UAE Auto Industry Is Booming In Spite of Global Economic Situation While the rest of the world is still in economic distress, the United Arab Emirates have evidence of exactly the opposite, at least when it comes to the auto industry. While the UAE has seen rapid growth within its own country, other Middle Eastern nations have also increased investments in the area. Last year at the beginning of the fourth quarter, auto sales had already reached over 350,000 units, breaking a previous record set in 2008. In 2012, the country sold 1.49 million vehicles, displaying 27% growth –in one year! In 2013, the sales on just new vehicles totaled 362,000, a rise of over 16%. But what is happening in the grand scale of the national economy that explains such growth? We know that there has been a rapid increase in investments in many economic sectors of Dubai; we know that the UAE has entered the auto export market by beginning to export used cars from the UAE to Asian countries from the free trade zone. But what is occurring within the country? A lot of the major dealerships in the UAE have exclusivity, whether it be for certain makes or even certain models. For example, Arabian Automobiles, the exclusive Nissan dealer in Dubai and the Northern Emirates, has displayed an incredible increase in sales over the past year. This type of monopolization seems to be exactly what is driving this economic boom in the auto industry, as it substantially increases the amount of market shares available, increasing dividends and market capital. Another factor to keep in mind is the position of the banks and their ability to provide extremely low interest financing. The inflammation of individual purchasing power is directly related to the extremely low financing rates that the market has to offer. The Central Bank of the UAE continues to offer interest rates at an all-time low of 1% (unbelievable!) although inflation is on the rise, so the rates may not be so low for long. A final factor is the view of the UAE on a global level as far as its involvement and participation in major automotive-related events. After the Dubai International Motor Show, held in November, there was even more interest in new models of cars such as the Toyota Corolla and the new Mitsubishi Mirage. The UAE was also the winning bidder for hosting Expo 2020, reinforcing the evidence of rapid growth not only in the auto industry, but the tourism, retail, commercial and real estate sectors. All of these factors work together seamlessly to create substantial growth in the UAE’s economy. Only time will tell if this advancement has a strong enough foundation to continue.
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