Dubai's automobile segment sees sustained growth

Although economic headwinds are posing challenges for Dubai’s retail sector, automotive retailers remain optimistic, buoyed by several years of strong sales growth for family saloons, sports utility vehicles (SUVs) and high-performance sports cars.

Asian Models

Dubai’s automotive retail boom appears to have benefitted most established dealerships operating in the emirate. “Between 2010 and 2014 we saw continuous double-digit growth, as did most automotive companies in the UAE,” Axel Dreyer, president of Hyundai Auto UAE, told OBG. Ahmed Al Habtoor, CEO of Al Habtoor Motors, which has the franchises for luxury brands Bentley, Bugatti and McLaren, as well as Mitsubishi, told OBG that there are fundamental reasons for this buoyancy in the emirate’s car sales market. “All the automotive segments will grow thanks to a growing population, good infrastructure, and reliable export and trade facilities. We have noticed that most customers will change an Asian car for another Asian car, and this particular segment is expected to grow.”

Vote Of Confidence

International companies are confident that the emirate will sustain its performance. Mark de Haes, president and CEO of Daimler Middle East & Levant, told OBG, “Although the turmoil in the Middle East is generating fluctuations in this business environment, in 2016 the auto industry will remain stable with slightly positive growth.” Hakim Boutehra, managing director of Renault Middle East said, “Luxury cars still account for the big chunk of the automotive sector in the region. This segment is not set to be affected by any market turbulence and should remain stable for the years ahead. However, smarter and cheaper cars, as much as affordable, robust and more efficient cars, are set to increase their share, and the car rental companies are also moving towards those segments in demand.”

The infrastructure to support electric and hybrid cars is being created in Dubai. In 2015 the Dubai Electricity and Water Authority opened the first charging stations. “ concept is very interesting, and there are affinities to green and ecological management in a context where public entities are providing the right incentives and infrastructure,” Johannes Seibert, managing director, BMW Group Middle East, told OBG. “In the short to medium term, hybrid cars may be more suitable than electric ones in most countries of the region.”

US carmaker Ford plans to unveil new models in the region, including lower-emission vehicles. “New hybrid cars are coming to the market, because air quality is a big issue globally, as is the carbon footprint,” Kalyana Sivagnanam, director of Ford Middle East and North Africa, told OBG.

Auto-Trading Centre

Dubai also serves as a major hub for the import and re-export of new vehicles, as well as the sale of used cars, having established a reputation for its quality dealers. The US car auction site Copart, which specialises in the sale of used and salvage vehicles on behalf of insurance companies, car rental companies and the public, currently sells over 1000 vehicles per month in Dubai and is expecting to see a three-fold increase in sales in 2016. “Overseas buyers don’t even need to visit us physically, as they can access our inventory through our comprehensive website platform,” Carlos Sabugueiro, CEO of Copart, told OBG.

Western Auto, which is part of the Al Ghurair Group, is a retailer in Dubai but the company also deals in parts and the import and re-export of vehicles through the emirate. “Dubai is very active in trade and re-export because the business is primarily driven by supply-side dynamics and flourishes due to being at the crossroads of rapidly growing emerging markets. In addition we enjoy good free trade and monetary policies, great infrastructure benefits, great financial resources and excellent logistics support,” A J Kamal, CEO of Western Auto, told OBG.