The GCC automobile sector is dynamic and one of the faster growing sectors in the world, primarily owing to the growing population and high disposable income coupled with significant infrastructure developments in the region. The sector, however is currently facing a slowdown amid a weak economic environment and low oil prices as consumers scale back new car purchases. Passenger Car sales will remain under pressure in 2017 but are likely to rebound in 2018 and thereon grow at a stable pace in anticipation of a recovery in oil. Other factors fueling growth include increasing disposable income, growing population and availability of attractive financing options in the country.
According to Alpen Capital, number of passenger cars in use in the GCC is expected to grow at a 5.0% CAGR from an estimated 10.3 million in 2015 to 13.2 million in 2020.
New passenger car sales are projected at 1.4 million in 2020, compared to 1.2 million in 2015. Although new sales declined in 2016 and will be under pressure in 2017, we expect to see steady growth starting 2018 as the economic environment stabilizes and creates pent-up demand. The anticipated growth is slower compared to that during last five years in view of the near-term softness in economic activity, as consumers tighten discretionary spending and delay buying new cars.
Between 2015 and 2020, passenger cars in use in the GCC countries is anticipated to register an annual average growth rate ranging from 3.6%-5.4%. Saudi Arabia, UAE, and Kuwait collectively are expected to continue holding more than 75% of the region’s passenger car fleet in 2020.
Sales of new cars in Saudi Arabia is likely to reach nearly 743,000 in 2020, suggesting a suggesting a CAGR of 2.0% from 2015.
New car sales in the UAE are projected to grow at an annualized rate of 4.5% to over 267,000 in 2020 from an estimated 214,000 in 2015.
A rise in population coupled with demand from car rental or tourism agencies in view of increasing tourist arrivals is also expected to support new vehicles sales growth, going forward.
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