Luxury car makers have seen a surge in GCC sales during the first half of the year amid rising oil prices and returning economic stability following the Arab Spring.
Car-makers reported significant gains in regional sales during the opening six months of the year as government handouts boosted personal incomes and automakers increased focus on growing operations in the region.
“Oil prices are still at a good level and for some countries there is a delayed trickledown effect from government spending. Plus the economies are doing quite well,” said Pierluigi Bellini, associate director for MEA at consultants IHS Automotive
“In the premium [car] segment there is also an increased focus on the region, especially in the GCC,” he added.
Oil rich GCC governments boosted social spending during and in the wake of the Arab Spring. Saudi Arabia, the Arab world’s largest economy, is the automotive industry's biggest regional market, representing 50 percent of sales.
The kingdom has also implemented bumper social spending plans in a bid to stave off any fermenting unrest. Ruler King Abdullah last year pledged an additional 66,000 jobs in teaching and healthcare as part of US$130bn of extra spending.
Other Gulf governments have done likewise, albeit on a smaller scale. The UAE’s spending on economic development increased five percent to AED37.3bn (US$10bn) in 2011 while spending on subsidies and transfers rose 31 percent to an estimated AED53.9bn.
There are suggestions that this has trickled down into greater spending in the automotive sector. Rolls-Royce reported a 22 percent increase in regional sales for the first six months of 2012 as the region benefited from renewed economic stability, said Alaa Tarabay, spokesperson for Rolls-Royce, Middle East and Africa.
“Our brand is an ultra luxury market car so it is highly affected by the economic situation and overall investor sentiment. The region is economically stable, we feel that the future outlook is positive and our customers are continuing to buy into ultra luxury products,” he said.
Habtoor Motors, a subsidiary of Dubai-based conglomerate Al Habtoor Group which owns franchise rights for supercar brands, Bugatti, Bentley and McLaren as well as Mitsubishi, opened its second McLaren showroom in the UAE in April.
The firm sold 40 models of its US$290,000 McLaren MP4-12C and 150 Bentleys in the first half of the year, said Karl Hamer, managing director of Habtoor Motors. Bentley sales are expected to double this year, making the UAE the second largest Bentley market after China.
“There were lots of worries last year and the year before and I think people have settled a bit now; people are a little bit more confident but there is value out there today,” said Hamer. “The growth in sales is a mixture of new premises and volume growing… The prestige market has seen lots of growth, it’s excellent.”
German car maker Audi and BMW Group Middle East also saw significant gains in the first half of the year. Audi last week said it sold more vehicles in the first half of 2012 than in any other time since entering the market in 2005. The firm delivered 4,274 vehicles during the first six months of the year, a 15 percent increase compared to the previous year with GCC sales the strongest.
BMW Group Middle East saw sales increase by 13 percent during the first half of the year. The UAE remained its highest volume selling market, accounting for 51 percent of total sales followed by Saudi Arabia and Kuwait, the firm said.