Emirates Automotive Market 2018 reported the third fall in a row with 247.652 sales (-10.9%), down almost 40% from the 2015 record. Market is hit by austerity measures, reduced public investment and price increase, related to VAT introduction. The market leader Toyota at the lower share in the decade.
Growth in the non-oil economy was likely broadly robust in the fourth quarter but nevertheless softened noticeably in December, when the PMI fell to an over two-year low on the back of weaker external demand.
Meanwhile, although oil prices plunged in the quarter—which likely hit fiscal revenues in turn—oil production increased significantly in the same period, which bodes well for GDP growth in Q4. The December slowdown was also likely temporary, as indicated by still-upbeat business confidence in the month.
Although the economy remains relatively sensitive to oil market fluctuations, prospects appear promising this year. A strong dose of fiscal stimulus and the ongoing infrastructure investment push related to the preparation of Expo 2020—which will notably buttress the construction sector—should drive momentum.
Back in June 2016, all six Gulf Cooperation Council (GCC) member states signed the Common VAT Agreement. It was agreed that each GCC Member State would introduce a VAT system at a rate of 5%.
On January 2018 a Value Added Tax (VAT) has been introduced in Saudi Arabia and the United Arab Emirates for the first time, breaking a milestone, if considering Gulf states have long attracted foreign workers and capitals with the promise of tax-free living.
But governments want to increase revenue in the face of lower oil prices and a 5% levy is being applied to the majority of goods and services. For “technical reasons” other members of the Gulf Co-operation Council – Bahrain, Kuwait, Oman, and Qatar -, also committed to introduce VAT, have delayed plans until at least 2019.
UAE vehicles market is running across the hardest crisis of last decades, following a long period of robust expansion.
Indeed, in recent years sales grew from 291.000 in the 2012 to the all time record of 408.252 established in the 2015. The demand contraction related to the oil price decline in the international market hit the country more than any other in the region.
In addition, it must be considered the relevance of trading activity for vehicles registered in the Emirates and then exported (others GCCs and Africa), which fell down in parallel, hit by the low demand in Africa and in the other GCC countries.
Consequently the consumer demand for vehicles is falling down and in the 2018 the market reported the third lost in a row with only 247.652 sales (-10.9%) having lost almost the 40% from the record level.
Brand wise, the 2018 leader was Toyota selling 64.736 vehicles (-21.6%) further losing market share, actually at 26.1%, the lowest in this decade.
In second place Nissan with 51.978 units (+8.4%) followed by Mitsubishi with 28.378 (+16.4%) and BMW with 17.962 (-8.5%).
Tables with sales figures