The high standards of living and increasing population in Dubai have led to the dynamic growth of the automotive sector.
The DCCI membership database as of February 2007, reveals that approximately 365 companies are actively involved in trading of motor vehicles and related items, 2,018 companies are involved in trading of motor vehicle parts and accessories, 204 of the companies involved in the maintenance and repair of motor vehicles while 73 companies are involved in other activities (trading, maintenance and repair of motorcycles and related parts and accessories).
As of the first quarter of 2007, these companies employed about 14.4 thousand people, invested a collective paid up capital of Dh3.1 billion and together reaped an annual turnover of Dh8.6 billion.
The number of traders in spare parts and maintenance represents about 83.5 per cent of the automotive market, however these activities are predominantly dependent on the trading of vehicles which accounts for 13.7 per cent of market activity. The vehicles trading companies employ a total of 4,127 people and have collectively invested a paid up capital of Dh1.3 billion and reaping a collective annual turnover of Dh5.5 billion.
In 2005, total trade within this sector accounted for Dh24.4 billion of which 70.6 per cent are imports, 29.1 per cent are re-exports and less than 1 per cent are exports. Locally manufactured vehicles, spare parts and accessories are sparse. As regards the 2005 distribution of total trade within this sector by activity, motor vehicles accounted for 74.6 per cent, spare parts and accessories for 22.3 per cent and the remaining for other related goods and services.
On the other hand, the top destinations of motor vehicles are Qatar, Libya, Iran, Afghanistan, and Iraq, respectively. This can be attributed to the fact the Dubai’s political stability and strategic location within the Middle East has helped it establish and emerge as regional headquarter for many international market players. With respect to parts and accessories, the top recipients are Iran, Russia, Iraq, Libya and Tanzania, whereas for other related items, the main recipients are Tanzania, Algeria, Kuwait, Libya and Iran, respectively.
In view of above, the buoyancy of the automotive trade market is a result of the increasing domestic and neighbouring countries consumption of vehicles and related goods and services. However, to further boost this market, avenues surrounding the encouragement of local manufacturing and assembling of motor vehicles needs to be stimulated in order to gain an edge over the competitors and market players from other neighboring countries.
This activity includes the trade of tractors, motor vehicles for transport of goods and people, cars, special purpose vehicles. The total imports within this activity increased by a CAGR of 30 per cent during 2001 to 2005, while on the other hand re-exports increased by CAGR of 60 per cent during the same period, thus indicating that although imports have witnessed a positive growth, the re-export growth has superseded the import growth.
It is important to note that trade of spare parts, and accessories is contingent to the trade of motor vehicles. The trade activity of spare parts and accessories includes the trade of chassis, bodies, and parts and accessories of motor vehicles. During the period 2001 to 2005, imports within this activity increased annually by 19 per cent, while re-exports grew by 23 per cent, however, on the other hand exports (trailers and semi trailers for transport of goods & parts and accessories of motor vehicles) witnessed an extraordinary 77 per cent growth. In 2005, re-exports of spare parts and accessories represented almost 70 per cent of imports.
The trade of other related items includes the trade of handling equipment trucks, motorcycles, bicycles, carriages, trailers and related parts and accessories. In 2005, import trade within this activity accounted for 68 per cent of total trade, where as re-exports accounted for 30 per cent and only 2 per cent accounted by exports. Furthermore, only 44 per cent of imports are being re-exported within this activity.
It is internationally known that Japanese, German, Swedish and American motor vehicle manufacturers dominate the world market. As a result, a similar representation can be seen with respect to the top import partners of the Dubai automotive market. (Emirates News Agency, WAM)
