Japanese used car

DUBAI — The UAE car market, one of the fastest growing sectors in the country’s economy, is forecast to grow by 28 per cent in 2006 with sales of 185,600 new cars during the year, compared to the sales of 145,000 units in 2005, according to senior industry analysts.

The growth in car sales is attributed to rapid economic development, increase in population and easy access to car loans. Re-exports constitute a significant sector of the market.

The growing popularity of compact and small engine cars is a new trend. The rising fuel price, the traffic jams, increase in the number of female drivers and shortage of parking spaces, are the main factors behind the trend. A leading car dealer opened a used car showroom exclusively for female customers and staffed by female sales executives. There is strong demand for Sports Utility Vehicles (SUVs) which make up 30 per cent of the cars in the UAE. They seat seven or eight passengers, with 4WD, large cargo space and V8 engines. Hummer, the civilian version of the Hum-Vee, is a notable success. Japanese cars make up 66 per cent of the cars in the UAE.

The SUV and luxury car markets are strong, and growing with the rising levels of disposable income, but the UAE automotive sector also has a growing used vehicle market, particularly in terms of re-exports to the wider region. The re-exports are expected to increase from 300,000 units in 2005 to approximately 400,000 units in 2006.

The automotive accessories re-export trade is growing at around 15 per cent per year. Auto parts are one of the top 10 re-export commodities from Dubai. Around 65 per cent of imported spare parts and accessories are re-exported to other countries in the Middle East, Africa where new destinations, such as Libya and Sudan, are increasing their share of the UAE re-export trade, and the countries of the former Soviet Union.

The UAE has a strong automobile finance market. Around 60-70 per cent of motor vehicles sold are financed through instalment schemes. Of the 48 commercial banks operating in the UAE, 15 provide some form of auto financing, in addition to three specialised companies. Growth in the finance business has been driven by a strong surge in sales of small cars, with repayment terms lasting up to six years.

Dubai’s automotive sector include those dealing in retail, maintenance, repair, parts and accessories, and employ an average of seven people. These sub-sectors are dominated by small-sized companies, with less than 10 employees; 84 per cent of motor traders fall into this category. However, 61 per cent of total turnover in the motor trade sector is generated by medium-sized companies, with a workforce of 10 to 99 employees.

Source : Khaleej Times - 18/08/2006