The automotive aftermarket is directly associated with vehicle parc, and car owners in the UAE are maintaining their vehicles for longer periods, thus boosting the sector.
Commercial fleet owners are also interested in maintaining their existing vehicles for longer periods, leading to a rise in the requirements for aftermarket components and services.
According to TechSci, Middle East sales revenue from engine and car components, systems, tyres, and auto accessories, will surpass the $15bn mark by 2021, compared to approximately $12.4bn in 2017, growing an average of 4.9 per cent annually.
One case study to support the figures is IQR, a Spanish producer of lubricants under the brand name Matrax, which is looking for new partners with which to launch operations in the GCC. Another is UK-based Autopumps, which is testing regional waters with a view not just to the automotive industry, but also for industrial, agricultural, and marine applications.
But also predicted new car sales
Despite the recent slowdown across the region, car sales in the Middle East will recover in the long term, with analysts Frost & Sullivan (F&S) estimating light vehicle sales will grow at a compound annual growth rate of 8 per cent to 2021, reaching 4.1 million units. That’ll put the total number of cars in operation in the region at 41.36 million according to F&S, compared to an estimated 37 million in 2017.
“Passenger cars constitute a major vehicle segment in the Middle East and Africa, while stabilising oil prices and significant government infrastructure in a number of regional countries will also boost growth in the commercial vehicle segment in the coming years,” says Ahmed Pauwels, CEO of Automechanika Dubai organiser Messe Frankfurt Middle East.
Access to Africa
Demand for spare parts in Africa is expected to grow by 9 per cent annually over the next four years. That percentage may sound incremental, but when you consider that there are already more than 34 million cars on the continent, there’s a lucrative market just waiting to be explored.
Automechanika Dubai has seen an exponential increase in African trade buyers, to the extent that the event span out into a West African roadshow last year. Of particular focus at that event was the role Dubai could play in catering to rising demand from Africa – and as cars more than 16 years old account for 54 per cent of all vehicles in sub-Saharan Africa, there is already significant demand for replacement parts.
Pauwels, at Messe Frankfurt Middle East, notes that the value of African spare parts demand – excluding tires, batteries and lubricants – will reach $15.3bn by 2020, up from an estimated $10.7bn in 2016.
“We’ve noticed a marked increase in trade inquiries from Africa, and visitors from the continent to Automechanika Dubai have grown from 249 in 2012 to 2,215 in 2017,” says Pauwels.
“The Automechanika Roadshow to Abidjan and Lagos gives us a chance to reach out to and connect key players in these crucial markets, and create awareness about the immense business generating and sourcing opportunities available at Automechanika Dubai.”
The Expo 2020 Dubai opportunity
The Middle East’s first-ever World Expo will demand significantly ramped-up logistics and construction capability in Dubai, with state-of-the-art pavilions and activations demanding niche infrastructure.
The price tag is estimated at $9bn currently, with a third of that dedicated to venue-related construction contracts that were awarded last year. So how does this affect the aftercare industry in the UAE?
Quite simply, the larger volume of commercial and heavy-duty vehicles needed to transport this infrastructure, along with the sheer volume of people that will be travelling in cars to the site, will see a positive correlation in demand for spare parts and accessories, tyres and batteries, as well as a host of maintenance and upkeep-related infrastructure and services.
“Mega-events such as Dubai Expo 2020 do have a multi-sectoral impact on the region with the increase in expenditure for new infrastructure, support systems, logistics and commercial facilities,” confirms Pauwels.
“The impact is reflected among exhibitors at Automechanika Dubai 2018, many of whom are anticipating an injection of aftermarket products and services demand, with the expected rise of vehicle parc,” he adds.