Increased competition, maturity expected for GCC’s automotive sector

 

The automotive industry in the UAE and GCC has been a resilient cornerstone of the economies in this region 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.

2017 expected to be a boom year

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 percent market share.

The same report suggests the UAE will have the second largest market share at 18.5 percent followed by Kuwait, Oman, and Qatar.

Increasing maturity and competition

However, amidst all the trends affecting the automotive industry, there are two things that directly affect the way in which automotive businesses operate. These are increasing maturity within the markets, and competition.

The increased competition has pushed automotive businesses toward 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.

Need to maintain high standards

“The high-traffic that automotive dealer showrooms witness daily can leave the area looking dirty if not regularly maintained. For example, 94 percent of soil, dust and sand in a facility come from foot traffic,” said 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 added.

Automechanika attracting stakeholders

Trade shows and exhibitions such as Automechanika, held annually in Dubai continue to draw attention, and interest in the automotive industry in general, and the automotive market in the UAE and GCC specifically.

In 2016, Automechanika saw the participation of 2,017 exhibitors from 58 countries, and 30,018 trade visitors from 138 countries. This year, the region’s most popular trade show returns for its 15th edition and will run from May 7-9 at the Dubai International Convention and Exhibition Centre, and promises more products and services from local, regional, and international markets.

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