily can leave the area looking dirty if not regularly maintained. “For example, 94% of soil, dust and sand in a facility come from foot traffic,” commented Mr. Mazen Abou Chakra, Export Sales Director, Kärcher Middle East FZE who is an exhibitor at this year’s Automechanika. “If showrooms, service areas, and parking lots are not maintained to the highest cleaning standards, then this could turn away customers. Of course, maintaining these high traffic areas is very demanding and requires top-of-the-line equipment which Kärcher manufactures. There is no doubt a clean showroom, and other public areas at automotive dealers play an important role of instilling customer confidence in the brand,” he continued.

However, amidst all the trends affecting the automotive industry, there are two that directly affect the way in which automotive businesses operate. These are increasing maturity within the markets, and competition. The increased competition has automotive businesses innovating new ways to compete. One area of focus is the showrooms and parking lots of automotive dealers. A clean showroom can instill customer confidence in the brand.