Car sales across MENA are extremely robust. The many challenges facing the region, such as rising inflation, the increased expense in driving a car and the tightening of credit facilities have not fazed the automotive sector. In the GCC growth has shown continuity in the automotive sector. The continued rise in oil revenues and the subsequent rise in liquidity in the region, and the GCC in particular, have resulted in sweeping away the obstacles in the region. However, many are holding their breath until the current global financial crisis has shown its true scale and the implications it has for the region.
The trend in the Gulf is still for highly exclusive luxury automotives and large luxury SUVs. Manufacturers are continuously increasing their presence in the region, which in turn is creating a significant improvement in professionalism, among their official import partners, as closer supervision occurs. Manufactures, in particular, are pushing for a much larger involvement by their official partners in the used car market that thus far has been largely ignored. The local car dealers themselves are expanding their show room and after-sales facilities at an incredible pace. This year Kuwait inaugurated the largest after-sales facility in the world and next year this title is expected to shift to Abu Dhabi. Hundreds of millions of dollars are poured into infrastructure by local dealers as they try to ensure to keep up with the rapid growth in car sales.
In the Levant, Lebanon has seen unbelievable growth in car sales this year, with many car dealers achieving growth of more than 100%. This is of course not sustainable, and represents an irregularity, created due to built-up demand because of previous political instability in the country. However, there has been a shift in the market of Lebanese wanting to buy more new cars — a sign that the predominating used-car market could be declining as concerns about safety and fuel efficiency increase. The general trend in Lebanon has seen a shift to more fuel-efficient vehicles in the small to medium segment. In the luxury automotive sector the Lebanese buying habits are very much like those of their GCC counterparts in wanting the newest and most exclusive luxury cars in the region. In the Middle East there has not been the same substantive shift to more fuel-efficient and environmentally friendly cars, as seen in Europe or the US. Car dealers in Lebanon certainly feel there is room in the market for expansion on car sales and are increasing their infrastructure accordingly, resulting over the past years in an increase in the number of new show rooms and after-sales facilities. Predicting the future of car sales in Lebanon will always be a job more for mystics than market analysts and future political instability and the fallout from the global financial crisis, for the global Lebanese community, is causing concern amongst Lebanese car dealers. The custom duties that Lebanese car dealers have to pay are one aspect that they insist, if reduced, would make their future considerably easier.
Jordan and Syria have also seen strong growth after a sluggish year in 2007. Both of these markets, however, have extremely high import tariffs that are depressing the potential growth in the automotive sector of the countries. In Syria these range from 60% to 165%, based on the type of vehicle, and in Jordan tariffs can make cars 80-90% more expensive than in the GCC. Syria is expecting a significant increase in future sales in the automotive sector, as it is soon to launch the Syrian Iranian Automobile Manufacturing Company (SIAMCO) in Adra, 35km north of Damascus. SIAMCO is a $60 million joint venture between Syria and Iran that will produce cheap and sanction free vehicles for Syrian roads.
The future of automotives in the region is one of continued expansion and increased professionalism. For a region that loves its cars quite like nowhere else, manufacturers are finally giving the region the attention that sales and interest deserve. Cars are now being created bespoke for the region and some are even released here before Europe and America. The current financial crisis in the West and the subsequent decline in car sales in the mature market for automotive manufacturers will result in an increased focus on the Middle East.
