Car makers see GCC sales accelerate

Surge in oil prices and gov't spending help drive auto sales across Middle East
The BMW M6 Gran Coupe (AFP/Getty Images - for illustrative purposes)
By Claire Valdini
Sun 03 Feb 2013 10:12 AM

Car makers saw a surge in
GCC sales last year, adding weight to the region’s economic revival.

Automotive firms reported
significant gains in regional sales over the last 12-months, driven by a surge
in oil prices and government spending.

“The auto market did
extremely well last year; I don’t think we expected it to do as well to that
extent," said Pierluigi Bellini, associate
director for MEA at consultants IHS Automotive.

“The reason [for the rise]
was the oil price. The average for 2012 was just slightly higher than 2011,
which was already high… so it was a windfall for oil revenues for countries," he added

“Then oil revenues enter
into the coffers of the governments to be spent. Government spending has been
very strong and the budgets for 2013 are very high,” Bellini said. “These are the
main drivers; it’s trickling down to the whole economy.”

The six GCC states, which
together supply about a fifth of the world’s oil, posted a surplus of around
US$350bn last year, according to International Monetary Fund (IMF) estimates, and spent record amounts on
welfare and job creation to preserve social peace following the Arab Spring.

The buoyant economic
environment helped push up car sales across the region. An estimated 1.4m light
vehicles were sold in the GCC in 2012, according to IHS Automotive data.

German car maker Audi saw a
16 percent increase in sales in the Middle East in 2012 with the UAE, Saudi
Arabia and Kuwait accounting for the vast majority of the 9,155 units
sold.  Swedish car giant Volvo said its Kuwait, Qatar and UAE sales
increased 73 percent, 48 percent and 15 percent, respectively, driven by the
availability of its XC and S models.

BMW Group delivered more
than 20,000 vehicles to Middle East customers in 2012, making it the most
successful year for the German car maker in the region, the firm said earlier
in the month.

“These remarkable results
clearly demonstrate the continued growth of the region’s economies,” said Dr
Joerg Breuer, managing director, BMW Group Middle East. “It is also the first
time that we have crossed the 20,000 unit mark.”

A predicted slowdown in
economic growth could see vehicle sales slow for 2013. GCC growth is expected
to slow from 5.5 percent in 2012 to 3.73 percent in 2013 as the region’s
three-year surge in regional oil production slows, according to the IMF.

“We are projecting a slowdown
in economic growth and also some decline in oil prices for the whole year but I
still think the market will do well, just maybe not the same growth as we saw
in 2012,” said Bellini.

“I think it’s going to be in
the high single digits,” he added.

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