UAE car sales set for 7.8% rebound in 2010 – BMI

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By Andy Sambidge  www.arabianbusiness.com

The UAE’s car sales market is predicted to see growth of nearly eight percent this year, a significant rebound from the impact of the global downturn in 2009, a new report has said.

7Business Monitor International’s latest report on the country’s automobiles market said it expects sales to increase to 352,913 in 2010, compared to 325,274 last year, despite continuing tightness of credit and the impact of the Dubai Metro.

The 2010 prediction puts sales just short of the 2008 figure when sales peaked at more than 355,000.

BMI added that it saw sales reaching more than 564,000 units by 2014.

The sales projection is more optimistic that a recent Dubai Chamber of Commerce and Industry report which said it expected five percent sales growth in the UAE car market this year.

The BMI report said: “The UAE has become one of the favourite markets for automobile companies around the world, primarily as the Middle East has been one of the more resilient regional markets for manufacturers compared with North America and Europe.”

However it added that opinion remains divided on how strong the UAE’s economic comeback will be, which could have a bearing on auto sales.

On Tuesday the IMF said it expected Dubai’s economy would contract by about 0.5 percent this year.

The economy of Abu Dhabi, the capital of the UAE, will grow 3.7 percent in 2010, it added.

BMI estimates that in the UAE, where GDP per capita is around $40,000, up to a quarter of car sales will fall into the luxury segment.

“The ulta-premium segment has been least affected [by the global downturn] as residents with high net worth remained relatively untouched by the credit crunch. However this might change as the impact of the Dubai World’s restructuring is felt,” the report said, adding that sales of BMWs in Dubai fell around 25 percent to 3,000.

While car dealers say that lower-cost cars are the worst performing, BMI said it believed that over the medium term, smaller, more economical models “will become more popular”.

“At the present time, consumers who are most likely to purchase vehicles from this segment are holding back purchases, waiting for further discounts, more favourable credit terms and mindful of the uncertainties in the wider economy.”