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plant in Oman at an estimated investment of around US$ 200 million
. About 70% of the
project will be funded by OIF and remaining by Qatar‘s transportation company. Once
operational, the unit is likely to have an annual production capacity of around 2,000 units.
In January 2016, OIF entered into a similar agreement with Iran Khodro Industrial Group to
establish a JV for building a car assembly unit at Duqm at an investment of US$ 200
million
. OIF owns a 57% interest in the venture. The project, expected to be launched
with an annual assembling capacity of about 20,000 cars, is eventually intended to be
developed into a full-fledged manufacturing unit in the future. Vehicles from this plant are
likely to be rolled out from 2017, and 80% of which will be exported. The Sultanate has a
strategic plan to commence automobile parts manufacturing in the country in a couple of
years and a car plant by 2020
. As a part of the plan, OIF acquired a 40% interest in Sigit
SpA, an Italian automobile parts manufacturer, in April 2015.
A Growing Automotive Aftermarket
Demand for automotive spare parts in the Middle East is projected to grow by ~6%
annually, from US$ 13.0 billion in 2015 to US$ 17.3 billion by 2020
. Dubai, the largest
automotive aftermarket in the GCC, registered automotive parts and accessories trade of
US$ 11.1 billion in 2015
. Based on value, the major products imported were sedan tires,
batteries, truck and bus tires, fuel filters, and clutches. The UAE re-exports around 60% of
its automobile components to the larger Middle East and African region
. The trade value
of automobile aftermarket products in Saudi Arabia was about US$ 2.6 billion in 2015
,
most of which was imports. Parts and accessories, with a trade value of US$ 996.5 million,
formed the largest imported product category, followed by tires and batteries.
A rapid increase in the number of vehicles on road in the GCC, a region typically
characterized by dry and hot climatic conditions, has created a vibrant market for
automotive parts and repair services. The constant need to replace batteries, tires, and
other components in commercial as well as passenger vehicles due to wear and tear in the
extreme climate has provided momentum to the industry. Further, cars aged over 10 years
and older are anticipated to represent 31% of the vehicle fleet in 2020
. An already
ageing vehicle fleet, with the tendency of owners holding on to their cars for a longer
duration amid the challenging economy is likely to accelerate demand for automotive parts
and services. On the other hand, the use of innovative technologies in vehicles has led to
a constant increase in need for new parts at repair centers.
Sensing the demand potential, international automotive aftermarket players are either in
the process of or considering options to establish presence in the region. This is evident
from the fact that the largest international trade show for the automobile aftermarket –
Automechanika – held in Dubai in May 2016 saw participation of over 2,000 exhibitors
(+7% y-o-y) from 58 countries
105
. Over 30,000 trade visitors attended the three-day event
in Dubai. The event takes place annually in many other countries, of which Dubai and
Jeddah are the hosts in the Middle East region. In February 2016, the Ministry of Economy
of the UAE abolished restrictions that tied warranty coverage to perform car maintenance
at dealer‘s workshop and service centers
. Instead, the customers can now carry out
Source: ―Mowasalat to open USD 200 mn assembly plant in Oman‖, BQ Magazine, May 4, 2014
Source: ―Iran‘s firm signs deal for car manufacturing unit in Oman‖, Times of Oman, January 17, 2016
Source: ―Oman‘s stake in Italian firm seen as a step towards car plant by 2020‖, Muscat Daily, April 22, 2015
Source: ―Digitisation, innovation and technology set to transform the global automotive aftermarket‖, Zawya,
September 28, 2016
Source: ―Dubai's auto parts trade valued at $11bn in 2015‖, Construction Week Online, May 12, 2016
Source: ―UAE, KSA lead region in car aftermarket trade‖, Arab News, March 30, 2013
Source: ―Saudi Arabia‘s aftermarket auto trade valued at $2.53b‖, Gulf News, September 16, 2016
Source: ―GCC car numbers to hit 19m by 2020‖, Gulf Digital News, March 15, 2016
Source: ―Compulsory condition of automobiles agency warranty abolished‖, Khaleej Times, February 10, 2016
A rapid increase in
vehicles on road in the
GCC coupled with its hot
climatic conditions has
created a vibrant market
for automotive parts and
repair services
The Sultanate has a
strategic plan to
commence automobile
parts manufacturing in the
country in a couple of
years and a car plant by
2020