By Andy Sambidge www.arabianbusiness.com
Car sales in the UAE are expected to rise by five percent next year despite the introduction of the Dubai Metro as banks resume lending as the impact of the global crisis eases, new research said on Monday.
Analysis by Dubai Chamber of Commerce and Industry also predicted that car ownership in the UAE will this year exceed 55 percent of the population for the first time in the country’s history, despite the efforts of the Roads and Transport Authority to encourage alternative forms of travel.
Ultimately, transport chiefs hope the metro will encourage 30 percent of Dubai’s population to use public transport by 2020.
The chamber’s statistics predict car sales will grow to $11.68bn in 2010, compared to the $11.03bn business expected this year, without giving details of how the figures were reached.
Hamad Buamim, director general, Dubai Chamber, said that the automotive sector in the UAE was affected by the financial crisis because banks became more cautious in granting auto loans.
“But with the UAE accelerating on the path to economic recovery, banks are now being more flexible with auto financing which will no doubt benefit the sector, fuel the demand, and ultimately increase sales,” he added in a statement.
His optimism comes despite a report by Business Monitor International, published last month, which predicted an 8.5 percent contraction in the UAE auto sales sector in 2009.
It said dealers in the UAE were facing unsold stock and dwindling profit margins as consumers pulled back, but added that prospects for 2010 were better.
The Dubai Chamber report added that car dealers in the UAE were optimistic on the outlook for the second half of 2009 and were confident that their sales “will grow though at a lower rate, in what seems like a challenging year on the back of the global financial crisis”.
In its outlook of the overall auto sector, the analysis said the decline in employment opportunities would likely lead to a severe curtailing of immigration and, as a result, the market had “very little room for growth in the short-term”.