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Investment Opportunities in Automotive Sector in RAK

-A Sector Study on Automotive Sector in UAE


with Regional Perspective

Photograph: Ashok Leylands Bus Assembly plant in RAKIA Industrial Park in Ras Al Khaimah (UAE)
December 2009

Contents
Executive Summary Introduction The Changing Nature of Global Manufacturing The Changing Nature of Supply Chain Global Automotive Production & Major Players Automotive Production in the Middle East GCC Automotive Sector GCC Economic Outlook-Macro-economic Indicators GCC Macro-economic Indicators GCC Auto Industry SWOT Outlook for GCC Automotive Sector GCC Competitive edge Vehicle Assembly in GCC GCC Source of imports GCC Highlights-Foreign trade in Automotive sector UAE Automotive Sector UAE Auto Industry SWOT UAE Economic SWOT UAE Business Environment SWOT UAE Automotive Sector trade Automotive Manufacturing in UAE Low cost and Luxury car market in UAE Used Car Market in UAE After- sales Business in UAE Car Rental Market in UAE Rationale for setting up projects in RAK Identified Projects UAE Auto Industry Forecast Scenario Automotive Products & Free Trade Agreements About Ras Al Khaimah About RAK Investment Authority References Annexure
I II III IV V-A V-B VI-A VI-B VII VIII IX X World Motor Vehicle Production By Country And Type In 2008 World Ranking of Vehicle Manufacturers In 2008 UAE Imports & Re-exports of Vehicles in value term List of Automobile Component Manufacturers in GCC UAE Trade figures on components 2006-1008 In value term UAE Trade figures on components 2006-1008 In Numbers UAE Trade on Tyre & Tyre Products-2008 UAE Trade on Tyre & Tyre Products-2007 Key Global Tyre Manufacturers Contact Details UAE Trade on Vehicle Battery (Accumulators)-2006-2008 UAE Trade on Electrical Ignition System-2006-2008 List of UAE car dealers

3 6 8 10 12 13 13 15 16 17 19 19 21 22 23 23 24 31 33 35 36 37 38 38 54 56 57 59 64 65 66 67 68 70 71 72 73 74 75 76 77

References..
1. Hiromi Oki, Where intraregional trade in East Asia is heading, JETRO Research Paper Vol. 06, 2008, 2. Changing Features of the Automobile Industry in Asia Asia-Pacific Research and Training Network on Trade Working Paper Series, No. 37, July 2007 3. Dubai Chamber of Commerce Economic Bulletin, vol-4, issue35, May 2007 4. OICA Statistics on global motor vehicles production 5. Trade Statistics-2008, Dubai Port & Customs, Dubai World 6. BMI report on UAEs Auto sector 2009 7. GOIC report on sector study on Automotive Industry in GCC 2009 8. Dubai Chamber of Commerce Economic Bulletin, vol-4, issue35, May 2007 9. Dow Jones Factiva database of compaies. Websites: http://www.researchandmarkets.com /reports/ http://www.worldbank.org http://www.unido.org http://www.gulfnews.org http://www.khaleejtimes.org

Executive Summary
As automobile industry is becoming more and more standardized, the level of competition is increasing and production base of most of auto-giant companies are being shifted from the developed countries to emerging markets in developing countries, to take the advantage of low cost of production. Thus, many developing countries are making serious efforts to grab these opportunities. The share of developing countries in global exports of passenger motor vehicles increased from 11 per cent in 1999 to 18 per cent in 2006. Emerging markets will contribute about two thirds of the growth in global light vehicle assembly between 2006 and 2014.

Highlights
The share of developing countries in global exports of passenger motor vehicles increased from 11 per cent in 1999 to 18 per cent in 2006. Global production of passenger cars and commercial vehicles grew at a rate of 4to 5% between 2002 and 2007. In 2007 the world production of automotives reached 73.27 million units In 2008 the production fell by -3.7% due to global recession. Out of this 75% was car and balance commercial vehicle About 69% of the total production was limited to top 10 companies. In the Middle East, Iran and Egypt are the two main producers of automotives. Approx.1.1 million units were produced in 2007 at a CAGR of 12.4%.

Global

State of the Global Automotive Industry

Highlights
There is no significant manufacturing of Vehicles. Manufacturing is limited to a few assembly lines for bus and trucks. Saudi Arabia and the United Arab Emirates (UAE) are the two high- consumption markets within GCC 4-5ml passenger cars in the GCC, out of which 1.4million are in UAE UAE constitutes about 30% (2007) of the total GCCs demand. No significant manufacturing of vehicles except some assembly lines. In 2008 GCC imported 1.2 ml vehicles. About 80% constitutes passenger car and rest trucks & buses. The growth in terms of value of imports of vehicles in GCC was @ 22% with $24.14bl of imports in 2007. Japanese automobiles dominate the GCC auto market with 60.98%, while the rest of the pie was shared by Korean brands at 13.78%, American brands at 10.15%, and European brands at 8.20%. There is no significant manufacturing of components. A few small scale manufactures are the active and catering to the requirements of aftermarket. The value of import of new tyres has gone up from USD 817 million in 2003 to USD 1.3 billion in 2007 (CAGR 12%). 3

GCC

The supply chain of auto industry has completely changed over the years. Major OEM (original equipment manufacturer) players world-wide are increasingly focusing on basic design and assembly operations as well as servicing the after-sales market and prefer to deal with a smaller number of large suppliers. Consequently, the supply chain is morphing into sub-system integrators, component makers, and commodity players. With the gradual opening up of the component sector, now the challenge is for individual governments to support the development of domestic critical component and subsystem suppliers through, interalia, improvement in the investment environment, stronger patent regimes and incentives for R&D. Free trade agreements can have important implications for the automotive sector because of the improved access (addressing both tariff and non-tariff barriers) which they can provide and because of the reduction in tariffs which

can occur under them. Modern agreements typically also cover a wide range of issues other than tariffs and these can be relevant to trade in automotive products or services. Global production of passenger cars and commercial vehicles grew at a rate of 4 to 5% between 2002 and 2007. In 2007 the world production of automotives reached 73.27 million units. In 2008 however, the production fell by 3.7% due to global recession to 70.53 million consisting of 52.6 million (75%) cars and 17.9 million (25%) commercial vehicles. About 69% of the total production was limited to top 10 companies. This level of output was equivalent to USD 2.8 trillion. It employed over 8 million workforce directly and five times as much indirectly. Thus nearly 50 million workforce depend on auto industry for their livelihood. Middle East in general and Gulf Cooperation Council (GCC) in particular is a fast growing market for automotive industry. The region has a high ratio of cars per household. GCC countries with their high GDP is a high consumption vehicle market and present enormous untapped opportunities for the manufacture of vehicles and its components. The combination of relatively high living standards, a growing population in the region, as well as favourable oil prices, have been the key driving forces behind the growth in the auto sector in the region. Despite an expected slowdown in auto sales during 20082009, the outlook based on resurgence in consumer demand on the back of a pick-up in the global economy is likely to lead to robust growth in 2010 and beyond. Whilst the GCC (Consisting of UAE, Saudi Arab, Kuwait, Oman, Qatar and Bahrain) does not possess a sizable domestic automobile manufacturing, its high national wealth has created a niche market for sales of imported vehicles in recent years, and there is a large reexport trade based on the countrys regional status as a key strategic location, With almost 4m passenger cars in the GCC, out of which 1.4million are in UAE; this region offers opportunities for car parts and accessories distributors, retailers and the aftermarket industry, in general, a huge opportunity to enter a market least affected by the current credit crunch. Saudi Arabia and the United Arab Emirates (UAE) are the two highconsumption markets within GCC and present enormous and untapped opportunities for automotive manufacturers.. In 2008 total imports in this sector in UAE was $16.9bl. of which 77% was imports and balance re-exports. As regards the 2008 distribution of total trade within this sector by activity, motor vehicles accounted for 68%, followed by auto component 24% and tyre was 8% respectively.

GCC
Import of auto components too have shown a healthy double digit growth. Main components are: tyres, mounted brake components, gear boxes, drive axle, components, mufflers and exhausts, automotive spring (leaf and helical),glass, lead acid batteries and accessories such as car radios and air conditioners. The individual import figures of major items have been given in the report.

Highlights
United Arab Emirates (UAE) There is no significant manufacturing of vehicles. Manufacturing is limited to a few assembly lines for bus and trucks. In 2008 total imports in the automotive sector in UAE was approx. $16.9bl. of which 77% was imports and balance re-exports. As regards the 2008 distribution of total trade within this sector by activity, motor vehicles accounted for 68%, followed by auto component 24% and tyre was 8% respectively. UAE trade of component and accessories in 2008 were $2.8bl out of which 29% was re-exported. The major source of imports being Japan, Germany, USA and China The top destinations (Re-exports) of motor vehicle parts and components are Iran, Russia, Iraq, Libya and Tanzania respectively. The major items of imports are Bumpers & parts, Suspension shock-absorbers, Parts & accessories for bodies, Clutches & parts, Brakes and servobrakes, Road wheels & parts & accessories and Steering wheels, columns & boxes

Despite the size and potential of the UAE market and its strategic location and well developed logistic support system, the emirates still have no significant passenger car assembly or manufacturing operations, although this is set to change in coming years. The presence of even a car assembly line in UAE would open the way for a local tie-up with a foreign car manufacturer seeking to tap into growing demand for low-cost cars in Africa, the Middle East, and Asia. The UAE has also been making strategic investments in European auto firms, which could pave the way for building up a domestic industry. Leading the investment has been Abu Dhabis Aabar Investment, an Abu Dhabi investment fund, bought a 9.1% stake in German autos company Daimler in March 2009. Swedish automaker Scanias and Indias Ashok Leyland have set up their trucks and bus assembly units in UAE. However, considering the potential, the manufacturing in this sector is insignificant and presents enormous untapped opportunities for the manufacture of vehicles and its components One of the strategies of UAE has been to promote industrialization away from oil and gas based industries in order to ensure a stable broad based economy for a balanced growth in the medium to long term. Automotive industry is an ideal investment scenario. Besides saving expensive imports, it tends to drive all-round development by investing in R&D, developing ancillary industries and generating employment opportunity for the local population. UAE has taken a number of steps in broadening the industrial base away from oil and gas. The competitive edge of the UAE lies in its excellent infrastructure such as roads, sea ports, power and telecommunication and geographical proximity to MENA, Europe and Asian markets. Apart for this, UAE has a stable government and sound macro-economy; high per capita GDP & high standard of living. Fiscal Benefits include 100% income and corporate tax exemptions, 100% capital and profit repatriation, fully convertible currency, no financial risk and relatively low Inflation. Regulatory benefits include 100% ownership in Free Zones, no trade barriers or quotas, easy licensing procedures & company formation, liberal labour laws and no restrictions on hiring expatriate. All these contribute to lower cost of operations.

Identified Projects for RAK (UAE) Based on import substitutions of major components Car/ bus/ trucks assembly/ manufacturing unit Tyre & Battery manufacturing units Auto components manufacturing units of both metallic and plastics particularly, Bumpers & parts Suspension shock-absorbers Parts & accessories for bodies Clutches & parts Brakes and servo-brakes Road wheels & parts & accessories, Car Air conditioners Automobile ignition system

Rationale for Setting up Project in RAK (UAE) Competitive Landscape e.g. Benefits
100% income and corporate tax exemptions 100% capital and profit repatriation, Fully convertible currency 100% ownership in free zones Exemption of equipment and raw material required by industrial units from customs duty. No trade barriers or quotas, Easy licensing procedures & company formation, Liberal labour laws No restrictions on hiring expatriate.

Sound Macro-economy & favourable Govt. policies Excellent infrastructure and logistic support system Increasing demand for vehicles and components Strategically located Base for Raw materials- Aluminium, Plastics and float glass
Aluminium -DUBAL (Dubai) Plastics-ADNOC(Abu Dhabi), SABIC (KSA) Glass- Guardian (RAK), Emirates Float Glass Dhabi)

(Abu

Introduction
The automotive sector, comprising of the automobile and auto component sub sectors, is one of the key segments of the economy having extensive forward and backward linkages with other key segments of the economy. The automotive industry is no stranger to change. Many of the changes occurring in the global marketplace today - tightened credit markets in a capital-intensive industry, declining consumer confidence, increased government involvement - are the most recent manifestations of this reality. The combination of these new realities with familiar industry challenges such as volatile raw materials costs and fuel prices, tighter regulations, capacity and sourcing challenges and the need to satisfy consumer demand for cleaner, greener cars, have combined to create a business environment that has had a profound effect on the global automotive industry. With the global economy in the midst of its worst recession, cash conservation has been the key element to survival for many automotive companies. However, to survive and prosper successful companies still have to invest for the future. The silver lining for the auto industry is that the price of oil is set to remain softer during this global downturn, as are commodity prices. Some experts feel the global slowdown in the auto sector, although harsh, will not be as pronounced as that during the recession of the early 1990s thanks to the strength of the BRIC nations (Brazil, Russia, India, and China).

The Changing Nature of Global Manufacturing and Trade in Automotive Products and Services
As automobile industry is becoming more and more standardized, the level of competition is increasing and production base of most of auto-giant companies are being shifted from the developed countries to developing countries to take the advantage of low cost of production. Thus, many developing countries are making serious efforts to grab these opportunities. Auto-giants such as General Motors, Ford, Toyota, Honda, Volkswagen, and Daimler Chrysler, to shift their production bases in different developing countries which help them operate efficiently in a globally competitive marketplace.

Different countries adopted different policies to handle the overcapacity problem in the sector. Specialization in automobile sector is increasingly becoming segment specific as each of these countries is finding its niche. For example in the emerging markets e.g. China is specalising in components, India in two wheelers and small vehicles, Thailand in pick-up trucks and passenger cars and Indonesia in utility vehicles. Thailand is exporting to developed countries and strengthening its position in ASEAN. Indonesia is also increasing its trade relation with ASEAN. India is concentrating on Middle East and south Asia beside traditional developed country destinations. With the gradual opening up of the component sector, now the challenge is for individual governments to support the development of domestic critical component and sub-system suppliers through, interalia, improvement in the investment environment, stronger patent regimes and incentives for R&D. 6

As with other industries, reductions in trade barriers and lower shipping costs, among other factors, have led to changes in the global automobile industry. These changes include increased demand for and production of vehicles in developing countries; the adoption of more globally focused strategies by major automotive producers (of both vehicles and parts); the development of integrated supply chains, including the use of e-commerce; increased involvement by suppliers, including in the development, manufacture and bearing of risk; greater diversity of roles among suppliers, ranging from specialist suppliers to component integrators; and highly specialised trade in vehicles and components. These changes have resulted in significant restructuring within the industry, particularly among parts manufacturers, with first-tier suppliers typically operating on a global basis.

According to JETRO data, the share of developing countries in global exports of passenger motor vehicles increased from 11 per cent in 1999 to 18 per cent in 2006. Papers released for the Review suggest that emerging markets will contribute about two thirds of the growth in global light vehicle assembly between 2006 and 2014 . The papers also note that the automotive components industry is becoming increasingly global, with many companies now having a production network of well over 20 locations around the world. Manufacturing services, such as design and research and development are increasingly performed on a worldwide basis. 7

In some respects, however, the motor vehicle industry has not changed as much as other sectors. In contrast to the information, communications and telecommunications industry, where tariff barriers are mostly at zero as a result of the WTO Information Technology Agreement, regional and global production networks remain less significant. This is reflected in the patterns of trade - in East Asia external trade [i.e. primarily export of assembled vehicles] is greater than intra-regional trade [of both vehicles and parts] and in investment patterns, as countries, remain focused on getting behind tariff barriers rather than efficiency-seeking production. While these factors have all operated to reduce the opportunities for the significant growth of production networks, the experience of other industries suggests that, as barriers are reduced further - through unilateral action and bilateral, plurilateral and multilateral agreements - intra-industry trade will increase, bringing with it opportunities in particular for trade in specialised parts and vehicles.

The Changing Nature of Supply Chain:


The supply chain of auto industry has completely changed over the years. Major OEM (original equipment manufacturer) players world-wide are increasingly focusing on basic design and assembly operations as well as servicing the after-sales market and prefer to deal with a smaller number of large suppliers. Consequently, the supply chain is morphing into sub-system integrators, component makers, and commodity players. The segregation is increasingly defined by risk sharing which was earlier defined by only cost pressure. Tier 1 suppliers (concentrating on system supply, module assembly and sub supplier management) are taking increasing risk from major players shifting the cost pressure to Tier 2 supplier who concentrate only on production of sub components. In general, suppliers can be divided into few groups such as Systems Integrator (capable of designing and integrating components, subassemblies), Global StandardizedSystems Manufacturer (specialist in design, development and manufacturing of complex systems), Component Specialist (produces specific component or subsystem for a given car or platform) and Raw Material Supplier. Many companies (such as Volkswagen and Renault) feel that a mono-supplier strategy (such as in Ford) is not good but having limited number of large suppliers are of a better strategy. Ford pushes the supplier to own the tools, a strategy of pushing the risk associated with volume fluctuations onto the supplier rather than Ford. On the contrary, Volkswagen and Renault, are satisfied with 2 suppliers in each region with an additional one having less responsibility but ready replace any of the existing supplier. Globally, these companies want their suppliers to invest near their plants or transfer their knowledge to local players. Companies bring the quality standards and price reduction condition while developing the contract with the suppliers. In general, contract length and overall value are related to price reduction targets that the supplier is able to commit to. For some of the assemblers, suppliers can also propose alternative designs that have the same economy results. The experience shows that magnitude of reduction per year varies from 2 to 8 percent due to achieving economies of scale. The competitive pressure in the industry is increasingly bringing the cost reduction targets as a major management decision of assemblers. Nowadays, major companies target cost reduction along with the design and models over a period of time. For example, German companies are targeting price reduction of 13% for the next generation model. Ford and Renault targets price reduction of 5-8% per annum and the figure is 13% for Toyota over 3 years 8

The components industry is now increasingly concentrating in companies that can design and provide systems and subassemblies across different markets. Several supplier companies were created by assemblers. In fact, in-house component manufacturing division were given separate identities and encouraged to compete with other companies. For example, Delphi was created out of GMs component activities. Similarly, Visteon (formerly part o f Ford), Magneti, Marelli (Fiat) and ECIA (formerly owned by Peugeot-Citroen and now fused with Bertrand Faure) were also created in the similar line. M&A activities among suppliers also became a common feature in 1990s. Lucas and Varity merged in 1996, T&N was taken over by Allied Signal; Bertrand Faure was acquired by ECIA. New global companies were created through the fusion of smaller manufacturers also. In Asia-Pacific region, the growth of component manufacturers has taken a different route. Most of the Japanese producers followed a tight relationship with their suppliers (independent or quasi-independent). The existence of the keiretsu system (business affiliation) in Japan greatly facilitated such an arrangement. But other manufacturers especially Korean, Chinese and Indian gave lot of importance on price and quality while buying from number of trusted suppliers. As a result of this indigenous auto-component sectors are thriving in many Asian countries though some MNCs are also present.

Global Automotive Production & Major Players


The global automotive industry is a highly diversified sector that comprises original equipment manufacturers (OEM), component suppliers, dealers and agents, service stations, environmental & transport safety groups, and trade unions. The growth in world production of automotives is given in Fig.1. WORLD MOTOR VEHICLE PRODUCTION

World Vehicle Production in 2008


80,00 70,00 60,00 50,00 40,00 30,00 20,00 10,00 0,00 Quantity in millions 60,66 64,50 66,48 69,22 73,27 70,53

in million units Year


2003 2004 2005 2006 2007 2008

Quantity
60.66 64.50 66.48 69.22 73.27 70.53

2003

2004

2005

2006

2007

2008

Source- OICA Statistics

Fig-1 Global production of automotives

According to Fig. 1 above, world production grew at a rate of 4% between 2002 and 2007. In 2007 the world production of automotives reached 73.27 million units. In 2008 however, the production fell by -3.7% due to global recession to 70.53 million consisting of 52.6 million (75%) cars and 17.9 million (25%) commercial vehicles ( Fig-2).

Category wise distribution of 2008 production in million units Commercial Vehicles 17,889,325

Category wise distribution of 2008 production


Commerc ial Vehicles 25%

Type Cars Quantity 52,637,206 Source- OICA Statistics

Cars 75%

Fig-2 Product distribution


Region wise breakup of automotive production in 2008 is shown in Fig.3.According to this, Asia pacific, Europe and NAFTA countries contributed maximum towards world production in 2008. (Annexure-I)

10

World Motor Vehicle Production By Region In 2007-2008 in million units Region 2007 2008 % Change
Europe CIS NAFTA South America Asia-Oceania Middle East Africa Total 20,834,089 2,018,489 15,454,764 3,699,295 29,717,618 1,101,713 440,093 73,266,061 19,590,808 2,179,977 12,974,058 3,942,457 30,204,954 1,166,212 468,065 70,526,531 -5.90% 8.00% -16.10% 6.60% 1.80% 5.80% 7.00% -3.7%

World Motor vehicle production by region in 2008


Middle Africa East 1% 2% Europe ASIA27% OCEANIA 44% NAFTA 18% South America 5%

CIS 3%

Source- OICA Statistics

Fig-3 Global production of vehicles by region

Auto industry produced over 70 million vehicles in 2008. About 69% of the total production was limited to top 10 companies. This level of output was equivalent to USD 2.8 trillion. It employed over 8 million workforce directly and five times as much indirectly. Thus nearly 50 million workforce depend on auto industry for their livelihood.

World Ranking of Top 10 Vehicle Manufacturers in the World in 2008 (Annexure-II)


Refer Annexure- for the list of top 50 companies and their production
Rank 1 2 3 4 5 6 7 8 9 10 TOYOTA GM VOLKSWAGEN FORD HONDA NISSAN PSA HYUNDAI SUZUKI FIAT Sub-total Total 9237780 8282803 6437414 5407000 3912700 3395065 3325407 2777137 2623567 2524325 47,923198 CARS 7768633 6015257 6110115 3346561 3878940 2788632 2840884 2435471 2306435 1849200 39,340128 LCV 1102502 2229833 271273 1991724 33760 463984 484523 85133 317132 516164 7,496028 135658 812961 23303 274081 151759 104774 134033 8416 HCV 251768 24842 46186 68715 HEAVY BUS 114877 12871 9840

Source- OICA Statistics

11

Automotive Production in the Middle East


Middle East in general and Gulf Cooperation Council (GCC) in particular is a fast growing market for automotive industry. The region has a high ratio of cars per household. GCC countries with their high GDP is a high consumption vehicle market and present enormous untapped opportunities for the manufacture of vehicles and its components. The combination of relatively high living standards, a growing population in the region, as well as a resurgence in oil prices, have been the key driving forces behind the growth in the auto sector in the region. Despite an expected slowdown in auto sales during 2008-2009, the outlook based on resurgence in consumer demand on the back of a pick-up in the global economy is likely to lead to robust growth in 2010 and beyond.

Middle East Automotive production in 2008


1.400.000 1.200.000 1.000.000 Quantity 800.000 600.000 400.000 200.000 0 2005 2006 2007 2008 Egypt Iran Total

Fig-4 Middle East Automotive production in 2008

In the Middle East, Iran and Egypt are the two main producers of automotives in the region. Production of automotives in the Middle East is shown in Fig.4 According to this, the production of automotives increased from 0.88 million units in 2005 to 1.1 million units in 2007 at a CAGR of 12.4%.

Middle East automotive production in 2008 Year Egypt Iran


2005 2006 2007 2008
Source- OICA Statistics

Total
881,749 996,018 1,101,713 1,166,212

% change
12.96% 10.61% 5.85%

64,549 91,518 104,473 114,782

817,200 904,500 997,240 1,051,430

12

GCC Economic Outlook


Gulf economies are benefitting from the global economic recovery. Although it is set to contract this year, real GDP should bounce back in 2010. Expansionary fiscal policy is a key part of the recovery story. If oil price drops substantially in 2010, the bullish outlook could be jeopardized. Despite the recovery, private sector activity could still be constrained by slower growth in bank credit. In its latest GCC brief, National Bank of Kuwait (NBK) reports that the recent months have witnessed an overwhelming consensus that the global economy is on the road to recovery, suggesting that the bottom of the financial crisis is behind. A number of recent economic indicators and signs strongly suggest the crisis has subsided. The most recent projections of the IMF show the world economy is expected to contract by 1.1% in 2009 and expected to recover 3.1% next year. This represents an improvement of 0.3 and 0.6 percentage points from the Funds projections three months earlier, respectively. There is, however, less agreement among economists on the shape of the probable global recovery; W, V, U or something in between. The road to this recovery has been cemented to a large extent by governments around the globe expanding fiscal and monetary policies, bailing out firms, and injecting capital and liquidity in the banking system. Nowadays, new economic concerns are emerging as governments, including the G20, start talking about the post crisis environment and the proper timing of an exit strategy. Exit, of course, entails the withdrawal of governments stimulus, whenever the signs of solid and durable recovery are established. More likely, such an exit strategy will not be executed in most countries before the second half of 2010.

World economic recovery is good for the region.


The Gulf economies are definitely among the top beneficiaries of any global rebound. As oil continues to be the major driver of GCC macro performance, the higher oil prices that started stabilize since June of this year began to gradually restore regional confidence and to leverage its favorable prospects. Recent consumer confidence surveys show a substantial improvement relative to earlier in the year. Indeed, the regions economic performance and outlook have always been an oil story. Over the last 10 years, oil accounted for an average of 46% of GDP, 75% of merchandise exports, 84% of governments revenues. Numbers were even higher in recent years. The global recovery, if robust, is expected to provide further support to oil prices in the near term. For 2009, however, it has been projected that the real GDP of the region to contract by 2.5%, affected mainly by cuts in oil production. The largest GDP contractions are to be recorded in the UAE and Kuwait. Growth in the non-oil GDP of the region is expected to continue in 2009, though at a slower pace (2%), compared to an average growth of 7% in the previous five years. Meanwhile, it has been projected that Gulf economies will post 4.8% real growth in 2010, outperforming most regions around the world. There are, however, some downside risks to this projection.

. but regional fiscal policies should be supportive


Oil prices have been very volatile since Q3-08. The average monthly price of the OPEC basket dropped from USD 131 per barrel in July 2008 to USD 39 in December, but had risen back to USD 78 by late October 2009. The current price level is considered fair by OPEC members who also prefer to see oil prices stabilizing at their current levels. OPEC members have so far insisted on keeping the cartels production level unchanged, and see no need to reverse the daily 4.2 million barrel in production cut that entered into force since November of last year. Looking ahead, oil prices may move in either direction depending on a number of issues, including the status of the global economy, demand and supply conditions for oil, geopolitics, the US dollar outlook, and any other oil-related changes in Western economic policies. Any forecast of the future direction of oil prices carries more uncertainty than usual. For Gulf countries, the major concern is to see prices slide again below USD 50 a barrel or below the breakeven price that balances governments budgets. Although such a scenario would have a negative impact on the regions finances and outlook at large, but the net impact would depend on governments and private sectors reactions to lower oil prices. Historically, government spending programs, especially on development projects were highly correlated with oil prices. In 2009 for example, and with the exception of Saudi Arabia and UAE, other GCC countries announced a small rise or a cut in their spending. If prices witness a substantial drop in 2010 and governments, out of budgetary concerns, decided to reduce spending, then the bullish outlook of the region would be jeopardized. Instead, Gulf governments would be advised to exploit the positive atmosphere and to build on it with more spending and more public-private projects. They also ought to pursue economic reforms and introduce further improvement to the business environment. 13

as well as banks
Banking services are a leading private sector activity in the Gulf region, contributing between 4-12% of the regions GDP, despite the large share of the oil sector. However, the financial results of most banks across the region during the first half of 2009 show a drop in profits relative to the same period of last year. At any rate, GCC banks have always been among the strongest and safest banks in the region according to most financial indicators, including capital, profitability, government backing, and prudent risk management. It is believed that GCC banks have drawn the proper conclusions, like others around the globe, and should remain healthier and in better shape than banks in other emerging economies. 2010 is expected to see the resumption of growth in bank intermediation, though at a slower pace than in previous years.

GCC Macroeconomic Data


2006 2007 7.6 3.4 8.4 4.7 8.1 n/a 198.7 381.7 70.4 112.1 17.5 40.3 13.3 4.1 13.8 5.5 3.8 n/a 5.3 24.3 1.3 3.4 1 2.6 37,690 15,700 52,660 32,980 16,810 15,546 2008E 7.7 4.2 14.3 8.5 6.1 n/a 240.4 468.1 95.8 148.4 18.6 n/a 14 9.9 15.1 10.8 7 n/a 5.6 25 1.6 3.6 1.1 n/a 42,690 18,710 61,420 41,510 16,510 n/a 2009F 0.9 0.4 12.4 0.7 2.4 n/a 201 331.8 75.2 108.6 18.1 n/a 4.5 1.3 9.2 7 0.8 n/a 5.7 25.6 1.7 3.8 1.1 n/a 35,340 12,950 43,670 28,810 16,090 n/a 2010F 4.3 3.3 19.9 4.3 3.1 n/a 232.3 393.6 105.2 130.9 19.7 n/a 6.5 3 8.1 5.6 2.8 n/a 5.9 26.3 1.9 3.9 1.2 n/a 39,660 14,980 55,780 33,280 16,660 n/a 2011F 6.7 3.7 8.6 5.1 4.6 n/a 266.7 425.1 127.6 14909 21.6 n/a 7.3 3.5 6.5 4.5 3 n/a 6.2 26.9 2 4.1 1.2 n/a 43,030 15,790 62,330 36,480 17,390 n/a 2012F 7 4 4.7 5.4 4.1 n/a 310.6 455.5 140.6 165.8 23.5 n/a 6 3.7 5.4 4 2.7 n/a 6.6 27.6 2.2 4.3 1.3 n/a 47,330 16,510 64,970 38,380 17,990 n/a 2013F 6.7 3.9 3.7 5.2 1.4 n/a 360.5 467.3 147 175.3 25.3 n/a 6 3.5 5.6 3.2 2.5 n/a 6.9 28.3 2.3 4.6 1.4 n/a 52,160 16,530 64,380 38,460 18,470 n/a

Real growth (%)


UAE Saudi Arab Qatar Kuwait Bahrain Oman 9.4 3.2 9.9 6.3 6.7 n/a 170.1 356.6 56.9 101.7 15.8 n/a 13.5 2.3 11.8 3 2 n/a 4.9 23.7 1.1 3.2 0.9 n/a 34,550 15,060 50,190 31,950 17,190 n/a

Nominal GDP (US$ bn)


UAE Saudi Arab Qatar Kuwait Bahrain Oman

CPI (Average %)
UAE Saudi Arab Qatar Kuwait Bahrain Oman

Population (m)
UAE Saudi Arab Qatar Kuwait Bahrain Oman

GDP per capita (US$)


UAE Saudi Arab Qatar Kuwait Bahrain Oman

Net FDI (US$ bn)


UAE Saudi Arab Qatar Kuwait Bahrain Oman 1.9 17.5 32 -8,056 1,935 n/a 6.6 11.2 -4,125 -13,563 87 n/a 7.2 15 -2,880 -11,078 -100 n/a 3 13.6 -1,290 -9,503 320 n/a 6.1 13.9 -2,120 -10,907 190 n/a 4.8 14.4 -950 -11,994 -107 n/a 6 15.7 -1,125 -13,976 -97 n/a 6.5 17 -855 -15,334 46 n/a

Source- Deloitte Touche Tohmastu- Report on GCC macro-economy indicators, E-Estimated; F-Forecast 14

GCC Automotive Sector


GCC Auto Industry SWOT

Strengths The regional economy is still liquid with strong current account balances which will sustain growth under the present depressed economic conditions for some time. High business confidence and an increase in disposable income provide a favorable background for the automotive sector. The SUV and luxury car markets are strong and growing on the back of rising levels of young drivers and disposable income Fuel prices are the lowest in GCC GCC has potential to become a base for aluminum and plastics based industry due to availability of raw materials locally. This in turn can be developed into a base for aluminum and plastic based auto component industry There is no local production of passenger cars in GCC and only a small number of commercial vehicles are assembled.

Weaknesses The domestic market is largely dependent on international car manufacturers for their style and design, and hence its profitability is hostage to the demands of those major suppliers. Lack of awareness of automotive quality standards

Opportunities Threats A potential threat exists if other regional suppliers (Egypt, Turkey, Iran and possibly, India) become competitive in a wider range of vehicles. But this threat is not significant to the luxury vehicle market. The used car market is expanding. This will help boost spare parts demand locally. As a result of climatic conditions and a rugged terrain, there is a vibrant and growing market for accessories and spare parts Trade liberalization between the Gulf Co-operation Council (GCC) states and the EU will open regional markets to more European imports Plans for a car assembly plant could help spawn a local automotive ancillary manufacturing industry. Proximity to markets in MENA region and hence potential for export

15

GCC Automotive Sector


Outlook for GCC Automotive Market

Whilst the GCC ( Consisting of UAE, Saudi Arab, Kuwait, Oman, Qatar and Bahrain) does not possess a sizable domestic automobile manufacturing, its high national wealth has created a niche market for sales of imported vehicles in recent years, and there is a large re-export trade based on the countrys regional status as a key strategic location, The current global financial crisis does not seem to have affected GCC vehicle market significantly according to market analysts. Major economies such as Saudi Arabia and UAE are still growing though at a reduced pace during the slow down phase of global economies. Experts feel the impact will be significant only if the oil price remains subdued for a longer duration. Reported research show that the Japanese automobiles dominate the GCC auto market with 60.98%, while the rest of the pie was shared by Korean brands at 13.78%, American brands at 10.15%, and European brands at 8.20%. With almost 4m passenger cars in the GCC, out of which 1.4million are in UAE; this region offers car parts and accessories distributors, retailers and the aftermarket industry, in general, a huge opportunity to enter a market least affected by the current credit crunch. Automotive market in GCC is buoyant. According to one industry estimate, GCC imported 1.2 million vehicles in 2008. Analysts feel the automotive sector in GCC is growing at an impressive rate of over 10% annually. The growth in terms of value of import of vehicles into GCC is given in Fig.5. Overall, the dollar value of imports has grown at an impressive rate of 22% CAGR.

GCC- Highlights
Higher per capita income, growing population and low fuel cost are driving the demand for automotives in GCC. This has led to a rapid development of an automotive market here. In spite of the current downturn in the world financial market, auto market in GCC is very strong. GCC imported 1.2 million vehicles into GCC in 2008. 80% of these are cars. Saudi Arabia and UAE are two prime markets in GCC leading the way. Import of vehicles is growing at a rapid rate in GCC. The growth rate is in excess of 10% per annum between 2003 and 2007. The Automotive component industry too has shown a double digit growth rate. Large number of used cars on road and inclement road and weather conditions are fueling the demand for spare parts. Based on import data, import of vehicles into GCC grew from USD 10.75 billion in 2003 to USD 24.1 billion in 2007. This is equivalent to 22% CAGR. Import of auto components too have shown a healthy growth rate. Main components are: Tyres, Mounted brake components, Gear boxes, Drive axle, components, Mufflers and exhausts, Automotive spring (leaf and helical),Glass, Lead acid batteries and Accessories such as car radios and air conditioners. In the case of vehicles, apart from a handful of truck and bus assembly units there is no serious automotive manufacturing activity in GCC currently. GCCs entire demand for cars are met through import. In the case of tyres too there is no manufacturing unit in GCC. In the case of components, there are manufacturing units, currently producing these items in the GCC. But majority of them supply to aftermarket only.

Growth in import of vehicles into GCC


In billion USD

Item Vans and Buses Cars Trucks Total

2007
1.11 19.42 3.61 24.14

2006
0.72 14.91 2.10 17.73

2005
0.62 12.06 1.70 14.38

2004
0.49 9.61 1.55 11.65

2003
0.55 8.40 1.78 10.74

16

Growth in import of vehicles into GCC CAGR 22%


30,00 25,00 20,00 15,00 10,00 5,00 0,00 2007 2006 2005 2004 2003 Trucks Cars Vans and Buses

GCC- Competitive edge


The competitive edge of the GCC lies in the following aspects: Resilient economies High per capita GDP High standard of living Reasonably low inflation Favorable tax environment with no personal, corporate, value added or withholding tax Favorable business climate Excellent infrastructure such as roads, power and telecommunication Geographical proximity to MENA, Europe and Asia markets Governmental encouragement One of the strategies of all GCC States has been to promote industrialization away from oil and gas based industries in order to ensure a stable broad based economy for a balanced growth in the medium to long term. Automotive industry is an ideal investment scenario. Besides saving expensive imports, it tends to drive all-round development by investing in R&D, developing ancillary industries and generating employment opportunity for the locals. GCC states have taken a number of steps in broadening the industrial base away from oil and gas. Incentives given to entrepreneurs are: Exempt equipment and raw material required by industrial units from customs duty. Exempt profits and earnings of industrial projects from taxes for a specified period. Assistance in export of goods manufactured locally.

Fig-5 Growth in import of vehicles into GCC Saudi Arabia and the United Arab Emirates (UAE) are the two high- consumption markets within GCC and present enormous and untapped opportunities for automotive manufacturers. The total automotive market in GCC can be broadly divided into the passenger cars (including SUVs), trucks, and buses.

Saudi Arabian Market:


Saudi Arabia with highest population in GCC and blessed with plentiful oil resources along with its strategic location in the Middle East is a booming automotive market. Automotive import into Saudi market is given below.
Automotive import into Saudi Arabia In USD, million 2007
Vans and Buses Cars Trucks Saudi- Total GCC Total As % of GCC total 400 6,991.00 1,385.00 8775 24,141.00 36%

2006
224 6,700.00 923 7,847.00 17,730.00 44%

2005
315 6,305.00 1,172.00 7,791.00 14,386.00 54%

2004
247 4,274.00 862 5,384.00 11,646.00 46%

2003
263 3,283.00 9,61.0 4,507.00 10,748.00 42%

As can be seen from above Table, the share of Saudi automotive market has declined over the years to 36% of GCC market in 2007.The passenger car segment is the largest and the most important segment of Saudi auto market and contributed around 80% of the total vehicle sold in Saudi market in 2007. Toyota is the leading market brand in the Saudi Arabia, followed by Nissan. Daimler is the leading automotive firm in the commercial vehicle market. The German company operates through the Mercedes-Benz brand. In 2004, Japanese cars captured approximately 36% of the Saudi market with Toyota topping the list with 29.5%. US manufacturers were 17

the other prominent manufacturers with 25% market share with GM leading the pack from American suppliers. Popularity of Australian Built cars is on the rise and sales have improved dramatically since 2006. Car rental services and limousine services are among the largest buyers of passenger cars in Saudi Arabia. Majority of car purchases were made through local suppliers although some governmental agencies such as Saudi Arabian National Guard (SANG), the Ministry of Defense and Aviation (MODA) and the Ministry of Interior (MOI) are believed to purchase directly from overseas suppliers.

Vehicle Assembly in Saudi Arabia


There is no car assembly plant in Saudi Arabia. The Saudi automotive production base is limited to a handful of firms that assemble commercial vehicles under contract with foreign automakers. The main brands of commercial vehicles assembled include, Mercedes, Volvo and MAN Trucks.

Mercedes group

National Automotives Industry, Jeddah, operates a truck assembly company in partnership with Mercedes group Germany. The plant is designed and run by Mercedes. Components are imported in CKD condition and assembled here.

The plant has a capability to assemble 15-20 trucks per day to make trucks of 20Ton capacity. Products of this company is sold in GCC as well as exported. Demand for the truck is very strong. This is indicated by the expansion drive of Mercedes.

Volvo Group

Volvo Vehicle truck assembly, Jeddah was set up as a joint venture between Zahid Tractors, the sole distributor of Volvo vehicles and Volvo Group of Europe. The plant assembles Volvo trucks from CKD units. The plant has a capacity to assemble 18 trucks per day. However, their current production level is 2 -3 trucks per day. In January 2009, MAN, together with its Saudi Arabian partner Haji Husein Alireza & Co. Ltd., opened a truck assembly plant in Jeddah.

MAN

The plant is designed to produce 3,000 vehicles a year in single-shift operation. It assembles MAN TGA-WW trucks and semi-trailer tractors, initially for the local market. In 2007, MAN's share of the market for trucks over 16 tons was 22.7%. In summary, automotive demand in Saudi Arabia is largely met through imports. The car import is tightly regulated by the authorities. Prior to 2003, the government set a fixed gross profit margin of 15% for car importers. The ending of this policy in 2003 stimulated further growth in the market. Nonetheless, until 2005, when the country finally gained entry to the World Trade Organisation, the Saudi Seaports Authority continued to impose a fixed customs duty, insurance and freight charge on each vehicle imported into the country. Motor vehicles are currently subject to a 5% customs tariff. Imported cars are sold through sole distributors who also provide after-sales service. There is greater competition, however, in the market for spare parts. Sizeable volumes of automotive imports are re-exported to neighboring countries such as Sudan, Yemen, Djibouti, Ethiopia and Eritrea.

Saudi Arabia Component Sector


Saudi Arabia component market is a dominant one in the Middle East. Saudi automotive component market remains an import driven market in spite of the presence a large number of local manufacturers. Saudi Arabia imported more than $650 million worth of parts and service equipment in 2006, compared to $630 million in 2005. Large population of used cars and extreme weather conditions have boosted the requirement of spares for repair and maintenance. Presently, Japan, USA, Germany, Australia, and South Korea, are the major suppliers of automobiles, and spare parts. Tyres come from dozens of countries around the world.

18

There are over 350 dealers for supplying automotive parts in Saudi Arabia.U.S. companies command a leading position in the supply of transmission, steering, suspension, and braking components and parts. Nonetheless, Japanese car manufacturers and spare parts suppliers still command the lion share of the Saudi market at more than 40 %.

GCC- Source of import


GCC automobile industry relies on imports with Japan accounting for 65%- 70% of sales, Europe 15%-20%, USA contributing 6.5% and the rest coming from other countries. Virtually, the entire car and light vehicles required in GCC is currently being imported. Barring a couple of truck units assembling CKD components, there is no serous manufacturing activity taking place in GCC to manufacture automotive vehicles. Leading players in Middle East are: Toyota tops the Middle East car sales chart. Toyota recorded Jan to June 2008 sales of 260,000 units up 31% from the same period 2007. GM sold 128,000 units in 2007 and ranked 2nd in 2007 However, they are likely to be overtaken by Nissan this year after the Japanese company's Jan-June (2008) performance showed an increase of 27 % to more than 74,000 units - nearly 8,000 more than GM. Others in the Gulf top five are Mitsubishi and Hyundai with Honda making up ground after a 52 % sales increase in the first half of 2008. Although no official data exists on the market's overall vehicle sale industry executives expect sales of new vehicles in the Gulf market -comprising Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the UAE -to grow to around 1.2 million cars and light trucks this year, up about 10 % from 2007. And recent figures issued by the Japan External Trade Organisation (JETRO) on the UAE-Japan trade figures, showed that the export of cars with engines up to three litres, surged by 71 % while more highpowered vehicles increased by 67 %.

Manufacture of components in Saudi Arabia


The automotive component industry in Saudi Arabia comprises more than 300 small and medium-sized firms manufacturing and stocking of parts and accessories. Most of these firms have low capacities. A number of joint ventures for manufacturing have been established in recent years providing high-volume, fastmoving car components, especially filters, oils and fluids, batteries, brakes and exhaust systems. However, majority of these units are catering to the requirement of aftermarket. The government aims to encourage further development of car-parts manufacturing as part of its strategy to develop more industrial production in the kingdom. A comprehensive list of major manufacturers under these categories is given in Annexure -4.

UAE Market:
UAE automotive import market is given in Table next page. As can be seen from this table, UAE market constituted 30% of the GCC total. The major suppliers in UAE auto market are Toyota, Nissan, Mitsubishi, Honda, Mercedes, BMW, Volkswagen, Ford and General Motors.

UAE Autos Sector - Key Players


Company Toyota Motor (AlFuttaim) Ford Motor General Motors DaimlerChrysler Honda Motor (AlFuttaim) Nissan Motor Segments Passenger, SUVs, Commercial Passenger, SUVs, Commercial Passenger, Luxury, Commercial Passenger, Luxury, Commercial Passenger, SUVs, Motorcycles Passenger, SUVs, Commercial

19

Automotive import Market of UAE


Unit: USD, million 2003
Vans and Buses Cars Trucks UAE- Total GCC Total As % of GCC total 121.00 1,987.00 265 2,373.00 10,748.00 0.22

2004
113.00 2,451.00 177 2,741.00 11,646.00 0.24

2005
134.00 3,183.00 142 3,459.00 14,386.00 0.24

2006
244.00 3,923.00 371 4,538.00 17,730.00 0.26

2007
387.35 6,017.88 956.52 7361.75 24,141.00 30%

2008
766.19 7,307.52 1113.13 9,186.84 N/A

The automotive component segment is also growing rapidly in UAE. In 2008, the UAE automotive parts and accessories market was estimated to be worth approximately $2.83bl. About 29% of the auto parts and accessories that have been imported are re-exported to other countries. Auto components are among the top 10 re-export products of UAE. The main destinations of these re-exports are Middle East, Africa and East Europe. The main sources of the imports are Japan, Europe and the US. UAE market for automotive parts is open and highly competitive. Like Saudi Arab, UAE automotive component market remains an import driven market. There are few companies manufacturing fast moving automotive parts a list of those major companies has been attached in Annexure-4. Supply of spurious components is the main threat affecting this sector.

A detailed analysis of UAE Auto sector has been given separately in subsequent chapters.

20

GCC Automotive Sector Trade -Highlights


GCC- Highlights of foreign trade in Automotive sector
Components 1
Import of Vehicles

Import to GCC
In terms of USD, the value of net import of vehicles have grown from USD 10.7 billion in 2003 to USD 24.1 billion in 2007. This corresponds to a CAGR of 22%.

Import of Tyres

The value of import of new tyres has gone up from USD 817 million in 2003 to USD 1.3 billion in 2007 (CAGR 12%). In terms of weight of new tyres imported, the net import rose from 340,000 tons in 2003 to 433,000 tons in 2007. The CAGR in terms of weight is approximately 6%. Import of mounted brake components rose from1,121 ton (USD 12.0 million) in 2003 to 11,558 ton (USD 81.0 million) in 2007 (CAGR 79%). Import of leaf springs rose from 7,300 tons in 2003 to 13,300 tons 2007 (CAGR 16%).Import of helical springs rose from 2,200 tons in 2003 to 3,500 tons 2007 (CAGR 12%).

3 4

Import of mounted brake components Import of leaf and helical springs

Import of filter-air, oil, fuel types

Import of oil and fuel filters rose from 8,960 tons (USD 51million) in 2003 to 13,460 ton (USD 102 million) in 2007 (CAGR 11%). Import of air filters rose from 3,226 ton (USD 37million) in 2003 to 8,930 ton (USD 103 million) in 2007(CAGR 29%). Import of toughened safety glass (tempered) rose from 870 tons (USD 8.3 million) in 2003 to 3600 ton ( USD 30.0 million) in 2007(CAGR 43%). Import of laminated glass rose from 1,900 tons (USD 10.4 million) in 2003 to 5,240 ton (USD 35.8 million) in 2007(CAGR 30%). Import of car air conditioners rose from USD 5.6 million in 2003 to USD 7.6 million in 2007(CAGR 8%). Import of car radios rose from USD 22 million in 2003 to USD 24.5 million in 2007(CAGR 2%). Import of lead acid batteries has gone up from USD 65.7 million in 2003 to USD 97.4 million in 2007.This corresponds to an increase of 10%. Import of muffler and exhausts rose from USD 9.5 million in 2003 to USD 18.5 million 2007(CAGR 18%).

Import of glass products

Import of accessories such as car radios and car air conditioners Import of lead acid batteries Import of mufflers and exhausts

8 9

10 Import of Transmission Import of gear box has gone up from 3,440 ton (USD 29 million) in 2003 to 4,480
components (gear box and drive axles) ton USD 55 million in 2007 (CAGR 7%). mport of drive axle components has gone up from 3600 tons (USD 20 million to 15,370 ton (USD 84 million) 2007 (CAGR 45%).

GOIC report on Automotive sector


21

UAE Automotive Sector


Auto Industry SWOT

UAE Auto Industry SWOT


UAE- Competitive edge
Strengths

The luxury car market is strong and growing on the back of rising levels of disposable income Investment in European auto firms lays the foundation for future partnerships
Weaknesses

The competitive edge of the UAE lies in the following aspects: Resilient economies High per capita GDP High standard of living Reasonably low inflation 100% tax exemptions with no personal, corporate, value added or withholding tax 100% ownership in free zones 100% repatriation of profits No restriction on hiring of expatriate workers Stable Government Excellent infrastructure such as roads, sea ports, power and telecommunication Geographical proximity to MENA, Europe and Asian markets Low cost of operation (in RAK) compared to other (Emirates) and GCC countries Governmental encouragement One of the strategies of UAE has been to promote industrialization away from oil and gas based industries in order to ensure a stable broad based economy for a balanced growth in the medium to long term. Automotive industry is an ideal investment scenario. Besides saving expensive imports, it tends to drive all-round development by investing in R&D, developing ancillary industries and generating employment opportunity for the locals. UAE has taken a number of steps in broadening the industrial base away from oil and gas.

There is no local production of passenger cars, and only a small number of commercial vehicles are assembled locally The domestic market is largely dependent on international car manufacturers for the style and design of autos, and its profitability is dictated by their demands
Opportunities

As a result of climatic conditions and a rugged terrain, there is a vibrant and growing market for accessories and spare parts Trade liberalization between the GCC states of Saudi Arabia, UAE, Kuwait, Oman, Qatar, and Bahrain and the EU will open regional markets to more European imports Plans for a car assembly plant could help spawn a local automotive manufacturing industry Car leasing is becoming more attractive with residents preferring to hire a car rather than take out loans
Threats

The rising cost of living is putting pressure on sales and could lead to a decline in the market share of luxury brands, which have led growth in recent years

22

UAE Automotive Sector


Economic & Business Environment SWOT

UAE- Economic SWOT


Strengths

UAE Business Environment SWOT


Strengths

The UAE is a member of the Gulf Co-operation Council, which being a common market can access the GCC market with common favourable terms. The UAE has one of the most liberal trade regimes in the Gulf, and attracts strong capital flows from across the region In common with most Gulf states, there are a high number of expatriate workers at all levels of the economy, making up for the otherwise small workforce The UAE is progressively diversifying its economy, minimizing vulnerability to oil price movements

The UAE is a member of the Gulf Co-operation Council, a six member common market, and has been a member of the WTO since 1996 The state has invested large amounts in infrastructure, and will continue to do so over the next 10 years The UAE's diversified economy reduces risks from volatile oil prices
Weaknesses

Weaknesses

The UAE's currency is pegged to the dollar, giving it minimal control over monetary policy and reducing its ability to tackle inflationary pressure
Opportunities

Due to the state's federal nature, regulations can vary considerably across the emirates The regional economy is oil-dependent. This has historically been very cyclical, which increases risks for long-term projects
Opportunities

Oil prices are expected to stay high (by historical standards) Economic diversification into gas, tourism, financial services and high-tech industry offers some protection against volatile oil prices The construction, tourism and financial sectors are growing rapidly, driven by domestic and foreign investment
Threats

Large number of free trade zones offering tax holidays and full foreign ownership Comparatively relaxed rules on expatriate employment The UAE's social stability and relative prosperity means that there is far less concern for security than in some other Gulf states
Threats

Some bottlenecks have been forming in the construction sector and there is a chance of delays in several high-profile construction projects

Oil prices have massively increased liquidity in the region. This has resulted in strong financial inflows,

23

UAE Automotive Sector Trade


Automotive parts, accessories and components are a thriving business in the region, and UAE is the undisputed leader in the region for the auto parts trade and re-export activities. Around 29% percent of imported auto goods (spare parts, accessories & equipment) were re-exported to neighbouring Middle East countries, Africa and the CIS. Iran, Saudi Arabia, Kuwait and Oman are amongst the most important trade partners. Eastern African states such as Kenya and Sudan have strong trade relations with UAE. The latest official figures indicate that a total number of 5 to 6ml vehicles are on the road in the GCC countries. Of those, 1.4ml vehicles are registered in the UAE with the figure growing at an annual rate of about 10 percent. The vehicles on the road in the Arabian Gulf are mainly Japanese (66 percent), followed by European with 23 percent, USA with 6.5 percent and 4.5 percent from other countries.

Trade in Motor Vehicles & Auto Components


In 2008, total trade in this sector accounted for $16.9 billion of which 77% were imports, 23% were re-exports. Locally manufactured vehicles, spare parts and accessories are sparse. As regards the 2008 distribution of total trade within this sector by activity, motor vehicles accounted for 68%, followed by auto component 24% and tyre was 8% respectively.

Trade in Motor Vehicles and Components in 2008 in million USD


Items Imports Re-exports Total

Motor Vehicles Automobile components Automobile Tyre & Tubes Total

9,187 2,831 922 12,940

2,287 1,146 473 3,906

11,474 3,977 1395 16,846

Trade Pie
Reexports 23% Imports 77% Auto compone nts 24%

Trade within the sector


Tyre & Tubes 8%

Motor Vehicles 68%

Fig-6 Total trade distribution

Fig-7 Trade within the Automotive sector

Trade in Motor Vehicles


This activity includes the trade of tractors, motor vehicles for transport of goods and people, cars, special purpose vehicles. UAE automotive import market is given in Table below. As can be seen from this table, UAE market constitutes 22-28% of the GCC total during 2003-2007 and increased to 30% in 2008.

24

Table : Automotive import market of UAE (In million USD) Category Vans and Buses Cars Trucks UAE- Total GCC Total As % of GCC total 2003 121 1,987.00 265 2,373.00 10,748.00 22% 2004 113 2,451.00 177 2,741.00 11,646.00 24% 2005 134 3,183.00 142 3,459.00 14,386.00 24% 2006 244 3,923.00 371 4,538.00 17,730.00 26% 2007 387.35 6,017.88 956.52 7,361.75 24,141.00 30% 2008 766.19 7,307.52 1113.13 9,186.84 N/A

Automotive import market of UAE


10000 9000 8000 in million USD 7000 6000 5000 4000 3000 2000 1000 0 2003 2004 2005 2006 2007 2008 Vans and Buses Cars Trucks

Fig -8 Import of vehicles during 2004- 2008 The passenger car segment in UAE accounted for about 82 % of the total UAE market in 2007 while trucks and buses together accounted for the remaining 18%.

Trade in 2008- Cars, Bus & Transport Vehicle


Reexports 20%

UAE trade-2008-Share of car, Trucks & Buses


Trucks and Buses 20%

Imports 80%

Car 80%

Fig -9 Percent of Imports & Re-exports in 2008

Fig-10- Share of car, buses & trucks trade in 2008 25

Trade in Automobile Components


It is important to note that trade of spare parts, and accessories are related to the trade of motor vehicles. During the period 2007 to 2008, imports within this activity increased annually by 17 per cent, while re-exports grew by 14 per cent,

Import of Components (in million AED) Source- Dubai port & customs, Dubai World HS Code HS Code Description 2008 2007
87081000 87082100 87082910 87083000 87083100 87083900 87084000 87085000 87087000 87088000 87089100 87089200 87089300 87089400 87089500 87089900 Bumpers & parts Safety seat belts Luggage carriers Brakes and servo-brakes Mounted brake linings Brakes & servo-brakes & parts-II Gear boxes Drive-axles with differential, Road wheels & parts & accessories Suspension shock-absorbers Radiators Silencers & exhaust pipes Clutches & parts Steering wheels, columns & boxes Safety airbags Parts & accessories of vehicle body
Total in million AED Total in million USD

2006
78.55 2.58 6.38 0.00 42.87 161.27 40.26 32.06 196.58 242.86 40.23 12.26 228.04 97.83 0.00 5,391.18
6,591.61 1796.10

251.12 8.20 11.84 195.96 3.16 51.55 71.61 31.37 283.27 200.00 65.20 27.32 441.09 182.83 6.55 8,558.91
10,389.97 2831.05

142.68 5.61 21.05 1.25 41.62 404.35 56.34 48.05 220.27 304.48 51.66 12.18 502.78 181.53 0.05 6,855.48
8,867.91 2416.35

Re-exports of Components (in million AED) Source- Dubai port & customs, Dubai World HS Code HS Code Description 2008 2007
87081000 87082100 87082910 87083000 87083100 87083900 87084000 87085000 87087000 87088000 87089100 87089200 87089300 87089400 87089500 87089900 Bumpers & parts Safety seat belts Luggage carriers Brakes and servo-brakes Mounted brake linings Brakes & servo-brakes & parts-II Gear boxes Drive-axles with differential, Road wheels & parts & accessories Suspension shock-absorbers Radiators Silencers & exhaust pipes Clutches & parts Steering wheels, columns & boxes Safety airbags Parts & accessories of vehicle body
Total in million AED Total in million USD

2006
26.28 17.85 1.00 0.00 4.75 31.45 15.89 6.75 91.03 70.12 46.66 1.52 78.92 6.10 0.00 2,088.00 2,487.77 677.87

58.96 30.30 1.08 13.13 0.20 9.69 13.35 5.14 91.14 97.48 17.22 4.03 108.73 88.99 0.62 3,665.59 4,206.72 1146.24

48.96 31.68 7.99 0.09 5.08 74.83 25.48 12.54 100.38 84.89 68.65 4.32 128.75 26.28 0.01 3,072.04 3,693.54 1006.41

26

Auto Component Imports & Re-exports


12000 10000 in million AED 8000 6000 4000 2000 0 2006 2007 2008
3694 2488 6592 4207 8868 10390

Imports Re-exports

Fig-11 Trade of Spare Parts and Accessories during 2006-2008

Imports- Major Trading Partners


Parts like bumpers, brakes, Road wheels & parts & accessories, Suspension shock-absorbers, Clutches & parts, Steering wheels, columns & boxes and Parts & accessories of vehicle body are the major items traded during 2008. In value terms constitutes 97% of the total amount of imports in 2008. The major sources of these items and the amount imported in value terms have been next page. It is internationally known that Japanese, German, American motor vehicle manufacturers dominate the world market. As a result, a similar representation can be seen with respect to the top import partners of the UAE automotive market.

Re-exports- Major Trading Partners


On the other hand, the top destinations of motor vehicle parts and components are Iran, Russia, Iraq, Libya and Tanzania respectively. The Table as given below gives the destination countries in different regions. Re-exports to Middle Eat constitute 50% of the total re-exports.

Regions
Africa Middle East Cis-Russia Asia Europe Others Total

Re-exports-2008
517,483,149 2,109,020,953 396,182,709 357,914,786 283,301,009 542,821,892 4,206,724,498

MAJOR DESTINATIONS OF RE-EXPORTS IN 2008


Europe 7% Asia 9% Others 13% Africa 12%

Cis-Russia 9%

Middle East 50%

This can be attributed to the fact that UAEs political stability and strategic location within the Middle East has helped it establish and emerge as regional headquarter for many international market players. In view of above, the buoyancy of the automotive trade market is a result of the increasing domestic and neighboring countries consumption of vehicles and related goods and services. However, to further boost this market, avenues surrounding the encouragement of local manufacturing and assembling of motor vehicles needs to be stimulated in order to gain an edge over the competitors and market players from other neighbouring countries. 27

Major Re-export Destinations Region


Africa Asia Middle East Cis-Russia Europe

Country Name
Nigeria, Kenya, Tanzania, Algeria, Sudan, Angola, Congo Republic, Ghana, Uganda, Mozambique, Ethiopia Singapore, Pakistan, Afghanistan, Hong Kong Iran, Iraq, KSA, Libya, Egypt, Kuwait, Syria, Yemen, Bahrain, Oman, Lebanon, Qatar Kazakhstan, Ukraine, Azerbaijan, Russia Turkey, Germany, Finland, Italy, UK (United Kingdom)

Major Sources of Imports


The major source of imports of the following automobile components, having strong imports and re-exports and volume of trade seen over the years in UAE, have been given below. Each of these components have been discussed separately under the chapter identified projects.

Parts & accessories for bodies (in 2008) Major Sources AED
GERMANY JAPAN SOUTH KOREA USA CHINA OTHERS Total in AED 2,250,738,758 2,151,491,599 982,790,828 857,427,987 539,775,411 1,776,684,113 8,558,908,696

Bumpers & parts(in 2008) Major Sources


JAPAN GERMANY USA CHINA OTHERS Total

AED
129,518,989 40,438,403 16,715,145 12,673,187 51,775,410 251,121,134

Clutches & parts thereof (in 2008) Major Sources


JAPAN GERMANY SOUTH KOREA CHINA OTHERS Total

Suspension shock-absorbers (in 2008) Major Sources AED


JAPAN GERMANY CHINA OTHERS Total 82,715,745 40,575,703 30,243,377 46,461,975 199,996,800

AED
182,019,154 125,161,324 41,254,048 23,719,789 68,940,566 441,094,881

Steering wheels, columns & boxes

Major Sources
JAPAN BRAZIL

AED
103,767,143 54,649,599 24,411,426 182,828,168

Brakes and servo-brakes (in 2008) Major Sources


CHINA GERMANY JAPAN SOUTH KOREA USA OTHERS Total

AED
42,895,708 42,341,874 26,571,417 20,859,796 16,322,222 46,970,918 195,961,935

OTHERS Total

Road wheels & parts & accessories (in 2008) Major Sources AED
CHINA GERMANY USA OTHERS Total 187303058 24385475 14423613 57157734 283,269,880

28

UAE Tyre market


The Middle East is a very important market as it exceeds the growth potential of other areas, such as Europe and America. The buoyancy of this region is due to its increasing population and continued economic growth. According to Goodyear, in 2008 saw the industry sell some 25 million tyres into the Middle East. Some countries in the region, which covers the whole of the Middle East, North and West Africa, are registering annual growth of up to 5%. Another contributory growth factor is the fact that local product is virtually non-existent and re-treading is still in its infancy in most countries within the Region. The Table below gives the UAE imports on all types of Automobiles Tyres and Tubes in 2008

UAE Trade on new All Types of Automobile Tyres & Tubes in 2008 Imports
NEW PNEUMATIC TYRES
cars buses & lorries. argriculture or forestry vehicles Industrial handling vehicles < 61 cm of a kind used on construction or industrial handling vehicles>61 cm of a kind used on agricultural or forestry vehicles & machines. having a herring-bone" or similar tread, n.e.s. of a kind used on agricultural or forestry vehicles & machines New pneumatic tyres of rubber, n.e.s.

Re-exports
Value (AED)
1324694809 284566493 71,065 2,678,296 1,179,262 247606 1,147,181 8,757,438 58258875

Value (AED)
1853365027 1190378134 22,579,890 47,346,029 9,167,141 969519 3,170,660 54,418,049 95787325

Units
9636233 2198087 100,365 50,155 4,520 5193 11,167 21,847 448235

Units
4898306 565151 405 13,644 225 603 3,444 146,936 159414

SUB-TOTAL RETREATED TYRES


of a kind used on motor cars (including station wagons & racing cars) of a kind used on buses or lorries.

3,277,181,774

12,475,802

1,681,601,025

5,788,128

633119 3726889

2701 20852

2711137 645368

19571 250

SUB-TOTAL USED PNEUMATIC TYRES


Used pneumatic tyres, of rubber

4,360,008 199842

23,553 3702

3,356,505 12043841

19,821 268279

TYRE TREADS AND TYRE FLAPS


Solid or cushion tyres, tyre treads & tyre flaps, of rubber

11,952,010
88229683

135,866
531643

2,098,940
40286988

1,902
206381

INNER TUBES
For motor cars buses or lorries.

TOTAL IN AED

3,381,923,317 921.50

13,170,566

1,739,387,299 473.95

6,284,511

TOTAL in million USD Source- Dubai port & customs, Dubai World

29

The imports of all types of tyres and tyre products of UAE in 2008 were valued at Dhs 3.4bl ($0.92bl/ 13 million in numbers),(compared to Dh2.73bl($0.74bl/ 11.9 million in numbers) in 2007 with an increase of 24% out of which about 97% constitute new pneumatic tyres for car, bus and lorries. The growth trend is expected to rise further in 2009. Out of total import of new pneumatic tyres, car tyres constitute 56% followed by bus & lorry tyres of 36% and rest being tyres for other end uses. Car tyres worth Dhs 1.85bl and Commercial tyres worth Dhs 1.19bl for buses and lorries were imported respectively to UAE in 2008, mainly from Japan, China, and India. Out of which UAE consumed almost 66%, re-exporting 34% mainly to Iran, Iraq, and African countries.

UAE Trade on Pneumatic Automobile Tyres in 2008 Imports


Value (AED) New pneumatic tyres Retreated Tyres Used pneumatic tyres Tyre treads & tyre flaps Inner Tubes Total in AED In Million USD 3,277,181,774 4,360,008 199,842 11,952,010 88,229,683 3,381,923,317 921.50 Units 12,475,802 23,553 3,702 135,866 531,643 13,170,566

Re-exports
Value (AED) 1,681,601,025 3,356,505 12,043,841 2,098,940 40,286,988 1,739,387,299 473.95 Units 5,788,128 19,821 268,279 1,902 206,381 6,284,511

The commercial vehicle market is an essential industry in the UAE, increase of 35% is expected from 2008 to 2012 according to industry sources. UAE (particularly Dubai) is a transportoriented country with one car for 1.84 residents, and an average vehicle occupancy rate of 1.7, it has the highest rate of car ownership than any other city in the world. The absence of automotive manufacturing industries results in most of the vehicles and automotive tyres and parts being imported for domestic use and re-export to other countries.

UAE Trade on new Pnematic AutomobileTyres


ReExports 34% Imports 66%

Break up of Import of Pneumatic Auto Tyres in 2008 Imports Percent


New pneumatic tyres Retreated tyres Used pneumatic tyres tyre treads & tyre flaps Inner Tubes 3,277,181,774 4,360,008 199,842 11,952,010 88,229,683 96.90% 0.13% 0.01% 0.35% 2.61%

Break up of Import of Pneumatic Tyres in 2008

The positive trend for tyre industry is not just limited to the UAE, but the entire Middle East (with about 4 to 5ml passenger cars and booming fleet of transport vehicles) is characterized by a diverse structure of economies, climates and transport conditions. The lack of railway connections on the Arabian Peninsula, forces most of the overlandtransport on the road, making it a high-volume sales territory for tyre manufacturers. Emerging markets in Africa are sourcing their products from the region, mainly from UAE. In general, there exists a huge opportunity to enter UAE market least affected by the current credit crunch.

New pneumat ic tyres 97%

30

UAE Automotive Sector Manufacturing


Despite the size and potential of the UAE market, the emirates still have no significant passenger car assembly operations, although this is set to change in coming years. The presence of a car assembly line in UAE would open the way for a local tie-up with a foreign car manufacturer seeking to tap into growing demand for low-cost cars in Africa, the Middle East, and Asia. The UAE has also been making strategic investments in European auto firms, which could pave the way for building up a domestic industry. Leading the investment has been Abu Dhabis Aabar Investment, an Abu Dhabi investment fund, bought a 9.1% stake in German autos company Daimler in March 2009. It agreed to invest EUR1.95bn in the automaker, making it the largest shareholder in the group. In addition to producing luxury Mercedes-Benz vehicles, Daimler manufacturers Smart cars, and the two companies intend to team up to develop electric vehicles (EVs). Under the agreement, an industry training centre will also be established in Abu Dhabi. Such investments would eventually encourage technology transfer.

SCANIA

Swedish automaker Scanias JAFZA plant opened recently. With this new factory, the automaker will become the first vehicle assembler in the UAE. It will provide completed vehicles to all states in the GCC.

The plant is modest with a capacity for 1,400 vehicles a year, initially for construction haulage, such as tipper and concrete trucks, but is to be adapted for bus chassis assembly in the future. It will assemble vehicles from semi knocked down kits (SKDs), adding locally-sourced components. Ashok Leyland of India is one of the biggest names in industry set up their assembly unit in Ras Al Khaimah, the northern most emirate. The company's integrated assembly plant is to build 1000 buses per year in RAK and has started its operations in the year 2008.This is the first fully integrated Bus/truck manufacturing in the whole of GCC.

Ashok Leyland

In 2008, Hafilat Industries of the UAE won an AED30mn (US$8.17mn) contract to supply locally assembled buses for export. A new purpose-built plant in the Industrial City of Abu Dhabi has been inaugurated for the assembly of the buses under licence from Australias Volgren.

VOLGREN

The buses will be built on the chassis of Euro IV-compliant Mercedes-Benz models, imported from Spain, but will take the form of Volgrens New Generation City Bus, which is made from aluminium in order to be lighter and stronger.

Production of the buses began in May09, and the order should take four months to fill. Hafilat will assemble double-decker, compressed natural gas (CNG), hybrid, and trolley buses for public transport. The company occupies a niche in providing in European-standard buses, through its use of Mercedes-Benz chassis and the Swiss technology used in its assembly processes.

Praktiko

In 2007, Dubai-based engine producer Praktiko GT announced plans to begin car production in the UAE. From a new production plant in Dubai Investment Park, the company plans to produce the Tiger Kub budget model for export to Africa and India, where small cars under INR100,000 (US$2,500) represent the growth segment.

Investor interest has also focused on bus assembly. Founded in 2003, Trans Continental Industries is the UAEs first facility for manufacturing buses and other additional components and began operations in 2006 with initial capital of AED15.5mn (US$4.2mn). The companys assembly operations are based in the Mussaffah Industrial Complex in Abu Dhabi. It is jointly owned by Advanced Industries of Arabia (51%), through its UAE partner Bin Jabr Group, and the UKs Vectra Azad (49%). The facility, the first of its kind in the UAE, is planning to expand its manufacturing base, targeting production of mini buses, school buses, public transport buses, luxury coaches and built-to-order buses. At present, it manufactures bus bodies and components, including the base structure for chassis, doors and seats. 31

Also in March09, Abu Dhabi state-owned group International Petroleum Investment Company (IPIC) completed its purchase of a majority stake in MAN Ferrostaal, a unit of German industrial group MAN. The EUR490mn deal will provide greater market access to countries where Ferrostaal is active. According to figures published by the Dubai Chamber of Commerce and Industry (DCCI), companies operating in Dubais automotive sector, including retail, maintenance, repair, parts, and accessories, have an average annual turnover of AED4.5mn (US$1.23mn) and employ an average of seven people. According to DCCI data, these sub-sectors are dominated by small-sized companies, those with fewer than 10 employees, and 84% of motor traders fall into this category. However, 61% of total turnover in the motor trade sector is generated by medium-sized companies with workforces of 1099 employees. In 2007, the DCCIs database showed that around 365 companies were actively involved in the trading of motor vehicles and related items, 2,018 companies were involved in trading of motor vehicle parts and accessories, 204 companies were involved in the maintenance and repair of motor vehicles, and 73 companies were involved in other activities (trading, maintenance, and repair of motorcycles and related parts and accessories). These companies collectively employ about 14,400 people. Together they have invested paid-up capital of AED3.1bn and have an annual turnover of AED8.6bn. The number of traders in spare parts and maintenance represents about 83.5% of the automotive market, with vehicle trade accounting for 13.7%. Vehicle trading companies employ over 4,100 people, have a paid-up capital of AED1.3bn, and an annual turnover of AED5.5bn.

UAE component manufacturing sector


UAE has a sizable presence of automotive component manufactures. There are approximately 17 major manufacturers of auto components such as radiators, filters, exhaust, glass, springs etc. (refer Annexure -IV).

32

UAE Automotive Sector Low Cost & Luxury Car Market


Low-Cost Cars Although the UAE is regarded as a major destination for premium cars, the budget car sector is also growing, as many more buyers are becoming cost conscious amid the global economic downturn. Many dealers are trying to appeal to price-savvy consumers, offering finance plans that let them spread their payments out over longer periods. According to Emirates Business, the Tiida from Nissan has gained popularity in Dubai since it became available in 2005, and more attractive repayment terms are making it possible for families to incorporate the model into their budget. The increasing popularity of budget cars also suggests that the effects of congestion are taking their toll and consumers are turning to smaller cars. The number of cars on the road in the UAE and Dubai in particular, has prompted a number of government measures aimed at reducing congestion, including the Salik road toll and the possible introduction of an autos-rickshaw service. However, the road toll has, in some cases, backfired, with reports claiming that people are less likely to be forced out of their cars and into taxis if the toll will push up fares. This creates a market for a smaller, more cost-efficient way of maintaining independent transport. Luxury Cars Sales of luxury vehicles are often used as a barometer of affluence in the MEA. The proportion of prime and luxury car sales is directly correlated with per capita income. BMI estimates that in the UAE, where GDP per capita is approximately US$40,000, up to a quarter of car sales fall into this segment. BMW, Mercedes-Benz, and Audi are traditionally regarded as premium brand car manufacturers, but from the early 1990s Japanese luxury cars the Toyota Lexus and Nissan Infiniti have gained a strong foothold in the Middle Easts luxury market. Non-luxury brands such as Saab have also moved into the segment with premium models, while sports car manufacturers such as Aston Martin, Porsche, and Maserati have brought out luxury models. In the ultra-luxury niche, Rolls-Royce, Maybach, and Bentley Cars dominate. High-income economies such as the UAE tend to have strong demand across the sub-segments of the luxury market. Despite robust growth and the potential for further rises in sales, for most luxury car brands the Middle East represents just 1-2% of global sales. However, the Gulf is a significant region for ultra-luxury carmakers, buoyed by the high net worth of many Arab residents and their tendency for opulence and extravagance. In recent years, luxury brands have seen doubledigit growth across the Middle East, with Mercedes-Benz leading the segment. There are demographic variations between Gulf countries, with expatriates making up 50% of luxury car customers in the UAE, the largest luxury car market in the Gulf, compared to just 10% elsewhere in the region. The Gulf countries are, by far, the most competitive in the Middle East in terms of luxury car sales. While Mercedes-Benz, Lexus, and BMW make up just below 60% of luxury car sales, other groups are seeking to challenge their dominance, with US carmakers at a competitive advantage due to the depreciation of the US dollar against the euro. The most competitive market is the UAE, which has the largest luxury car market in the MEA. BMWs exclusive distributor for Abu Dhabi and Al Ain, Abu Dhabi Motors, reported record sales for the BMW and Mini brands in 2008. New product launches and the availability of servicing and repair packages have helped the brands growth. Strategic links with the customer are also being strengthened through the expansion of Abu Dhabi Motors showroom network to include a new showroom in Umm Al Nar, which will be the groups largest in the Middle East. The AED220mn facility will house the BMW, Mini, and Rolls-Royce brands, as well as after-sales servicing bays. Due for completion in 2010, the centre will take the total number of BMW facilities in Abu Dhabi and Al Ain to 10, comprising three showrooms, two workshops, two body shops, two car warehouses and a Pre-Delivery Inspection (PDI) centre.

33

UAE is one of the most important regional and global markets for Rolls-Royce. In 2008, the Gulf region contributed 18% to car sales, with 216 units sold out of over 1,200 units sold globally. Abu Dhabi and Dubai accounted for sales of 100 units. UAE is the regional leader and number two globally in terms of market for Rolls Royce. According to TradeArabia News Service, German autos manufacturer Porsches largest dealership, Porsche Centre Dubai (PCD), of the Al Nabooda Automobiles group, registered its best ever December sales. In December 2008, sales were up by 50% y-o-y compared with sales in December 2007, resulting in a 28% y-o-y increase. Going forward, the UAE is likely to remain the largest luxury car market in the MEA. While luxury car sales are broadly correlated with per capita income, BMIs forecasts suggest some variance between markets largely due to income distribution. In the Gulf states, the UAE will retain its dominant position as the largest luxury car market in the region, growing by around 70% over the forecast period (up to end2013). Brand competition is set to heat up throughout the region, particularly in the entry-level segment, where non-luxury brands are introducing new top-of-the-line models falling into this category. Exchange rates will also play an important role in determining demand in this segment. These factors will lead to erosion in the market share of European manufacturers such as Mercedes and BMW, with US carmakers as, to a lesser extent, Japanese brands likely to reap the rewards of rising demand.

34

UAE Automotive Sector Used Car Market


The UAE has positioned itself as a regional exporter of used cars in the Middle East, but the economic downturn has triggered unprecedented volatility in the second-hand market. Exports have been reeling due to a regulation implemented in Saudi Arabia in June09 that bans the import of cars older than five years old. Lack of demand from Africa has also weighed on used car sales, according to a report in Emirates Business. One used car dealer told the online newsletter that his business has fallen by nearly 95%, and another said that prices had dived 40%. Emirates Business said while used car dealers are suffering, used car auctions are booming. Car auctions often times are able to offer even lower prices than dealers on second-hand cars, and it isnt just consumers who are flocking to the auctions. Banks which have repossessed cars from owners who have defaulted on loans, as well as rental firms and leasing companies, are also turning to auction companies to unload their vehicles. Dubais Used Car Complex hosts nearly 200 showrooms, offering a single place for customers to purchase vehicles. In April 2008, the Dubai Municipality began construction of an AED65mn multi- storey building for storing cars at the complex in Ras Al Khor. The project is due to be completed in 2009. The storage facility is intended to overcome the shortage of space currently available by adding 1,500 extra parking spaces for showroom owners in the complex. This is testament to the growth in used vehicle sales in the UAE. Elsewhere, in the second-hand premium segment, Mercedes distributor Gargash Enterprises opened a new showroom for used cars in June 2008. Based in Dubais new autos Market complex, the centre has the capacity to show 60 models, with plans to further expand the used car division. Gargash announced growth of 13% y-o-y for its second-hand division in Q1-08, on the back of rising demand in the UAE for second-hand premium vehicles. It opened its first used showroom in 2006. The centre offers approved used cars from the Mercedes-Benz range, which have been tested and awarded a two-year warranty. The operator claimed at the time that the new showroom made its Approved Used Car division the largest in the Middle East, with an inventory of around 500 cars and average annual sales growth of 38%. Other UAE dealerships are following Gargashs example. In June 2008, Western Motors, sole distributor of Jeep in Abu Dhabi and Al Ain and a member of Alfahim Group, expanded its facilities with the opening of a pre-owned Jeep Car showroom in Umm Al Nar in Abu Dhabi. Western Motors is projecting used car sales of 200 cars in 2008 with strong growth in the years ahead. With new car buyers in GCC countries changing models regularly, the region has a large used vehicle sector. Older used vehicles are often exported to poorer states in the region, such as Yemen and Iraq. In the GCC itself, there is a growing demand for quality used vehicles with stringent technical and quality checks before sale. Sales growth shows that there is still demand for used premium vehicles, despite the influx of small and budget models, marked especially by the arrival of Chinese brands. The trend towards nearly-new cars in the UAE is likely to be boosted as a result of new regulations which will lead to a ban on the registration of all light vehicles aged 20 years and over. This was due to be implemented from January 2009, but was delayed due to concerns over the impact on people on low incomes at a time of economic downturn. Currently, Abu Dhabi has 5,600 light vehicles and Dubai and Northern Emirates have 61,400 light vehicles that are set to be banned under the decree, which is intended to alleviate pollution. From January 2010, vehicles aged over 15 years were due to be banned, affecting 100,000 vehicles on the UAEs roads, although this deadline is likely to be put back. The decision also involved a ban on the transfer of ownership of light vehicles aged 10 years or above. The governments move will lead to a radical shift in the Gulf automotive market. Old vehicles likely to be exported to other markets in the GCC over the next few months, helping to drive down used vehicle prices in these countries. Meanwhile, newer used vehicles, particularly those aged under five years, are likely to rise in value as they become more sought after.

35

UAE Automotive Sector After- sales Business


Despite the lack of a significant vehicle production industry in the UAE, the after-sales business is a healthy one, with average annual growth of 20%, according to the Autos Parts Merchant Group (APMG), which represents automotive and spare parts dealers in the UAE. The new car import market is also one of the fastest growing in the region, as well as a re-export hub for the rest of the Middle East, providing increasing demand for after-sales services. In the UAE, Japanese brands have the biggest slice of the market, accounting for about two-thirds of all passenger vehicles, according to an al-Bawaba report. European brands follow with about a 15% share. Korean and US car brands account for nearly 8% and 4% of the market, respectively. There are reportedly 4mn passenger vehicles in the Gulf region, with about 1.3mn of them in the UAE. This large number of vehicles offers much opportunity for the after-sales industry, which is valued at around US$5bn. With an expanding service infrastructure in place, it now remains to be seen whether vehicle manufacturers will take the plunge in establishing operations in the Emirates. The possibility has been raised following Abu Dhabis EUR1.95bn investment in Daimler. In 2007, the UAE-based Sharaf Group signed an agreement to distribute automotive parts and accessories for Japans Yellow Hat. Under the Master Franchise Agreement, Sharaf will set up at least five stores throughout the UAE over the next five years, beginning with a store in Dubai in April 2007. Outlets will also be integrated into fuel stations. Around 50% of imported spare parts and accessories are re-exported to other countries in the Middle East, Africa (where new destinations such as Libya and Sudan are increasing their share of the UAE re-export trade), and the countries of the former Soviet Union. The automotive accessories re-export trade is growing at around 15% per year. However, counterfeit products account for a major slice of the market, estimated at between 30-35% when compared with sales of original replacement products (40-45%) and the after-market segment, which takes the remainder.

36

UAE Automotive Sector Car Rental Market


The UAEs rental sector is becoming more competitive, with firms reducing charges to encourage drivers to rent cars instead of buying them. Car rental is also a cheaper option to buying a car at a time when car loan rejections are rising in the UAE and expatriates in particular tend to hire vehicles rather than take on more debt. More competitors are also entering the rental market. According to local media, some used car firms are launching their own rental businesses and giving customers the option to lease a vehicle. Rental companies may also be looking to take advantage of the increasing tourist inflow in the UAE. Tourism is a key pillar in the growth strategies of the individual emirates. Abu Dhabi, for example, plans to increase the number of tourist visitors from 1.8mn in 2007 to 3.3mn in 2013. Car rental company Budget Rent A Car has a total of 16 offices in the UAE, including offices at the Abu Dhabi, Dubai and Sharjah international airports. In Q1-09, DTG, which includes Thrifty Car Rental and Dollar Rent a Car, revealed its plan to open three new outlets in the UAE. The move increases its locations served to 21 and its workforce to 135. Dollar also expanded its dealership network with new centres at the Abu Dhabi and Sharjah airports, Fujairah and Ras al-Khaimah. Furthermore, a new call centre was opened to enhance DTGs customer service activities. Dollars expansion includes adding franchisees in Qatar, Kuwait, Oman, Saudi Arabia, Lebanon and Jordan. Other rental companies are also expanding their fleets. In February, Audi Dubai (Al Nabooda Automobiles) delivered 330 vehicles to the rental company German Rent A Car. The delivered cars will be used by the rental company to service government and embassies, the Emirates Group, airlines and tourism companies, several five star hotels, a number of international and local companies as well as individuals. Other players in the market include Hertz UAE, which is aiming to become the leading provider of specialist luxury and sports vehicles in the country; global car and truck rental organization National Car Rental, which has established offices in strategic locations throughout the country, including Dubai International Airport, and has opened an office in Abu Dhabi office; and Go Rent a Car, Go Internationals licensee in the UAE, which offers short- and medium-term vehicle hire to corporate accounts and individuals, as well as offering leasing and chauffeur-driven services. The car rental sector generally purchase cars in bulk. Automotive Finance The automotive market in the MEA benefited from a boom in consumer credit over 2005-2007. With a higher proportion of premium brands than most developed markets, the value of the automotive finance market in the GCC was worth up to US$30bn. In the UAE, up to 80% of new car sales depend on financing, and consequently the global credit crunch has put the brakes on growth in autos sales. While the global credit crisis is likely to lead to a contraction in the UAE autos market this year, manufacturers and dealers are taking aim at the problem. In addition to offering the opportunity to lease vehicles, theyre trying to make credit more widely available for car buyers. Dealers say there are signs that these efforts are paying off. The head of retail loans at Emirates NBD, the biggest consumer bank in the UAE, told Emirates Business in July09 that there have been signs of stabilization in demand for loans. Banks have had to offer more attractive deals in order to entice buyers, according to local media. Emirates Business reported offers of zero-down and interest rates as low as 4.5%. According to the online newsletter, the UAE auto finance market is worth Dh8-10 billion annually, or close to two-thirds of the expected value of the total auto market in 2009. Leading distributor Al-Futtaim announced in March 2009 that it was teaming up with banks to provide autos loans to buyers who wouldnt normally be able to qualify for a loan because they dont earn enough, the Middle East North Africa - Financial Network has reported. In April, HSBC Middle East reportedly halved the minimum salary requirement for consumer and autos loans to AED10,000. The bank said the move was in line with current market conditions, Gulf News has reported. Likewise, Emirates NBD cut its minimum salary requirement for autos loans to AED4,000 from AED6,000, the Englishlanguage newspaper reported. 37

Rationale for Setting up Project in RAK (UAE)

Competitive Landscape of UAE

Government Incentives
One of the strategies of UAE has been to promote industrialization away from oil and gas based industries in order to ensure a stable broad based economy for a balanced growth in the medium to long term. UAE offers a number of incentives/ benefits to companies/investors to this effect. Fiscal Benefits; include 100% income and corporate tax exemptions, 100% capital and profit repatriation, Fully convertible currency, Exemption of equipment and raw material required by industrial units from customs duty. Regulatory benefits include; 100% ownership in Free Zones, No trade barriers or quotas, Easy licensing procedures & company formation, Liberal labour laws and no restrictions on hiring expatriate . Highlights.. Government Incentives Sound Macro-economy Excellent infrastructure and logistic support system Strategic location Increasing demand for vehicles and components Base for Raw materials-Aluminium, Plastic and glass for automotive sector

Sound Macro-economy; High per capita GDP, High standard of living, Relatively low inflation. High
business confidence and an increase in disposable income provide a favorable background for the automotive sector

Excellent infrastructure and logistic support system; UAE has invested large amounts in
infrastructure, and will continue to do so over the next to come.

Increasing demand for vehicles and components; In 2008, total trade in this sector accounted for $16.9 billion
in UAE alone of which 77% were imports, 23% were re-exports. Locally manufactured vehicles, spare parts and accessories are sparse. As regards the 2008 distribution of total trade within this sector by activity, motor vehicles accounted for 68%, followed by auto component 24% and tyre was 8% respectively

Strategically located; Easy access to huge markets like Middle East & North Africa( MENA), India, South-East Asia
and CIS countries

Base for Raw materials- Aluminium, Plastic and float glass; UAE has potential to become a base for
aluminum, plastics, glass based industry due to availability of raw materials locally. This in turn can be developed into a base for aluminum, plastic etc based auto component industry.

Aluminium
DUBAL (in Dubai, UAE) has evolved into a global aluminium producer and presently has a production capacity of more than 980,000 metric tonnes of quality hot metal per year. More than 92 per cent of DUBAL's total production is exported to global markets. Presently exporting to 48 countries, with key markets including the Far East, Europe, the ASEAN region, the Middle East, the Mediterranean region and North America. DUBAL produces extrusion billets for wheel forging, as well as for automotive applications. DUBAL also produces high purity aluminium used in the manufacture of electronic components. 38

Plastics
With the drive to reduce fuel efficiency and to meet new emission regulations gaining importance, the attempt to use more and more plastics in car is gaining momentum. It is estimated that about 13-15% of the weight of an average-sized family car is now made out of plastic. This compares to about 6% twenty years ago. As an example, the use of Thermoplastic Elastomer (TPE) in auto industry has increased from 185,000 tons in 1991 to 280,000 tons in 1995, an increase of by 51%. Currently the auto components are made from plastics are Dash Boards, Manifolds, Air bags, Bumpers, Clutch activating system, Interior trims, Window glazing and wind shields. Types of plastics used include Thermoplastic Elastomer, Polyamide, Polyphthalamide, Polycarbonate, Polypropylene, etc. Abu Dhabi Polymers Company Limited (BOROUGE) under ADNOC (Abu Dhabi, UAE) and SABIC (Saudi Arab) producing basic plastic raw material and a range of differentiated products for high-value applications including automotive components. With GCC striving to become a leader in the field of plastics, this is an opportunity to develop UAE as a plastic based automotive component supply base.

Float Glass
There are two major float glass manufacturers in UAE with total approx. capacity of 0.45 million tonnes/ yr, started operation during 2007-2008 producing glass for use in automotive and also for construction applications US firm Guardian, UAEs dominant float glass supplier, built the UAEs first float glass manufacturing facility (Guardian Zoujaj International Float Glass Co Llc) with joint venture with The National Company for Glass Investments (Zoujaj) of Saudi Arabia and Zamil Group also of Saudi Arabia, in the RAKIA Industrial park, Ras AlKhaimah in 2007. Guardian RAK produces 700 tons of glass per day for use in automotive and construction applications, including high-performance coated glass. Emirates Float Glass, a subsidiary of Dubai Investments PJSC, a 600-tons/day float glass facility has launched commercial operations at its manufacturing facility in Abu Dhabi. The $200 million plant, located at the Industrial City of Abu Dhabi, has commenced manufacture and supply of premium float glass products to the architectural and automotive markets for local market and exports.. The plant is built with technological assistance from US-based PPG Industries, global leaders in glass manufacturing technology.

39

Identified Projects

The present study has investigated automotive sector in GCC with major emphasis in UAE, with a view to identify potential investment opportunities. In view of the strong imports seen over the years for vehicles and its components in the GCC, UAE in particular, there is a strong case for the development of automotive industry in UAE. However, Because of its competitive edge in terms favourable investment environment and strategic location, UAE has the potential to become a manufacturing hub for whole range of components, both for OEMs and Replacement/After Market manufacturers and accessories like Light Fittings, HAVC system, Seats. Tyres, Batteries, Fasteners etc. not only to serve the local market but also exports to various markets. However, the emphasis would be to attract Vehicles manufacturers (OEMs), the anchor industry and the catalyst for the development of the whole automotive sector. The identified projects based on strong imports and re-exports and volume of trade seen over the years for vehicles and its components in the GCC/ UAE, have been listed below. However, it requires carrying out detailed feasibility studies before embarking upon projects of this nature.

OEM & Vehicle Assembly Units Auto Parts Components


Parts & accessories of vehicle body Clutches & parts Road wheels & parts & accessories Bumpers & parts Suspension shock-absorbers Brakes and servo-brakes and parts Steering wheels, columns & boxes Electrical Ignition system

Automobile Tyres Vehicle Battery (accumulators

Please find market/ trade information on the above in subsequent pages.

40

I. Vehicle Assembly Plant


Barring a few truck & bus assembly units there is no major vehicle manufacturer in GCC. GCC therefore depends entirely on import for its vehicle requirement. Annual import of nearly a million vehicles is a strong enough case for setting up a vehicle assembly plant in the GCC. As per import data, the number of vehicle imported into GCC in 2007 is estimated to be approximately 880,000 units. In 2008 approx. 475,000 vehicles (approx. $9.2bl) were imported in UAE alone, out of which about 25% were re-exported. Vehicles assembled in GCC can also have access to MENA markets.

UAE Trade-2007-2008 In ml AED 2008


Imports Re-exports 33,715,713,151 8,393,202,038

2007
27,017,622,902 6,192,020,288

In no of units
Imports Re-exports

2008
475,567 161,041

2007
542,141 136,784

40.000 35.000 In billion AED 30.000 25.000 20.000 15.000 10.000 5.000 0 2008 2007 Imports Re-exports In millions

0,60 0,50 0,40 0,30 0,20 0,10 0,00 2008 2007

Imports Re-exports

Type of Vehicle Imports in Y 2008 in UAE Category Car Motor Vehicle for Transport of People Motor Vehicle for Transport of Goods Grand Total Value (AED) 26,818,609,248 2,811,911,927 4085,191,976 33,715,713,151 Units 408,903 16,202 50,462 475,567
Transpo rt vehicles 12% Bus etc 8%

Imports-2008

Car 80%

Type of Vehicle Re-exported in Y 2008 from UAE Category Car Motor Vehicle for Transport of People Motor Vehicle for Transport of Goods Grand Total Value (AED) 6,660,332,310 242,806,432 1,490,063,296 8,393,202,038 Units 136,168 3,645 21,228 161,041
Transpo rt vehicles 18% Bus etc 3%

Re-exports-2008

Car 79%

41

II. Auto Parts Components


Automotive parts, accessories and components are a thriving business in the region, and UAE is the undisputed leader in the region for the auto parts trade and re-export activities. The total import in the Y2008 was $2.83bl an increase of @17% over the Y2007 while re-exports grew by 14 per cent. The major source of imports being Japan, Germany, USA and China Around 29 percent of imported auto goods (spare parts, accessories & equipment) are re-exported to neighbouring Middle East countries, Africa and the CIS. The top destinations of motor vehicle parts and components are Iran, Russia, Iraq, Libya and Tanzania respectively. Re-exports to Middle Eat constitute 50% of the total re-exports. This can be attributed to the fact that UAEs political stability and strategic location within the Middle East has helped to establish and emerge as regional headquarter for many international market players. The buoyancy of the automotive trade market is a result of the increasing domestic and neighboring countries consumption of vehicles and related goods and services. The UAE is the second largest car market among the Gulf Cooperative Council (GCC) countries. The latest official figures indicate that a total number of 4 to 5 million vehicles are on the road in the GCC countries out of which about 1,4 million vehicles are registered in the UAE with the figure growing at an annual rate of about 10 percent. The vehicles on the road in the Arabian Gulf are mainly Japanese (66 percent), followed by European with 23 percent, USA with 6.5 percent and 4.5 percent from other countries. Because of its competitive edge in terms favourable investment environment and strategic location, UAE has the potential to become a manufacturing hub for the whole range of automotive components, both for OEMs and Replacement/After Market manufacturers, not only to serve the local market but also exports to various markets. UAE has potential to become a base for the development of automobile and automobile components as the basic ingredients for vehicle and components manufacturing like aluminum, plastics, glass etc are available locally,. Major automobile parts by material and process has been given in Table below. Major automobile parts by material and process
Automotive Part ENGINE Block Cylinder Head Intake Manifold Connecting Rods Pistons Camshaft Valves Exhaust Systems TRANSAXLE Transmission Case Gear Sets Torque Converter CV Joint Assemblies Primary Materials Iron, Aluminum Iron, Aluminum Plastic, Aluminum Powder Metal, Steel Aluminum Iron, Steel, Powder Metal Steel, Magnesium Stainless Steel, Aluminum, Iron Primary Process Casting Casting, Machining Casting, Molding, Machining Molding, Forging, Machining Forging, Machining Molding, Forging, Machining Stamping, Machining Extruding, Stamping

Aluminum, Magnesium Steel Magnesium Steel Steel Rubber

Casting, Machining Blanking, Machining Stamping, Casting Casting, Forging, Extruding Stamping

42

BODY STRUCTURE Body Panels Bumper Assemblies CHASSIS/SUSPENSION Steering Gear/Column Rear Axle Assembly Front Suspension Wheels Brakes SEATS/TRIM Seats Instrument Panel Headliner/Carpeting Exterior Trim HVAC SYSTEM A/C Compressor Radiator/Heater Core Engine Fan

Steel, Plastic, Aluminum Steel, Plastic, Aluminum Steel, Magnesium, Aluminum Steel, Plastic Steel, Aluminum Steel, Aluminum Steel, Friction Materials Steel, Fabric, Foam Steel, Fabric, Foam Synthetic Fiber Plastic, Aluminum Zinc Die Casting

Stamping, Molding Stamping, Molding Casting, Stamping, Forging Machining Stamping, Molding Stamping, Forging Stamping, Forging Stamping, Forging Molding, Stamping Molding, Stamping Molding Molding, Casting, Stamping

Aluminum, Steel, Plastic Copper, Aluminum, Plastic Plastic, Steel

Casting, Molding, Stamping Extruding, Molding Stamping, Molding

However, from the trend of UAEs trade volume of auto components (import and re -export), and possible opportunities for expansion of the existing units or addition of new capacities the following auto components have been identified. Parts like bumpers, brakes, road wheels & parts & accessories, suspension shock-absorbers, clutches & parts, steering wheels, columns & boxes and parts & accessories of vehicle body are the major items traded during 2008. In value terms constitutes 97% of the total amount of imports in 2008.

List of Auto Components with substantial UAE trade


HS Code 87089900 87089300 87087000 87081000 87088000 87083900 87089400 8511-1000 to -9000 Identified Projects Parts & accessories of vehicle body Clutches & parts Road wheels & parts & accessories Bumpers & parts Suspension shock-absorbers Brakes and servo-brakes and parts Steering wheels, columns & boxes Electrical Ignition System

43

Parts & accessories of vehicle body


Dents, bumps, scratches and rust - these are just some of the damages that a vehicles body parts suffers from. They are caused by numerous factors such as accidents and constant exposure to the elements. Over a period of time, the vehicles body parts will begin to exhibit signs of abuse and damage and it will be time to repair or replace it with new components. A cars body parts include some of the largest pieces of that compose a cars body such as the front and rear fenders. Both import and re-exports of these items have seen significant increase over the years. There has been an increase 25% of imports in 2008 over 2007 in value term. Similarly, the re-exports had gone up by 19%.

UAE Trade-2006-2008 In ml AED


Imports Re-exports

2008
8,558.91 3,665.59

2007
6,855.48 3,072.04

2006
5,391.18 2,088.00

In no of units
Imports Re-exports

2008
30,309,298 28,208,085

2007
5,606,998 3,151,127

2006
3,684,515 2326588

9,00 8,00 7,00 6,00 5,00 4,00 3,00 2,00 1,00 0,00 2008 2007 2006

35 30
In million nos

in billion AED

25
20

Imports Re-exports

15 10 5
0 2008 2007 2006

Imports Re-exports

About 80% of import of these items were from Germany, Japan, South Korea, USA and China. Source of imports

Major Sources
GERMANY JAPAN SOUTH KOREA USA CHINA OTHERS Total in AED

In ml AED
2,250,738,758 2,151,491,599 982,790,828 857,427,987 539,775,411 1,776,684,113 8,558,908,696 CHINA 6%

Parts & accessories for vehicle bodies

OTHERS 21% USA 10%

GERMANY 26%

SOUTH KOREA 12%

JAPAN 25%

44

Bumpers & parts


The bumper is designed to absorb and safe guard against minor and low-speed collisions. Both import and re-exports of these items have seen significant increase over the years. In 2008 the local demand had increased tremendously There has been an increase 76% of imports in 2008 over 2007. In value terms. Similarly, the re-exports had gone up by 20%.

UAE Trade-2006-2008 In ml AED


Imports Re-exports

2008
251.12 58.96

2007
142.68 48.96

2006
78.55 26.28

In no of units
Imports Re-exports

2008
790,993 175,947

2007
205,650 21,700

2006
210,030 29,332

300 250

150 100
50 0 2008 2007 2006

millions

200 Imports Re-exports

0,90 0,80 0,70 0,60 0,50 0,40 0,30 0,20 0,10 0,00 2008 2007 2006

In million AED

Imports Re-exports

About 80% of import of these items were from Japan, Germany, USA and China. Source of imports

Major Sources
JAPAN GERMANY USA CHINA OTHERS Total

AED
129,518,989 40,438,403 16,715,145 12,673,187 51,775,410 251,121,134 CHINA 5% USA 7%

Bumpers & parts

OTHERS 21%

JAPAN 51%

GERMANY 16%

45

Suspension shock-absorbers
There has been an 34% decrease in imports in 2008 over 2007 in value term but in terms of units there was considerable increase in numbers. This is mainly due to reduction in price in 2008 and increase of Chinese market share in this segment with lower price. The re-exports had gone up by 15% in terms of value term. About 77% of import of these items were mainly from Japan, Germany and China.

UAE Trade-2006-2008 In ml AED 2008 2007


Imports Re-exports 200.00 97.48 304.48 84.89

2006
242.86 70.12

In no of units
Imports Re-exports

2008
1,169,773 194,847

2007
410,777 266,495

2006
508,149 113,710

The main reason behind Chinas increased market share is not only due to aggressive marketing but also the pricing which is considerably lower than others. China has been promoting heavily through some of the established agents and has been able to make a breakthrough by introducing some products in the lower price segment.
350 300
1.40 1.20

In million AED

In million nos

250
200

1.00
0.80

150 100 50
0 2008 2007 2006

Imports Re-exports

0.60 0.40 0.20


0.00 2008 2007 2006

Imports Re-exports

Source of imports-2008

Major Sources
JAPAN GERMANY CHINA OTHERS Total

AED
82,715,745 40,575,703 30,243,377 46,461,975 199,996,800

Suspension shock-absorbers
OTHERS 23% CHINA 15%

JAPAN 42%

GERMANY 20%

46

Clutches & parts


A clutch is a subcomponent of an engine's transmission designed to allow engagement or disengagement of the engine to the gearbox or whatever apparatus is being driven. There are many different clutch designs, but most are based on one or more friction discs, pressed tightly together or against a flywheel using springs. The friction material is very similar to the material used in brake shoes and pads and used to contain asbestos. The spring pressure is released when the clutch pedal is depressed and the discs are held less tightly and allowed to rotate freely. A wet clutch is immersed in lubricating fluid to keep the surfaces clean and to cool it, for improved performance and longer life; while a dry clutch is not There was significant increase in imports in 2008 compared to previous years in terms of number of units. However in value terms it was less This may be due to decline in price due to lesser demand. However the volume of trade was quite significant compared to other components.

UAE Trade-2006-2008 In ml AED 2008 2007


Imports Re-exports 441.09 108.73 502.78 128.75

2006
228.04 78.92

In no of units
Imports Re-exports

2008
1,835,596 562,674

2007
394,930 29,504

2006
338,029 94,577

600 In million AED

2,00

400 300 200 100 0 2008 2007

Re-exports

In million nos

500

Imports

1,50 1,00 0,50 0,00 Imports Re-exports

2006

2008

2007

2006

Source of imports

Major Sources
JAPAN GERMANY SOUTH KOREA CHINA OTHERS Total

AED
182,019,154 125,161,324 41,254,048 23,719,789 68,940,566 441,094,881 SOUTH KOREA 9% CHINA 6%

Clutches & parts


OTHERS 16% JAPAN 41%

GERMANY 28%

47

Brakes and servo-brakes and parts


There was significant increase in imports in 2008 compared to previous years. However in value terms it was less This is mainly due to increase in Chinese market share (19%) in this segment with pricing considerably lower than others..However the volume of trade was quite significant compared to other components.

UAE Trade-2006-2008 In ml AED 2008 2007


Imports Re-exports 247.51 22.82 405.6 74.92

2006
161.27 31.45

In no of units
Imports Re-exports

2008
1,764,751 77,481

2007
548,361 140,259

2006
445,730 75,091

450 400 350 300 250 200 150 100 50 0 2008 2007

2 Imports Re-exports In millions 1,5 1 0,5 0 2006 2008 2007 2006 Imports Re-exports

Source of imports

Major Sources
CHINA GERMANY JAPAN SOUTH KOREA USA OTHERS Total

In million AED

AED
46,884,445 62,251,233 42,104,277 25,516,527 17,192,137 53,564,048 247,512,667
USA 7%

Brakes and servo-brakes

OTHERS 22%

CHINA 19% GERMANY 25%

SOUTH KOREA 10%

JAPAN 17%

48

Road wheels & parts & accessories


Imports of these items have seen significant increase over the years. There has been an increase 29% of imports in 2008 over 2007. However, the re-exports had gone down by 9%. About 80% of import of these items were mainly imported from China, Germany and USA.

UAE Trade-2006-2008 In ml AED 2008 2007


Imports Reexports 283.27 91.14 220.27 100.38

2006
196.58 91.03

In no of units
Imports Re-exports

2008
2,889,040 536,184

2007
1,385,680 191,462

2006
1,051,517 262,776

300 250 In million AED jn millions 200 150 100 50 0 2008 2007 2006 Imports Re-exports

3,50 3,00 2,50 2,00 1,50 1,00 0,50 0,00 2008 2007 2006

Imports Re-exports

Source of imports

Major Sources
CHINA GERMANY USA OTHERS Total

AED
187303058 24385475 14423613 57157734 283,269,880

Road wheels & parts & accessories

USA 5% GERMANY 9%

OTHERS 20% CHINA 66%

49

Electrical Ignition system


The imports of all types of electrical Ignition System in 2008 were valued at Dhs 159 ml ($43ml/ 2.7 million in numbers), compared to Dh 117ml ($32ml/ 0.07 million in numbers) in 2007 with an increase of 36% in value term. The growth trend is expected to rise further in 2009. Imports in 2008 were mainly from Japan, Germany, China, UK & USA. Re-exports were mainly to- Middle East & African countries like Iran, Iraq, Kenya and Pakistan. Re-exports were about 35% in value term. The ignition system consists of the following,

UAE Trade on Ignition System in Y 2008 Year-2008


HS Code 85111000 85112000 85113000 85114000 85115000 85118000 85119000 HS Code Description Sparking plugs. Ignition magnetos; magneto-dynamos etc Distributors; ignition coils. Starter motors & dual purpose starter-generators. Generators for internal combustion engines,. Electrical ignition or starting equipment Parts of electrical ignition or starting equipment Total Value (AED) 65,783,493 206,981 10,374,531 23,277,776 30,529,240 7,437,748 21,460,893 159,070,662 Units 2,410,352 1,052 47,824 26,943 58,876 44,770 115,850 2,705,667 Value (AED) 24,946,131 596,664 2,240,557 10,811,500 35,581,344 2,909,280 7,391,844 84,477,320 Units 25,039 1,656 4,961 12,626 16,917 2,936 9,076 73,211

UAE Trade-2006-2008 (Ref Annexure-11 for detailed Break-up) In ml AED


Imports Re-exports

2008
159.07 84.48

2007
117.15 58.12

2006
109.60 47.01

In no of units
Imports Re-exports

2008
2,705,667 73,211

2007
200,104 57,290

2006
505,209 68,216

180,00 160,00 140,00 120,00 100,00 80,00 60,00 40,00 20,00 0,00 2008 2007 2006

3,00 2,50 In millions Imports Re-exports 2,00 1,50 1,00 0,50 0,00 2008 2007 2006 Imports Re-exports

In million AED

50

III. Automobile Tyres


Based on foreign trade analysis, GCC imported 433,000 tons (net) of tyres in 2007. There are no local manufacturers for tyres in GCC. Extreme climatic conditions prevailing in GCC shorten the life span of tyres and increase the frequency of replacement. According to Goodyear, last year saw the industry sell some 25 million tyres into the Middle East. Some countries in the region, which covers the whole of the Middle East, North and West Africa, are registering annual growth of up to 5%. Another contributory growth factor is the fact that local product is virtually non-existent and retreading is still in its infancy in most countries within the Region. The imports of all types of tyres and tyre products of UAE in 2008 were valued at Dhs 3.4bl ($0.92bl/ 13 million in numbers), compared to Dh2.76bl($0.74bl/ 12 million in numbers) in 2007 with an increase of 24%, out of which about 97% constitute new pneumatic tyres for car, bus and lorries. The growth trend is expected to rise further in 2009. Out of total import of new pneumatic tyres, car tyres constitute 56% followed by bus & lorry tyres of 36% and rest being tyres for other end uses. Car tyres worth Dhs 0.89ml and Commercial tyres worth Dhs 0.324ml for buses and lorries were imported respectively to UAE in 2008, mainly from Japan, China, and India. Out of which UAE consumed almost 66%, re-exporting 34% mainly to Iran, Iraq, and African countries.

UAE Trade on Pneumatic Automobile Tyres in 2008 Imports


New pneumatic tyres Inner Tubes Total in AED In Million USD Value (AED) 3,277,181,774 88,229,683 Units 12,475,802 531,643

Re-exports
Value (AED) 1,681,601,025 40,286,988 Units 5,788,128 206,381

3,365,411,457
917.00

13,007,445 1,721,888,013
469.18

5,994,509

UAE Trade-2007-2008 In bl AED


Imports Re-exports

2008
3,365.41 1,721.89

2007
2,764.08 1,781.27

In mllion units
Imports Re-exports

2008
13.01 5.99

2007
12.11 6.21

Imports 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0 2008 Imports Re-exports In million 14,00 12,00 10,00 8,00 6,00 4,00 2,00 0,00 2008 Re-exports

In million AED

2007

2007

51

Tyre manufacturing is heavily dependent on raw materials like natural rubber (NR), synthetic rubbers (SR) and carbon black which accounts for 70% of the raw material cost. The major sources of NR are being South-East Asia and Far East (Thailand, Indonesia, Malaysia, India, Vietnam, China and Sri lanka) which accounts for about 95% of global production in 2008. The major sources of Synthetic Rubber are being South-East Asia and Far East which accounts for about 46% of global production in 2008 followed by Europe and USA. All these have to be imported. Both natural and synthetic rubbers are being imported in UAE for manufacturing of various other rubber products. UAE trade figure in 2008 has been given below. The major sources of imports of NR being India, Thailand, Malaysia and Sri Lanka. The major sources of imports of SR being France, Belgium, UK, South Korea. Netherlands & Germany. UAE trade on NR & SR in 2008 Source- Dubai port & Customs-Dubai World
IMPORTS RE-EXPORTS

Description Natural rubber Synthetic rubber

Weight (KG)

Value (AED)

Weight (KG)

Value (AED)

1,789,744 27,324,125

17,810,676 233,950,113

278,487 1,762,351

2,358,589 17,618,129

Similarly, Carbon Black is being imported in UAE for use in manufacturing rubber products, plastic, inks, paints &
coatings and other end-uses. UAE trade figure in 2008 has been given below. The major sources of imports are being Netherlands, Germany, India, Iran & USA. UAE trade on Carbon Black in 2008Source- Dubai port & Customs-Dubai World
IMPORTS Description Weight (KG) Value (AED) Description Weight (KG) RE-EXPORTS

Carbon Black

15,564,719

86,326,022

1,192,764

4,930,562

52

IV. Vehicle Battery (Accumulators)


A car battery is a type of rechargeable battery that supplies electric energy to an automobile. Usually this refers to an SLI battery (starting, lighting, ignition) to power the starter motor, the lights, and the ignition system of a vehicles engine. This also may describe a traction battery used for the main power source of an electric vehicle.

UAE Trade on Vehicle Batteries in Y 2008


IMPORTS HS Code 85071000 85072000 85073000 85074000 85078000 85079000 HS Code Description Lead-acid electric accumulators(!) Lead-acid electric accumulators(ii), Nickel-cadmium electric accumulators. Nickel-iron electric accumulators. Electric accumulators, n.e.s. Parts of electric accumulators. Total Value (AED) 540,685,783 98,882,052 31,085,088 211,193 51,760,920 3,736,475 726,361,511 Units 1,486,667 174,370 140,181 71 146,718 35,947 1,983,954 RE-EXPORTS Value (AED) 195,855,500 6,146,077 37,734,888 381,650 6,596,153 483,097 247,197,365 Units 729,548 14,022 248,898 62 2,607 5,393 1,000,530

The imports of all types of accumulators in 2008 were valued at Dhs 726 ml ($198ml/ 2 million in numbers), compared to Dh 554ml($151ml/ 1.7 million in numbers) in 2007 with an increase of 31%. The growth trend is expected to rise further in 2009. Imports in 2008 were mainly from South Korea, Indonesia, China, Malaysia, Thailand & India. Re-exports were mainly to- Middle East & African countries like Iran, Iraq, Saudi Arabia, Lybia, Yemen, Tanzania, Nigeria, Sudan, Algeria and Cameroon. Re-exports were about 25% in value term.

UAE Trade on Vehicle Batteries in Y 2006-2008 (Ref Annexure-10 for detailed Break-up) In ml AED
Imports Re-exports

2008 726.36 247.20

2007 553.85 227.13

2006 334.91 151.11

In no of units
Imports

2008
1,983,954.00 1,000,530.00

2007
1,704,628.00 669,439.00

2006
1,740,073.00 536,862.00

Re-exports

800,00 700,00 600,00 500,00 400,00 300,00 200,00 100,00 0,00 2008 2007

2,50 Imports Imports Re-exports Achsentitel 2,00 1,50 1,00 0,50 0,00 2006 2008 2007 2006 Re-exports

In million AED

53

UAE Automotive Sector Industry Forecast Scenario


2008e Total autos sales(US$bn) Total autos sales (CBUs) Total re-exports (US$bn) Total re-exports (CBUs) Car ownership (% population0
E Autos Sector -

2009f 9.62 324,901 1.72 66,144 55.4

2010f 9.95 331,606 1.81 68,880 56.2

2011f 10.75 353,352 2.07 77,759 56.8

2012f 11.96 387,487 2.28 84,408 57.3

2013f 13.23 422,145 2.43 88,512 57.9

10.38 355,118 2.02 78,876 54.8

e/f = estimate/forecast. Sources: Dubai Chamber of Commerce and Industry, UAE Ministry of Planning, UAE Ministry of Interior, BMI

The UAE has become one of the favourite markets for automobile companies around the world, primarily due to the fact that the Middle East region has been one of the more resilient markets for automobile manufacturers when compared to the North American and European markets. Before the global economy hit the skids, vehicle numbers were easily outpacing the rate of population growth. The number of vehicles on the road rose by 49% to 583,015 units in 2008 from 392,546 units in 2006, according to Gulf News (citing the Abu Dhabi Traffic Department). The growth in the number of vehicles was attributed to the increase in residents and new companies entering the emirate. In Dubai, the number of registered vehicles rose to 1.045mn in 2008, up from 853,827 in 2007, Gulf News said. But the economic downturn has taken a temporary toll on this robust growth. Dealers have reported high levels of unsold stock and dwindling profit margins this year. According to the Licensing Agency of the Dubai Roads and Transport Authority, there has been a rapid slowdown in the number of new registered vehicles in the emirate. As reported by Gulf News, new vehicle registrations in Dubai rose just 4.5% in the first six months of the year, compared to a 17% increase in the year-ago period. In the first two months of the year, the number of vehicle registrations dropped 3% y-o-y, according to the Vehicles and Drivers Licensing Department of the Abu Dhabi police. The daily registration rate fell to 500 vehicles, down from 700-1,000 in 2008. With 70-80% of UAE sales financed through credit, restrictions on lending have severely hit the market. The government has put in place policies to stabilize the economy and get credit flowing. According to Bloomberg, it has made approximately US$32.6bn available to banks in an effort to get them to make financing available to business and consumers. While financing still remains, for the most part, difficult to come by, there are signs that these efforts are starting to stabilise the market. In March 09, leading distributor Al-Futtaim announced it was teaming up with banks to provide autos loans to buyers who wouldnt normally be able to qualify for a loan because they dont earn enough, the Middle East North Africa - Financial Network has reported. Around the same time, HSBC Holdings slashed the minimum monthly salary required for consumer and autos loans in the UAE by 50% to AED10,000, according to published reports. Along with an improved credit conditions, there are signs that UAE economy overall is on the road to recovery. In August, the head of the UAEs central bank told Al Ittihad newspaper that he expects crude prices to rebound in 2010. As reported by Emirates Business, he predicted that this would help the economy return to growth. The sharp fall in crude prices in the last year has been the main source of the decline in Gulf economic growth, and consequently, auto sales. BMI believes that as the UAE economy gains strength, this will help lay the foundation for a recovery in auto sales. The credit freeze may be starting to thaw, but credit is trickling down very slowly to the consumer level and it will some time before the heady days of credit-fuelled buying return - if ever. Still, auto sales are showing some signs of life. Evidence suggests consumers are paying cash for vehicles in response to aggressive pricing and promotional offers. Dealers are deeply discounting prices and offering free add-ons in a bid to move stock, making it a buyers market. The 54

luxury segment has been largely unaffected by credit issues, although sales have not been immune from the downturn. In Q109, BMW Middle East posted a 9% fall in sales. But regional sales and marketing director James Crichton said the drop was in line with its estimates and that the company remains optimistic about the regions growth. BMI envisages that the premium segment will continue to thrive, even during the downturn, as residents with high net worth will remain relatively unaffected by the credit crunch. Although, anecdotal evidence suggests that dealers in the UAE are turning to leasing schemes as customers find it increasingly difficult to secure loans. The UAEs car dealers say that lower-cost cars are the worst performing, although BMI believes that over the medium term smaller, more economical models will become more popular. At the present time, consumers who are most likely to purchase vehicles from this segment are holding back purchases, waiting for further discounts, more favourable credit terms and mindful of the uncertainties in the wider economy. The market for commercial vehicles is also showing some signs of life. The Department of Transport in Abu Dhabi placed an order with German autos manufacturer MANs affiliate MAN Nutzfahrzeuge for 400 city and intercity buses. The supply of 250 MAN Lions City low-floor buses and 150 MAN Lions Regio intercity buses started in April09.

55

Automotive Products & Free Trade Agreements


Free trade agreements can have important implications for the automotive sector because of the improved access (addressing both tariff and non-tariff barriers) which they can provide and because of the reduction in tariffs which can occur under them. Modern agreements typically also cover a wide range of issues other than tariffs and these can be relevant to trade in automotive products or services. Agreements can provide, for example: enhanced cooperation in relation to standards, technical regulations and conformity assessment procedures; disciplines encouraging more efficient customs procedures, including WTO-plus provisions encouraging the availability of advanced rulings on tariff classification, questions relating to customs valuation, and the origin of goods; commitments to improve access for trade in services; commitments to enhance the protection of investments, increase the transparency of investment regimes, and ease restrictions on Australian investment; and commitments to enhance the protection and enforcement of the rights of intellectual property holders. In UAE all FTAs are conducted on the GCC level, with the exception of FTA with US was on bilateral level and this has not been signed. The GCC has signed two FTAs, the first one with Singapore last December 2008, and the last one was with The European Free Trade Association (EFTA) the countries are (Iceland, Liechtenstein, Norway and Switzerland) signed on the 22nd of June 09. The two FTAs need to be ratified by both sides in order to come into force. The GCC currently negotiating with the following countries and economic blocks e.g. EU (27 countries), Turkey, Australia, New Zealand, Mercosur (Argentina, Brazil, Paraguay and Uruguay), Japan, S.Korea, China, India & Pakistan. All two agreements impose obligations on the parties in relation to trade in automotive products. These obligations include a general requirement to provide national treatment to goods originating in the other party (that is to treat goods originating in the other party no less favourably than like goods originating in UAE in regard to domestic taxation and regulation). They also include obligations to remove or reduce tariffs in accordance with agreed schedules and timetables.

56

About Ras Al Khaimah (UAE)


A LOCATION OF CHOICE With a favourable geographical location at the crossroad of trade between the East and West, the excellent infrastructure, strong government support towards the private sector, and not to mention its unmatched natural beauty, it is no surprise that the emirate of Ras Al Khaimah has emerged as a destination of choice for investors and leisure travellers alike. Ideally positioned to service and access markets like the Middle East, Africa, the Indian Subcontinent and the CIS countries, Ras Al Khaimah has become a growth-driven emirate with an increased focus on manufacturing, services, real estate, construction and tourism. RAK ECONOMY Ras Al Khaimah, the fourth-largest emirate in the UAE, today boasts of a rapidly growing economy, thanks to the ambitious process of economic diversification adopted by the government that primarily focuses industry, trade & commerce, tourism and real estate. While Ras Al Khaimahs business -friendly policies have ensured a brisk increase in foreign direct investments, it has also helped the emirate steadily increase its global appeal as a superior choice destination for business and leisure. The natural topography of Ras Al Khaimah which consists of 65 kilometers of sun-kissed sandy beaches, the Al Hajar Mountain range, the vast desert plains in the central region and the green belt in the southern region, have added to the success of Ras Al Khaimah as a destination of choice. Ras Al Khaimah has been witnessing impressive economic growth in the past few years under the visionary leadership of H.H. Sheikh Saud Bin Saqr Al Qassimi, the Crown Prince & Deputy Ruler of Ras Al Khaimah. In recent years, Ras Al Khaimah has witnessed an increase in GDP figures with growth in manufacturing, services, and tourism sectors, along with the increase in foreign trade and per capita income, rise in the standard of living, growth in education, development in world class housing and health-care facilities among other positive developments that point towards the all round socioeconomic prosperity of Ras Al Khaimah. Ras Al Khaimah was recently rated the best investment destination by the FDI Magazine, Financial Times, London. The RAK Government encourages development through private sector and believes that the role of the Government is primarily to create an optimum environment for enterprises, providing enabling infrastructures, utilities and services and making sure that the Government is an effective partner- supporting and empowering the private sector. Ras Al Khaimah has negligible deposits of hydrocarbons unlike some of the other emirates or countries in the GCC. As a result has sought to diversify its economy over the course of the last decades by opening up to foreign investors and industries. The aim was to make the best use of the emirates strategic positioning by improving its infrastructure and creating the right incentives and liberal business environment to attract major industrial enterprises from around the world.
INFRASTRUCTURE

The Government of Ras Al Khaimahs constant endeavor to enhance infrastructure facilities across the emirate has been a major factor in attracting major foreign investments to Ras Al Khaimah. With a well-planned road network, an international airport, fully equipped seaports, and advanced communications network, Ras Al Khaimah is wellpositioned for rapid socio-economic growth.

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RAK INFRASTRUCTURE- Highlights


RAK is well connected to most of the neighboring countries by air, sea and roads The emirate has an excellent road network making overland trans-shipment throughout the Middle East a realistic possibility Excellent telecom system RAK airport is one of the six international airports in the country Saqr port in RAK is one of the largest bulk handling ports in the region with container handling facilities

Although the drive to attract foreign companies has been a recent development, RAK has long been one of the industrial centres of the UAE. The industrial sector has been dominated by the three main industries of Cement, Ceramics and Pharmaceuticals. The sector has diversified in the recent years especially since the creation of free zones as well as partnerships between government and foreign investors. Ras Al Khaimah has a natural advantage when it comes to the production of cement as the Al Hajar mountain range holds vast supplies of high quality limestone, which is a key raw material for cement manufacturing. The emirate is also rich in other raw materials such as clay, quartz and other minerals. The pharmaceutical industry in RAK is about 30 years old and has been one of the key focus areas of government plans since several years. The industry in RAK is dominated by the Gulf Pharmaceutical Industries, known as Julphar. The company has grown into a pharmaceuticals giant by Middle East standards and now exports to over 80 countries. Julphar is the biggest pharmaceuticals manufacturer in the UAE. What RAK lacks in oil is somewhat compensated for by its natural mineral water resources. RAK is the origin of Masafi mineral water brand, the region's leading mineral water brand, with its source lying in several rich underground springs in the mountainous city of Masafi. Masafi water, has developed into an international brand which exports bottled water and fruit juices to more than 20 countries. RAK INDUSTRIAL ACTIVITIES- Highlights
One of the largest producers of cement in the Gulf region. Al Hajar range of mountains contain high quality limestone deposits. One of the largest producers of medicines in the UAE (Julphar) One of the largest producers of ceramic tiles and sanitary ware in the world (RAK Ceramics) Regions leading brand of mineral water (Masafi) Increased industrial activities with the creation of free zones and partnerships between government and foreign investors Thousands of small and medium scale industries in diversified sectors of manufacturing Emphasis on high-tech industries

RAK Ceramics is the single largest, state-of-the-art, ceramic tile manufacturer in the world with its 12 plants spread across the UAE, India, Bangladesh, Sudan, Iran and China, producing over one hundred million square meter of tiles and 3 million pieces of sanitary-ware annually, exporting to 135 countries. The UAE operation is the largest single location ceramic manufacturing facility in the world with more than 6,000 active models in the ceramic and porcelain tiles segment, and an exclusive range of more than 600 active models of sanitary ware to offer with a wide choice in designer bathroom sets, wash basins, bathtubs and related items. RAK Ceramics has diversified horizontally by forming several joint ventures including Kludi RAK LLC, RAK Porcelain LLC, Laticrete RAK LLC and many more in Ras Al Khaimah.

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About RAK Investment Authority (RAKIA)

The RAK Investment Authority (RAKIA) was constituted as per Emiri Decree No. (2)/ 2005 issued by H.H. Sheikh Saqr Bin Mohammed Al Qasimi, Supreme Council Member and Ruler of Ras Al Khaimah. The mandate for the authority is to work towards reinforcing the investment climate in the emirate and to promote its various economic sectors. Under the direction of H.H. Sheikh Saud bin Saqr Al Qasimi, the Crown Prince & Deputy Ruler of Ras Al Khaimah, we are pursuing the goal of making Ras Al Khaimah a regional hub for industrial manufacturing, trade and commerce. The GDP of RAK has grown significantly over the past few years. The growth is driven by increased focus on manufacturing, services, real estate, construction and tourism.

Vision & Mission


Our vision is to build a diverse economy that enjoys strong, sustainable growth, by attracting investments from the domestic and foreign markets that will create wealth and raise the standard of living for the people of Ras Al Khaimah. Our mission is to offer complete solutions to the needs of every investor and provide value and customer satisfaction, ensure minimum transaction & conversion cost, enable businesses to flourish in the quickest possible time and to make investment in Ras Al Khaimah simple, easy and a pleasant experience.

Soon after the formation of RAKIA in the year 2005, RAKIA undertook the development of the industrial parks which include the free zones and non free zones in the Al Hamra. In the same year the infrastructure and allied work were started in the Industrial parks which resulted in overall development of industries in the Emirate. In a period of 16 months from RAKIA inception 100% of the Free zone land (2.20 million Sqm) was leased out to 114 companies and also around 2.2 million sqm were leased out to 94 companies in the non-free zone Industrial area. With the success in attracting very large conglomerates around the world, RAKIA took the task of developing 25 million sqm of Industrial land in Al Ghail area of Ras Al Khaimah at the end of year 2006. RAKIA has already licensed over 220 manufacturing companies in Al Ghail Industrial and is self sufficient with a 64 MW of captive power plant. The strategy of RAKIA is to attract sustainable industries and RAKIA offeres investment advisory services and equity participation on selected projects. This has resulted in an atmosphere of trust among investors and generated a solid network of opportunities. As a result of that within a span of 3 to 4 years of its inception, RAKIA has been instrumental in attracting over US$2.5 billion of industrial investments alone, powering an unprecedented economic surge that has made Ras Al Khaimah as one of the fastest growing emirates in the UAE and the region. In response to Ras Al Khaimahs growing emergence as a business destination of choice, RAKIA established RAKOFFSHORE and the International Business Company (IBC) concept- a move designed to address the growing demand for offshore markets, and also complementing the emirate's ongoing economic diversification program. RAK OFFSHORE is an innovative initiative that establishes a true offshore facility and regulatory body providing complete offshore non-resident business registration and financial services through registered and reputed law firms. After successfully running industrial parks in Ras Al Khaimah, RAKIA is setting up a Free Industrial zone in Georgia (Eastern Europe), under the aegis of a subsidiary company of RAKIA. This is the first free zone in the Caucasus Region and is strategically located for easy access to the EU, Central Asia and Caucasus/ Eastern European markets. The free zone is being established next to the Poti Sea Port, which is also a subsidiary of RAKIA, the largest sea port in the Black Sea region and offers tremendous supply chain cost advantage for movement of goods. RAKIA is now in the expansion mode and has various Strategic Business Units, e.g. Education/ Technology Real Estate Transportation Investments Manufacturing & Energy RAK Offshore Real Estate Regulatory Authority (RERA). 59

RAKIA Milestones- Achievements Since its inception, over 5200 local and foreign investors have set up operations within the emirate under RAKIA, fueling an unprecedented pace of economic growth that has made Ras Al Khaimah one of the fastest growing emirates in the UAE and a regional economic force to reckon with. Out of which over 2300 are registered under RAKIA free zones and non-free and over 2800 are registered under RAK Offshore. No of Licenses under RAKIA Free Zones & Non Free Zones

Performance Highlights
5200 local and foreign investors have set up operations within the emirate under RAKIA. Out of which over 2300 are registered under RAKIA free zones and non-free and over 2800 are registered under RAK Offshore In RAKIA free zone and non free zone. About 85% of the investors have come from outside UAE Overall composition of license issued in RAKIA Free Zones & Non Free Zones so far-- Commercial24%, Industrial-23%, Consultancy-24%, Trading19% and Media-10%. Attracted close to US$ 2.5 billion worth of investments from 95 countries e.g. from the MiddleEast including UAE, Indian sub-continent including Pakistan, South-East Asia, US & Europe and other ME countries. Non-free zone (Industrial zone) Phase-I, II, Extn Zone and Ceramic zone at Al Hamra of total area of 2.83 million sqm have been completely leased out to 94 companies with 90% of these are in manufacturing.

No of Licenses under RAK Offshore

Free Zone at Al Hamra with total area of 2.20 million sqr mtr have been completely leased out to about 114 companies registered in free Zone out of which 89% are in manufacturing. Al Ghayl industrial park, spanning 25 million sq mtr of which 6 million sq mtr is Free Zone. Already 5 million sqm have been leased out to 230 companies so far.

RAKIA ADVANTAGES Easy licensing procedure Single window clearance for approvals & permits Every investor gets personal attention Ready availability of power Issue of visit and residence visa under one roof Open door policy. Easy access to decision makers.

RAKIA has attracted very strategic companies in diverse industry segments ranging from glass and table ware, float glass, vehicle assembly, steel products, building materials, electrical equipment, rubber, plastics and food processing. The winning strategy that RAKIA adopted was to forge partnership with some investors who had viable projects.

This strategic partnership has given the investing companies competitive edge in the way of early implementation, fund and many functional support. RAKIA continues to have many strategic partners in European countries and also has its own representative offices in France and Germany. RAKIA has also participated in various events in Europe, Asia and also in the UAE to show case its investment opportunities to companies looking for investments in UAE and in the region. 60

Some of the events that RAKIA participated recently are the Hanover Industrial fair in Germany, Forum for Trade and Investment in Zurich organized by OSEC, Global India Forum organized by Horasis in Munich to name a few and many local events like Middle East Manufacturing Exhibition in Abudhabi and also BIG 5 in Dubai apart from hosting many business delegation in RAK from across the world. RAKIA has been giving importance for a knowledge based approach with its dedicated team conducting sector analysis and identifying and communicating with potential large Industrial investors in the target countries. It has in the past forged partnership with prominent international consulting companies line KPMG, PWC, Financial Times etc. for various studies and opportunity assessments. It is evident from the above table that the number of companies registered in RAKIA in Y2009 has increased by over 120% over year 2007, is indicative that the efforts of RAKIA to attract investment to RAK is showing fruitful results. In the year 2010, RAKIA is expecting to attract large number of Industrial companies as it has already seeing signs of improvement in many countries after the global economic meltdown during 2008-09.

Geographic Trend-Overall

Russia/cis Miscellaneous 2% 6% rest of ME 21% INDIA 28%

USA 3% UAE 15%

ASIA/SE Asia 7% Europe 18%

The licenses RAKIA has issued show a remarkable balance among key sectors 25 per cent went to commercial companies, 24 per cent to consultancy and service companies, 23 per cent to industrial firms and the balance to trading and media companies. Investors have come from 96 countries around the world, out of which 36% are from the Middle East, 35% from Asia & Far East, 18% from Europe, and the balance from other parts of the world. RAKIA has experienced considerable increase in the registration of European companies from its previous years. Almost 85% of the European investments in RAKIA are coming from the six Industrialised countries like Germany, UK, France, Holland, Switzerland and Austria. RAKIA through its customer relationship approach has identified the investors need and has diversified its product offerings with the introduction of RAKIA Business Tower, a multi-stored commercial complex located in the Al Hamra region of RAK that houses corporate offices of clients from diverse segments. RAKIA has also developed warehousing facilities to cater to its growing needs and moreover, workers accommodation and studio flats were also made available. Besides managing industrial/business parks, RAKIA also delivers a wide range of complementary services to ensure that investment potentials are maximized. RAKIA offers investment advisory services and equity participation in selected projects, a key move that

KEY ENABLERS
Good infrastructure & logistic support system Excellent port facilities Competitive energy cost Easy access to GCC countries Strategic location being near to large and important markets Zero corruption and minimum bureaucracy Stable government and investor friendly policies Presence of local and international banks for project funding

61

reinforces investor trust and confidence. Due to Its investor-friendly policies and flexibility, brought in an array of international brands including Guardian Glass, Arc International, Franke, Duscholux, Mitsui, Kludi, Becker Industries, Kempe, Ashok Leyland and many others. RAKIA is a one stop shop for all the investor needs providing statutory support like issue of licenses, assistance in company formation, project approvals, investors visa, design approvals & construction permits, occupancy certificates etc.,

Accolades for RAK/RAKIA


S&P affirmed its A long-term and A-1 shortterm sovereign credit ratings to RAK. Ras Al Khaimah was rated as Most Cost Efficient FDI Destination by Financial Times London in the year 2007. Ras Al Khaimah has been awarded Most Attractive Destination For FDI in the 2008 2009 Middle Eastern Cities of the Future benchmark rankings

Among the myriad of advantages which the foreign investors avail of are full ownership of their businesses and a tax free haven apart from duty exemptions. Other key benefits offered to investors are 100 per cent capital and profit repatriation; easy availability of labour; easy licensing procedures; excellent port facilities; and absence of foreign exchange controls, trade barriers and quotas. Apart from the above advantages RAK had the unique traits, well differentiated from its competing locations like excellent terms for leasing, low cost of operations, favorable business environment, friendly government policies and high quality infrastructure. Because of all these, RAK was rated the Best Foreign Direct Investment destination in the Middle East for 2009 by Financial Times London in the year 2007.
Sector wise break-up- Non free zone Sector wise break-up- Free zone
Auto & Related Food 4% processing 2% Metal Products 36%

Metal Products 30%

Food Wood Auto & processing products Related 2% 4% 2% Electricals 7% Rubber & Plastics 7% Chemicals 9%

Electricals 4% Wood products 6% Rubber & Plastics 6% Building m aterials 11%

Building materials 22%

Others 17%

Others 20%

Chem icals 11%

RAKIA has signed a memorandum of co-operation with banks in Ras Al Khaimah in a move that will greatly benefit investors in the emirate. Under the agreement, the banks will provide financing to firms for their projects in RAKIA industrial parks. S&P affirmed its A long -term and A-1 short-term sovereign credit ratings on RAK which has build tremendous confidence for banks as well as investors. RAKIA's ongoing success largely reflects the Ras Al Khaimah Government's own success in establishing reforms, instituting new laws and regulations and enforcing policies that are hospitable to local, regional or international investors. Major companies in RAKIA Ashok Leyland of India is one of the biggest names in industry in the automobile industry. The company's integrated assembly plant is to build 1000 buses per year in RAK has started its operations in the year 2008. This is the first fully integrated Bus/trck manufacturing in the whole of GCC.

62

Zamil Steel of Saudi Arabia is a strong example of a company based in the Middle East that is starting to establish an important presence in RAK. Zamil, which is actually one of the largest industrial groups in the Middle East, registered with RAKIA in 2005. The company manufactures pre-engineered buildings and galvanized steel for electricity towers. The pre-engineered structures are mainly used for construction projects' show rooms, military bases, factories and temporary or semi-temporary structures. Arc International based in France came to RAK in 2004 to establish a production facility in the region for easier access to surging Middle Eastern markets. Arc International is one of the world's top producers of glassware and stemware. Guardian Glass of USA With an initial investment of approximately $115 million, established Guardian RAK with a production capacity of 700 tons of glass per day for use in automotive and construction applications, including high-performance coated glass. Global Glass Solutions has recently set up a glass processing facility in the Al Ghail Industrial Park in Ras Al Khaimah. The state-of-the-art factory is one of the largest glass-processing facilities in the region with up to 1,000 sqm glass processing capacity per day, providing clients in the region a complete array of world-class solutions for their processed glass requirements. The facility will manufacture all kinds of processing glass and will initially cater to markets in the UAE and the rest of the GCC.
INVESTMENT Million USD YEAR 60 10 35 20 10 30 10 130 55 50 30 25 25 25 150 100 70 35 30 105 100 30 -2009 2009 2008 2008 2008 2007 2007 2006 2006 2006 2006 2006 2006 2006 2005 2005 2005 2005 2005 2005 2004 2009 2009

NAME KEC Cables Pikko POSCO Becker Paints Novas Sealing Kludi RAK

SECTOR Industrial Cables Steel Connectors Steel Paints Manufacturing Industrial Gaskets Water Taps & Faucets

COUNTRY India Finland South Korea France UK Germany Australia USA Austria India Kuwait India Pakistan India Japan India Switzerland KSA Germany India France Jordan Germany

Kempe Engineering Industrial Equipments Guardian Industries Float Glass Franke Ashok Layland Kirby Steel Dabur India RAK Ghani Glass RAK Steel Mitsui Japan JBF RAK SS Kitchen Product Bus & Truck Assembly Steel Herbal Products Glass Containers Steel Products Heavy Fabrication Polyester Chips & Films

Falcon International Blue Ray DVD Zamil Steel Steel Duscholux Pioneer Cements Arc International Global Glass Solution Maico Gulf Sanitaryware Fittings Cement Tableware Glass mfg Ventilation system

RAK Steel, a joint venture of Ras Al Khaimah Investment Authority,is a new energy efficient and environment friendly steel rolling mills. The mill produces 500,000 tonnes per annum 8mm to 40 mm diameter steel deformed reinforcement bars (REBARS) to international British and American standards. JBF Industries has teamed up with Ras Al Khaimah Investment Authority in its initial stages and set up Polyster PET Resin Packaging chips plant in RAKIA. The cost of the plant would be around $100 million. Naturelle LLC Dabur International Subsidiary Naturelle LLC, subsidiary of Dabur International Ltd., has started its production in RAK in the year 2008. Dabur India Limited is one of the leading FMCG Companies in India, with interests in health care, personal care products, with powerful brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola & Real. Maico Gulf LLC Maico Gulf LLC, a reputed company in air ventilation systems has set up its manufacturing unit in Al Ghail Industrial Park. Maico Gulf LLC is a joint venture company between Maico Holding GmbH of Germany and Hira Holding BVI. The Maico products include Ventilation Fans, Industrial & Jet Fan, Smoke vents and Air Handling Units. 63

References

1. Hiromi Oki, Where intra-regional trade in East Asia is heading, JETRO Research Paper Vol. 06, 2008, 2. Changing Features of the Automobile Industry in Asia - Asia-Pacific Research and Training Network on Trade Working Paper Series, No. 37, July 2007 3. Dubai Chamber of Commerce Economic Bulletin, vol-4, issue-35, May 2007 4. OICA Statistics on global motor vehicles production 5. Trade Statistics-2008, Dubai Port & Customs, Dubai World 6. BMI report on UAEs Auto sector 2009 7. GOIC report on sector study on Automotive Industry in GCC 2009 8. Dubai Chamber of Commerce Economic Bulletin, vol-4, issue-35, May 2007 9. Dow Jones Factiva database of compaies.

Websites: http://www.researchandmarkets.com/reports/ http://www.worldbank.org http://www.unido.org http://www.gulfnews.org http://www.khaleejtimes.org

64

Annexure-I
World Motor Vehicle Production By Country And Type In 2008
Source: OICA Statistics
Commercial vehicles 197,509 43,966 25,441 44,367 658,979 882,153 2,607,356 12,510 42,297 376 423,043 513,700 3,696 484,985 169,421 110,560 364,553 1,647,480 110,847 949,942 73,271 110,908 42,913 14,252 320,872 1,810 0 17,610 241,841 356,204 598,595 56,747 44,260 992,433 525,543 22,328 202,896 4,928,881 13,000 170,993 17,889,325

Country Argentina Australia Austria Belgium Brazil Canada China Czech Rep. Egypt Finland France Germany Hungary India Indonesia Iran Italy Japan Malaysia Mexico Netherlands Poland Portugal Romania Russia Serbia Slovakia Slovenia South Africa South Korea Spain Sweden Taiwan Thailand Turkey Ukraine UK USA Uzbek others Total

Cars 399,577 285,590 125,436 680,131 2,561,496 1,195,436 6,737,745 933,312 72,485 18,000 2,145,935 5,526,882 342,359 1,829,677 431,423 940,870 659,221 9,916,149 419,963 1,241,288 59,223 840,000 132,242 231,056 1,469,429 9,818 575,776 180,233 321,124 3,450,478 1,943,049 252,287 138,709 401,309 621,567 400,799 1,446,619 3,776,358 195,038 332,917 52,637,206

Total 597,086 329,556 150,877 724,498 3,220,475 2,077,589 9,345,101 945,822 114,782 18,376 2,568,978 6,040,582 346,055 2,314,662 600,844 1,051,430 1,023,774 11,563,629 530,810 2,191,230 132,494 950,908 175,155 245,308 1,790,301 11,628 575,776 197,843 562,965 3,806,682 2,541,644 309,034 182,969 1,393,742 1,147,110 423,127 1,649,515 8,705,239 208,038 503,910 70,526,531

% change 9.60% -1.50% -33.80% -13.20% 8.20% -19.40% 5.20% 0.90% 9.90% -24.40% -14.80% -2.80% 18.50% 2.70% 46.00% 5.40% -20.30% -0.30% 20.20% 4.60% -4.40% 20.00% -0.60% 1.50% 7.80% 17.40% 0.80% -0.30% 5.30% -6.80% -12.00% -15.60% -35.40% 8.30% 4.30% 5.10% -5.80% -19.30% 12.50% -15.80% -3.70%

65

Annexure-II World Ranking Of Vehicle Manufacturers In 2008


Source: OICA Statistics

Rank
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

GROUP
Total TOYOTA GM VOLKSWAGEN FORD HONDA NISSAN PSA HYUNDAI SUZUKI FIAT RENAULT DAIMLER AG CHRYSLER B.M.W. KIA MAZDA MITSUBISHI AVTOVAZ TATA FAW FUJI ISUZU CHANA AUTOMOBILE DONGFENG BEIJING AUTOMOTIVE CHERY SAIC VOLVO BRILLIANCE HARBIN HAFEI GEELY ANHUI JIANGHUAI BYD GAZ MAHINDRA PROTON GREAT WALL PACCAR CHONGQING LIFAN M.A.N. JIANGXI CHANGHE CHINA NATIONAL PORSCHE LUAZ NAVISTAR SCANIA SHANNXI AUTO UAZ ASHOK LEYLAND KUOZUI

Total
69,561,356 9,237,780 8,282,803 6,437,414 5,407,000 3,912,700 3,395,065 3,325,407 2,777,137 2,623,567 2,524,325 2,417,351 2,174,299 1,893,068 1,439,918 1,395,324 1,349,274 1,309,231 801,563 798,265 637,720 616,497 538,810 531,149 489,266 446,680 350,560 282,003 248,991 241,553 226,754 220,955 207,711 192,971 187,053 162,816 157,306 129,651 125,084 122,783 108,053 107,422 106,377 96,721 90,548 90,264 79,874 75,220 72,181 71,485 67,891

CARS
55,846,163 7,768,633 6,015,257 6,110,115 3,346,561 3,878,940 2,788,632 2,840,884 2,435,471 2,306,435 1,849,200 2,048,422 1,380,091 529,458 1,439,918 1,310,821 1,241,218 1,175,431 801,563 489,742 637,720 552,096 531,149 489,266 446,680 350,560 282,003

LCV
10,652,432 1,102,502 2,229,833 271,273 1,991,724 33,760 463,984 484,523 85,133 317,132 516,164 368,929 330,507 1,356,610 83,159 105,754 128,233 160,966 64,401 47,101

HCV
2,598,495 251,768 24,842 46,186 68,715 134,033 151,759 135,658 395,123 7,000

HEAVY BUS
464,266 114,877 12,871 9,840

8,416 104,774 23,303 68,578

1,344 2,302 5,567 128,169 19,388

488,488

3,221

17,964 241,553 226,754 220,955 207,711 192,971 22,043 100,615 156,813 129,651 140,985 62,201 493

218,542

12,485

24,025

125,084 122,783 100,566 107,422 106,377 96,721 88,316 2,232 76,302 72,067 75,220 30,953 63,827 41,228 1,019 1,792 50,539 2,272 19,927 13,962 7,807 7,487

66

Annexure-III
UAE Imports & Re-exports of Vehicles in 2008 & 2007 in value & Number of units Source- Dubai Port & Customs(Dubai World)
Y-2008 Imports
Category Car Motor Vehicle for Transport of People Motor Vehicle for Transport of Goods Grand Total Value (AED) 26,818,609,248 2,811,911,927 4085,191,976 33,715,713,151 Units 408,903 16,202 50,462 475,567

Re-exports
Category Car Motor Vehicle for Transport of People Motor Vehicle for Transport of Goods Grand Total Value (AED) 6,660,332,310 242,806,432 1,490,063,296 8,393,202,038 Units 136,168 3,645 21,228 161,041

Y-2007 Imports
Category Car Motor Vehicle for Transport of People Motor Vehicle for Transport of Goods Grand Total Value (AED) 22,085,635,576 1,421,562,276 3,510,425,050 27,017,622,902 Units 450,325 22,390 69,426 542,141

Re-exports
Category Car Motor Vehicle for Transport of People Motor Vehicle for Transport of Goods Grand Total Value (AED) 4,936,000,803 122,293,508 1,133,725,977
6,192,020,288

Units 113,362 2,500 20,922


136,784

67

Annexure-IV
Auto component Manufacturers in GCC Source: GOIC report on GCC Autosector 2009

SI. No 1 2 3 4 5

Company Name Gulf Exhaust National Automobile Industry Co Arabian Axles, Foundries and Spare parts Co Rezayat Friction Co Ltd Saudi Germany BrakeShoes manufacturing Co Ltd Akam Brake production factory Al Saraha Car Bodies Factory Arabic Car Bodies Factory Modern steel Fabrication & Exhaust factory Otaibi Silencer Factory Saudi Exhaust System Co Alkamil Mufflers Factory Saudi Filter Industry Company Al Mutlaq Filters Co

Business activity Exhaust Assembly Axles Brakes Brakes

Location BahrainMaameer KSA- Jeddah KSA-Dammam KSA-Dammam KSA-Jeddah

Address Factory 107, Road 3402, Maameer 634 PO Box 5938, Jeddah 21432 PO Box 8491,2nd ind city, Dammam 31482 PO Box 90, Al Khobar 31952 PO Box 42221, Jeddah 21541 PO Box 42004, Riyadh 11541 PO Box 5356, Hassa 31982 PO Box 14044, Dammam 31424 PO Box 1963, Dammam 31441 PO Box 294, Dammam 31411 PO Box 10873, Jeddah 21443 PO Box 147, Jeddah 21944 PO Box 31872, 2nd Industrial City, AlKhobar 31952 PO Box 2076,Industrial Estate, Phase#2,Jeddah PO Box 22287, Jeddah 21495 PO Box 120, Riyadh 11383 PO Box 7315, Riyadh 11642 PO Box 32013, Jeddah 21428 PO Box 32226, Jeddah 21426 PO Box 43130, Riyadh 11561 PO Box 171, Riyadh 11383

Phone 97317701126 +96626822000 009663 812 1267/1147 Ext:116 00966-3-8140363 / 0362 00966 26080783

6 7 8 9 10 11 12 13

Brakes Chassis Chassis Exhaust, shock absorber Exhaust, shock absorber Exhaust, shock absorber Exhausts, Mufflers Filters

KSA- Riyadh KSA-Dammam Hassa KSA-Dammam, Seihat KSA-Dammam KSA-Dammam KSA-Jeddah KSA-Jeddah-Taif KSA- Dammam

00966 1 4466624 5966 848 Factory- 9663 837 1968, office-8203353 00966 3 847 1350 00966 38472815 00966 2 6379281 966 2 7440736 00966 3812 1184 Extn 223

14

Filters

KSA-Jeddah

009662 636 9317 00966 2 650 4745 009661 265 0567 009661 422 0243 00966 2 637 9909 9662 608 1320, 6377124, 6378637 9661 2652325 966 1 242 9225

15 16 17 18 19 20 21

Al Nahdi Spare parts & Foundries & Filters Desert Filters Factory Saudi American cars Spare parts Industry Technoglass Co National Glass & Mirrors Ltd Saudi Lamino Ltd Car Seat & Cushion Factory Co

Filters Filters Gear box Glass Glass Glass Interior

KSA-Jeddah KSA-Riyadh KSA- Riyadh KSA-Jeddah KSA- Jeddah KSA-Riyadh KSA- Riyadh

68

SI. No 22

Company Name Sasco Renewing Engine &Car Water Pumps Factory Al Nahda Radiator factory National Radiator Factory Zaid Md Drawaish & Partner Radiator Factory Al Aman For Radiator Factory Gulf Radiator Factory El Salama Radiator Factory Al Fawzan Radiator Factory Rifai Glass Reem Batteries & Power Appliance con SAOG Oman Filters Industry Co Sea Shore Car Bodies and Chassis Factory Nemeh Enterprises National Radiator Factory WLL(Nemeh Enterprises Al Khaleej Car Exhaust factory Skyline Exhaust Industry LLC Consolidated Filters Industry LLC Gulf Filters Establishment Reliable Fabricators LLC Gulf Engineering & Heavy Car Body Factory Lumi Glass Industry National Finland Auto Glass Wellfit Co Dolphin Industrial Ltd International Radiators Industry Sabah Car Radiator Industry Serck Services-Gulf ltd Automotive Ancillaries Ltd Al Baqa Mechanical & Eng. CO Ltd Aswan International Engineering Co LLC Dolphin Brake linings

Business activity Pumps

Location KSA-Riyadh

Address PO Box 51880, Riyadh 11553 PO Box 121, 1st Ind. City, Dammam PO Box 2464, Dammam 31952 PO Box 7835, 2nd Ind. City, Dammam PO Box 98, Hafouf 31982 PO Box 124929, Jeddah 21342 PO Box 1043, 1St Ind city, Dammam PO Box 41411, Riyadh 11521 PO Box 1941, Kuwait 13020 PO Box 123, Rusail PO Box 45, Rusail 124 PO Box 60100, Al Khor PO Box 3410, Doha PO Box 99, Doha PO Box 1162, Dubai PO Box 3710, Dubai PO Box 26322, Dubai PO Box 2175, Abu Dhabi PO Box 16648, Dubai PO Box 18099, P.O. Box;113744

Phone 463 0722

23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

Radiators Radiators Radiators Radiators Radiators Radiators, brakes Radiators, brakes Glass Glass Filters Chasis Radiators, brakes Radiators, brakes Exhaust Exhaust Filters Filters Fuel injectors Fuel tank Glass Glass interior Radiators Radiators Radiators Radiators Spring Spring Valves

KSA-Dammam KSA- Dammam KSA-Dammam KSA-Dammam Hafouf KSA-Jeddah KSA-Dammam KSA- Riyadh Kuwait-Safat Oman Oman- Rusail Qatar- Al Khor Qatar-Ind. Area Doha Qatar- Ind. Area Doha UAE- Dubai UAE- Dubai UAE- Dubai UAE- Musafah UAE-Dubai UAE- Al Ain UAE- Dubai, Alquz, UAE- Umm Al Quwain UAE- Ajman UAE-Ajman UAE-Sharjah UAE-Sharjah UAE-Sharjah UAE-Dubai UAE- Ajman UAE-Dubai UAE

8571618/84 71472 966 38220679 009663 834 8559 9663 5864500 00966 2635 2590 00966 3 828 3205/6/3 009661 448 0612 (+965) 24817162- 24843719Tel.: (968) 2444 6191/92/93 00968 626 420/21 00974 472 2843/44 4607 962 4114782/43 76922 8801203 97143389775 3472221 5554300/55 43393 9714333 2399 9713782 4450 9714 340 3919

PO Box 20767, Ajman PO Box 20678, Ajman PO Box 388, Sharjah PO Box 44,Sharjah PO Box 5834,Sharjah PO Box 16755, Dubai PO Box 1546, Ajman PO Box 31550,Dubai

9716743 7012 9716743 2565 9716 5344999 9716 5341926 9716558 2607 8816645 9716 7435942 8851300 971-6-7432565

69

Annexure-V-A
UAE Imports & Re-exports of Parts and Accessories in 2006, 07 & 08 in value term Source- Dubai Port & Customs(Dubai World)
Table- Imports
HS Code 87081000 87082100 87082910 87083000 87083100 87083900 87084000 87085000 87087000 87088000 87089100 87089200 87089300 87089400 87089500 87089900 HS Code Description
Bumpers & parts Safety seat belts Luggage carriers Brakes and servo-brakes Mounted brake linings Brakes & servo-brakes & parts-II Gear boxes Drive-axles with differential, Road wheels & parts & accessories Suspension shock-absorbers Radiators Silencers & exhaust pipes Clutches & parts Steering wheels, columns & boxes Safety airbags Parts & accessories of vehicle body

Total

2008 ml AED 251.12 8.20 11.84 195.96 3.16 51.55 71.61 31.37 283.27 200.00 65.20 27.32 441.09 182.83 6.55 8,558.91 10,389.97

2007 ml AED 142.68 5.61 21.05 1.25 41.62 404.35 56.34 48.05 220.27 304.48 51.66 12.18 502.78 181.53 0.05 6,855.48 8,867.91

2006 ml AED 78.55 2.58 6.38 0.00 42.87 161.27 40.26 32.06 196.58 242.86 40.23 12.26 228.04 97.83 0.00 5,391.18 6,591.61

Table- Re-exports
HS Code 87081000 87082100 87082910 87083000 87083100 87083900 87084000 87085000 87087000 87088000 87089100 87089200 87089300 87089400 87089500 87089900 HS Code Description
Bumpers & parts Safety seat belts Luggage carriers Brakes and servo-brakes Mounted brake linings Brakes & servo-brakes & parts-II Gear boxes Drive-axles with differential, Road wheels & parts & accessories Suspension shock-absorbers Radiators Silencers & exhaust pipes Clutches & parts Steering wheels, columns & boxes Safety airbags Parts & accessories of vehicle body

2008 ml AED 58.96 30.30 1.08 13.13 0.20 9.69 13.35 5.14 91.14 97.48 17.22 4.03 108.73 88.99 0.62 3,665.59 4,206.72

2007 ml AED 48.96 31.68 7.99 0.09 5.08 74.83 25.48 12.54 100.38 84.89 68.65 4.32 128.75 26.28 0.01 3,072.04 3,693.54

2006 ml AED 26.28 17.85 1.00 0.00 4.75 31.45 15.89 6.75 91.03 70.12 46.66 1.52 78.92 6.10 0.00 2,088.00 2,487.77
70

Annexure-VB UAE Imports & Re-exports of Parts and Accessories in 2006, 07 & 08 in no of units (Source- Dubai Port & Customs(Dubai World)
Table- Imports
HS Code 87081000 87082100 87082910 87083000 87083100 87083900 87084000 87085000 87087000 87088000 87089100 87089200 87089300 87089400 87089500 87089900 HS Code Description
Bumpers & parts Safety seat belts Luggage carriers Brakes and servo-brakes Mounted brake linings Brakes & servo-brakes & parts-II Gear boxes Drive-axles with differential, Road wheels & parts & accessories Suspension shock-absorbers Radiators Silencers & exhaust pipes Clutches & parts Steering wheels, columns & boxes Safety airbags Parts & accessories of vehicle body

2008 790,993 34,606 57,820 1,743,193 3,612 21,558 154,678 771,396 2,889,040 1,169,773 369,700 115,346 1,835,596 193,487 20,572 30,309,298 40,480,668

2007 205,650 162,357 53,912 10,396 98,944 537,965 49,022 21,011 1,385,680 410,777 119,072 71,800 394,930 71,948 10 5,606,998 9,244,910 2007 21700 2136 2675 125,067 5,702 15,192 72,717 25,631 191462 266,495 190,185 5,745,781 29,504 143,086 12 3,151,127
9,988,472

2006 210,030 247,485 39,083 0 73,550 445,730 20,354 10,002 1,051,517 508,149 94,541 46,849 338,029 70,168 0 3,684,515 6,861,373 2006 29,332 46676 9411 0 14,199 75091 6335 5,225 262,776 113710 77,448 7025 94577 7,022 0 2326588
3,075,415

Table- Re-exports
HS Code 87081000 87082100 87082910 87083000 87083100 87083900 87084000 87085000 87087000 87088000 87089100 87089200 87089300 87089400 87089500 87089900 HS Code Description
Bumpers & parts Safety seat belts Luggage carriers Brakes and servo-brakes Mounted brake linings Brakes & servo-brakes & parts-II Gear boxes Drive-axles with differential, Road wheels & parts & accessories Suspension shock-absorbers Radiators Silencers & exhaust pipes Clutches & parts Steering wheels, columns & boxes Safety airbags Parts & accessories of vehicle body

2008 175,947 430,409 6,764 54,364 603 23,117 24,570 39,001 536,184 194,847 107,738 78,261 562,674 497,625 458 28,208,085 30,940,647

71

Annexure-VI-A
UAE Trade On Tyre & Tyre Products-2008
Source- Dubai Port & Customs(Dubai World)

IMPORT NEW PNEUMATIC TYRES


of a kind used on motor cars (including station wagons & racing cars). of a kind used on buses & lorries. of a kind used on aircraft. of a kind used on motorcycles. of a kind used on bicycles. of a kind used on argricultural or forestry vehicles of a kind used on construction or industrial handling vehicles < 61 cm of a kind used on construction or industrial handling vehicles>61 cm of a kind used on agricultural or foresty vehicles & machines. having a herring-bone" or similar tread, n.e.s. of a kind used on agricultural or forestry vehicles & machines ew pneumatic tyres of rubber, n.e.s.

RE-EXPORT Units
9636233 2198087 9062 153801 118,722 100,365 50,155 4,520 5193 11,167 21,847 448235

Value (AED)
1853365027 1190378134 34923969 9795180 14,681,597 22,579,890 47,346,029 9,167,141 969519 3,170,660 54,418,049 95787325

Value (AED)
1324694809 284566493 4738330 7603778 9,071,693 71,065 2,678,296 1,179,262 247606 1,147,181 8,757,438 58258875

Units
4898306 565151 1054 37086 44,959 405 13,644 225 603 3,444 146,936 159414

SUB-TOTAL RETREATED TYRES


of a kind used on motor cars (including station wagons & racing cars) of a kind used on buses or lorries. of a kind used on aircraft. Others

3,336,582,520

12,757,387

1,703,014,826

5,871,227

633119 3726889 4,670,578 550,244

2701 20852 1,707 1,140

2711137 645368 6,246,604 222,875

19571 250 1,010 128

SUB-TOTAL USED PNEUMATIC TYRES Used pneumatic tyres, of rubber TYRE TREADS AND TYRE FLAPS Solid or cushion tyres, tyre treads & tyre flaps, of rubber INNER TUBES For motor cars buses or lorries.
For bicycles.

9,580,830 199842

26,400 3702

9,825,984 12043841

20,959 268279

11,952,010
88229683 11836720 16855195

135,866
531643 692572 135604

2,098,940
40286988 5121461 10736405

1,902
206381 622739 55839

SUB-TOTAL TOTAL

116921598 3,475,236,800

1359819 14,283,174

56144854 1,783,128,445

884959 7,047,326

Source- Dubai port & customs, Dubai World

72

Annexure-VI-B
UAE Trade On Tyre & Tyre Products-2007
Source- Dubai Port & Customs(Dubai World)

IMPORT NEW PNEUMATIC TYRES


of a kind used on motor cars (including station wagons & racing cars). of a kind used on buses & lorries. of a kind used on aircraft. of a kind used on motorcycles. of a kind used on bicycles. of a kind used on argricultural or forestry vehicles of a kind used on construction or industrial handling vehicles < 61 cm of a kind used on construction or industrial handling vehicles > 61 cm having a "herring-bone" or similar tread, n.e.s. of a kind used on agricultural or foresty vehicles & machines. of a kind used on construction or industrial handling vehicles < 61 cm. of a kind used on construction or industrial handling vehicles > 61 cm. New pneumatic tyres of rubber, n.e.s. SUB-TOTAL Value(AED) 1382503324 1111091646 17529785 7617082 15,405,549 16602029 12096654 21,532,173 1688460 3,672,028 16,044,455 33,403,103 58265503 2,697,451,791 Unit 8439240 2614907 9640 57483 80,598 65806 34443 13,661 1165 21,834 36,624 10,971 208821 11,595,193

RE-EXPORT
Value(AED) 1260471315 404045338 5602363 9265834 7,360,456 271193 2916918 111,808 208195 1,274,758 5,893,978 4,475,423 47336695 1,749,234,274 Unit 4629483 1323997 5360 46425 14,083 195 7563 117 47 6,697 1,357 4,559 65397 6,105,280

RETREATED TYRES
of a kind used on motor cars (including station wagons & racing cars) of a kind used on buses or lorries. of a kind used on aircraft. Other SUB-TOTAL 865890 5322149 4,372,001 478971 11,039,011 3746 26467 2,396 1599 34,208 6410729 1816104 2,499,150 468865 11,194,848 1819 1570 638 2583 6,610

USED PNEUMATIC TYRES


Used pneumatic tyres, of rubber. 427123 4415 14687184 27251

TYRE TREADS AND TYRE FLAPS


Solid or cushion tyres, tyre treads & tyre flaps, of rubber. 11389461 48330 2149187 2728

INNER TUBES
For motor cars, buses or lorries. For bicycles Other SUB-TOTAL Total 56177100 8076551 2,370,762 66,624,413 2,786,931,799 418678 68390 23,116 510,184 12,192,330 23376127 2759298 5,896,957 32,032,382 1,809,297,875 54742 8055 38,893 101,690 6,243,559

Source- Dubai port & customs, Dubai World

73

Annexure-VII
Key Global Tyre Manufacrurers Contact Details

Company
Bridgestone Michelin

Contact Information
Shoshi ARAKAWA, Chairman of the Board , 10-1 Kyobashi 1-chome, Chuo-ku, Tokyo, 104-8340, Japan, Tel- 81 3 35636822/ 81-3-3535-2553 Chairman Supervisory Board: ric Bourdais de CharbonnireCompagnie Gnrale des tablissements Michelin, 23, place des Carmes-Dchaux, 63040 Clermont-Ferrand, France, Tel. +33-4-73-32-20-00/ Fax +33-45-66-15-53 Chairman, President, and CEO: Robert J. (Bob) Keegan, The Goodyear Tire & Rubber Company, 1144 E. Market St.Akron, OH 44316-0001,OH, USA, Tel. 330-796-2121/ Fax 330-796-2222 Elmar Degenhart (CEO and Chairman of the executive board), Continental AG, Vahrenwalder Strasse 9, D-30165 Hannover, Germany, Tel. +49-511-938-01/ Fax +49-511-938-81-770 Mitsuaki Asai, Chairman, Sumitomo Rubber Industries, Ltd.3-6-9 Wakihama-cho, Chuo-ku, Kobe 651-0072, Japan Tel. +81-78-265-3004/ Fax +81-78-265-3113 Kenji Nakakura, President & CEO, Toyo Tire & Rubber Co., Ltd., 1-17-18 Edobori, Nishi-ku, Osaka 550-8661, Japan Tel. +81-6-6441-8801/ Fax +81-6-6446-2225 Tadanobu Nagumo, President and Representative Director, The Yokohama Rubber Co., Ltd. 36-11, Shimbashi 5-chome, Minato-ku, Tokyo 105-8685, Japan, Tel. +81-3-5400-4531/ Fax +81-3-54004570 Jong Ho Klm, President and CEO, Kumho Tires Co Inc, 555, Schon-dong, Gwangsan-gu, Guangju, Korea, TEL- 062-9402114/ 82-2-6303-8297 Cho Yang-Rai , Chairman, Hankook Tire Co., Ltd. 647-15 Yeoksam-dong, Gangnam-gu, Seoul 135723, South Korea Tel. +82-2-2222-1000/ Fax +82-2-2222-1100 Roy V. Armes, Chairman, President, Cooper Tire & Rubber Company, 701 Lima Ave., Findlay, OH 45840, OH , USA Tel. 419-423-1321, Toll Free 800-854-6288, Fax 419-424-4212 Henrik Therman, Chairman, Nokian Tyres plc, Pirkkalaistie 7, FIN-37101 Nokia, Finland, Tel. +358-10-401-7000/ Fax +358-10-401-7799 Dr Enki Tan, Chairman, No.280-2,linhong Road, Changning District, Shanghai 200335,P.R.China Tel- (86-21) 2207 3333/ Fax- (86-21) 2207 3000 R. P. Goenka, Chairman, CEAT Limited, CEAT Mahal, 463, Dr Annie Besant Road, Worli, Mumbai 400 030 Telephone: +91 22 2493 0621/ Fax: +91 22 2493 8933 MRF Limited, 124, Greams Road, Chennai - 600 006, India. Phone : 91 - 44 28292777/ Fax : 91 - 44 - 2829 1844 / 0562 Onkar S Kanwar (CMD), Apollo Tyres Limited, Apollo House, 7 Institutional Area, Sector 32, Gurgaon 122001 , Haryana, India Tel: +91 124 2721000/ Fax- 91 124 2721000 H.S.Singhania, Chairman, JK Tyre and Industries Ltd. Link House,, Bahadurshah Zafar Marg, New Delhi - 110 002 Tel-91-11-23311112-7/ Fax- 91-11-23322059 Marco Tronchetti Provera (Chairman of the board and CEO),, Pirelli Group, Viale Sarca, 222 Pirelli & C. S.p.A 20126 Milano, Tel- +39 02 64421/ +39 02 6442 2670

Goodyear Continental Sumitomo Rubber

Toyo Tire & Rubber

Yokohama

Kumho

Hankook

Cooper Nokian
GT Radial CEAT MRF Apollo JK Tyre Pirelli

74

Annexure-VIII
UAE Trade On Vehicle Battery (Accumulators)-2006-2008
Source- Dubai Port & Customs(Dubai World)

YEAR2008
HS Code 85071000 85072000 85073000 85074000 85078000 85079000 HS Code Description Lead-acid electric accumulators Lead-acid electric accumulators, Nickel-cadmium electric accumulators. Nickel-iron electric accumulators. Electric accumulators, n.e.s. Parts of electric accumulators. Total

IMPORTS Value (AED) 540,685,783 98,882,052 31,085,088 211,193 51,760,920 3,736,475 726,361,511 Units 1,486,667 174,370 140,181 71 146,718 35,947 1,983,954

RE-EXPORTS Value (AED) 195,855,500 6,146,077 37,734,888 381,650 6,596,153 483,097 247,197,365 Units 729,548 14,022 248,898 62 2,607 5,393 1,000,530

YEAR2007
HS Code : 85071000 85072000 85073000 85074000 85078000 85079000 HS Code Description : Lead-acid electric accumulators Lead-acid electric accumulators Nickel-cadmium electric accumulators. Nickel-iron electric accumulators. Electric accumulators, n.e.s. Parts of electric accumulators. Total Value(AED) 447973827 54743681 15745827 81864 27462288 7843938 553,851,425 Unit 1330067 101951 182782 878 70435 18515 1,704,628 Value(AED) 198792553 2092049 14497591 152967 11010986 584591 227,130,737 Unit 648740 7704 3608 1469 3921 3997 669,439

YEAR2006
HS Code : 85071000 85072000 85073000 85074000 85078000 85079000 HS Code Description : Lead-acid electric accumulators Lead-acid electric accumulators, Nickel-cadmium electric accumulators. Nickel-iron electric accumulators. Electric accumulators, n.e.s. Parts of electric accumulators. Total Value(AED) 251928815 34952404 20118595 337725 23279397 4295687 334,912,623 Unit 1217169 78544 178373 1634 71290 193063 1,740,073 Value(AED) 126624400 2716978 10528256 134328 10452681 654809 151,111,452 Unit 486322 15272 7113 1553 19870 6732 536,862

75

Annexure-IX
UAE Trade On Electrical Ignition system - 2006-2008
Source- Dubai Port & Customs(Dubai World)

Year-2008
HS Code 85111000 85112000 85113000 85114000 85115000 85118000 85119000 Year2007 HS Code : 85111000 85112000 85113000 85114000 85115000 85118000 85119000 Year2006 HS Code : 85111000 85112000 85113000 85114000 85115000 85118000 85119000 HS Code Description Sparking plugs. Ignition magnetos; magneto-dynamos;etc Distributors; ignition coils. Starter motors & dual purpose starter-generators. Generators for internal combustion engines, n.e.s. Electrical ignition or starting equipment Parts of electrical ignition or starting equipment Total Value (AED) 65,783,493 206,981 10,374,531 23,277,776 30,529,240 7,437,748 21,460,893 159,070,662 Units 2,410,352 1,052 47,824 26,943 58,876 44,770 115,850 2,705,667 Value (AED) 24,946,131 596,664 2,240,557 10,811,500 35,581,344 2,909,280 7,391,844 84,477,320 Units 25,039 1,656 4,961 12,626 16,917 2,936 9,076 73,211

HS Code Description : Sparking plugs. Ignition magnetos; magneto-dynamos;etc Distributors; ignition coils. Starter motors & dual purpose starter-generators. Generators for internal combustion engines, n.e.s. Electrical ignition or starting equipment Parts of electrical ignition or starting equipment Total

Value(AED) 46915241 2781649 6199984 13970749 20271941 7301082 19707847 117148493

Unit 48616 3492 18272 33556 32638 17865 45665 200104

Value(AED) 22420671 1342357 969775 6163814 17539776 1792090 7889298 58117781

Unit 26984 1981 1260 10657 10187 946 5275 57290

HS Code Description : Sparking plugs. Ignition magnetos; magneto-dynamos;etc Distributors; ignition coils. Starter motors & dual purpose starter-generators. Generators for internal combustion engines, n.e.s. Electrical ignition or starting equipment Parts of electrical ignition or starting equipment Total

Value(AED) 33041892 409,348 11315771 18,745,929 18722176 6684512 20683080 109602708

Unit 360992 432 14780 28,864 29643 21062 49436 505209

Value(AED) 17130059 82,662 1492687 4,745,644 14410455 1199042 7953729 47014278

Unit 27584 193 3836 6,638 16017 1044 12904 68216

76

Annexure-X
UAE Auto Dealers

Company AGMC Al-Futtaim Al Ghandi Auto Al Habtoor Motors Al Khoory Automobiles Al Majid Motors Al Nabooda Automobiles

Brand BMW, MINI, Alpina Toyota Motor, Lexus Fiat, Proton, Chevrolet, General Motors Mitsubishi Motors, Galloper Subaru Kia Motors, Renault Volkswagen, Porsche, Audi Ford Motor*, Rover, Range Rover, Jaguar Cars,

Coverage area UAE UAE Dubai, Sharjah UAE Dubai, Northern Emirates UAE UAE

Al Tayer Motors Al Yousuf Motors Arabian Automobiles Autostar Trading Bin Dhahir Motors Galadari Automobiles Gargash Motors Genavco Al Jazira Motors Juma Al Majid Est Liberty Automobiles Nadoo Motors National Auto Swaidan Trading Trading Enterprises Abu Dhabi Motors Al Masaood Automobiles Ali and Sons Motors Bin Hamoodah Autos Emirates Motor Company Omeir Bin Youssef Western Motors

Ferrari, Maserati GM Daewoo Auto & Technology, Daihatsu Motor Nissan Motor, Renault koda Auto SEAT Mazda Motor, Mahindra & Mahindra, Bajaj Tempo Mercedes-Benz Isuzu Motors Lamborghini Hyundai Cadillac, Hummer, Opel , Chevrolet Pudmani, LDV General Motors , SsangYong Motor Peugeot Jeep+, Honda Motor, Chrysler, Volvo Cars, Dodge BMW Nissan Motor Porsche, Volkswagen, Audi Opel, General Motors Mercedes-Benz Peugeot Fiat, Jeep

UAE UAE Dubai and Northern Emirates UAE UAE UAE Dubai, Northern Emirates UAE UAE UAE UAE UAE UAE UAE UAE Abu Dhabi Abu Dhabi Abu Dhabi and Al Ain Abu Dhabi Abu Dhabi Abu Dhabi Abu Dhabi

77

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