A Brief study of U.A.E auto industry....!!!

1. By- Shashank shukla

2. The United Arab Emirates (U.A.E.) is the second-largest
automotive market (including cars, parts and accessories,
trailers and semi-trailers, trucks, public transport vehicles, and
tractors) in the GCC after Saudi Arabia. Passenger cars
account for approximately 80 percent of the U.A.E. market,
with commercial vehicles (trucks, vans and buses) accounting
for remaining 20 0ercent.
The U.A.E. relies heavily on imports, with virtually the entire
supply of car and light vehicles being imported. Cars
represent over 50 percent of automotive imports from the
world, followed by parts and accessories, and trucks. With
the exception of armored vehicles factories and a few bus
manufacturing and truck units that assemble knock-down kit
(CKD) components, there is no significant automotive
manufacturing activity in the U.A.E.
overview

3. According to BMI Research, there were 401,922 units sold
in 2015, down by 0.7 percent from 2014. BMI cited falling oil
prices, slowing economic growth and lower consumer
confidence as primary factors behind the drop in
sales. Asian manufacturers remained dominant, occupying
seven of the top 10 positions on the list of the top 10 best-
selling brands in the U.A.E. Toyota ranked number one with
a 31.4 percent market share and sales of 126,279
units. Nissan took second place (63,076 units and a 15.7
percent market share), and Mitsubishi placed third (55,413
units, 13.8 percent market share). BMW, Hyundai, Ford,
Kia, Lexus, Chevrolet, and Honda – in rank order – round
out the list, with Ford taking the sixth position (16,077 units,
4.0 percent market share) and Chevrolet placing ninth
(9,740 units, 2.40 percent market share).
There is also favourable outlook for the sale of luxury cars,
electric and hybrid vehicles, as well as a rising demand for
motorcycles.

4. Tariffs
The tariff applied to cars is 5 % customs duties (on value of the
vehicle plus 1 percent insurance plus cost of the shipment).
For trucks the custom duty is 12 %.
Taxes
Currently, there is no VAT, luxury tax or special consumption
tax on vehicles in the U.A.E; however, a proposed VAT is
expected to be implemented in 2018.
Barriers
The U.A.E.’s trade policy has been consistent with its
obligations under the WTO. There are few trade barriers. Two
noteworthy barriers are: 1) automotive parts should not contain
asbestos, and 2) products should not have been manufactured
or transited through isreal.

5. Market entry
All cars and buses entering the U.A.E. must adhere to the
safety regulations issued by the Emirates Authority for
Standardization and Metrology (ESMA). In addition, the
following rules also apply-
Head restraints in all seats and air bags for the driver and
the front passenger are compulsory for all passenger cars
and buses with capacity up to 22 passengers.
Safety belts and Anti Braking System (ABS) are required in
all new vehicles. Extra seats in the aisles are prohibited for
any motor vehicle with a riding capacity of four people or
more.
Every vehicle must have an alarm to notify when drivers
exceed speed limit of 120 km in cars and 100 km on buses.

6.  All vehicles must be exported from the country of
manufacture and steering wheels must not be modified.
There must be no damages on the vehicle’s outer body
and must be accident free.
Sub sector best prospects
Alternate fuel vehicle
The U.A.E. has stepped up measures to promote electric
vehicles (EV’s) in order to reduce its carbon footprint, and it
is working on standardizing its regulations governing EV’s.
The Alternate Fuel Vehicles sub-sector is expected to grow due to higher
consumer acceptance and increased governmental initiatives, e.g.,
implementation of regulations and requirements such as battery material,
adaptability standards vis-à-vis harsh local climatic conditions,

7. commercial vehicle
U.A.E.’s planned infrastructure and housing projects, this
sector will experience continued growth. Light commercial
vehicles sales should surge as a result of increased business
and investment generated by growing migration from
neighbouring countries.
Demand for buses and minibuses will see positive growth as
the U.A.E. experiences increased tourism and hospitality
activities.Motorcycles
Demand for motorcycles is on the rise in the U.A.E., both for
lower end (used by expatriate workers) and higher end (used
by richer U.A.E. consumers). Companies like Harley-
Davidson, Honda, and Kawasaki already have operations in
the U.A.E., and other companies including Royal Enfield (from

8. Opportunities
Auto city in Mussafah
This is an Abu Dhabi Government initiative to develop
advanced workshops and service centers to attract investment
in automobile manufacturing and spare part logistics.
Remanufactured parts
With local government bodies showing increased
commitment on greener technologies, commercial vehicle
remanufactured parts should find increased acceptance.

9. Dubai Water and Electricity Authority (DEWA) recently stated
that by 2020, ten percent of all new vehicles procured by the
Dubai government will be for electric cars and the government
will provide incentives to encourage people to buy electric cars
instead of traditional petrol-powered vehicles.
This target will see thousands of electric cars ordered in the
next few years by Dubai government departments.
Electric vehicle
Luxury vehicle
Lifestyle changes in the U.A.E. provide opportunities for U.S.
manufacturers to supply luxury vehicles, RVs, and specialty
vehicles.

10. Automotive After market
With increased acceptance for U.S. manufactured parts and
accessories, U.S. based OEM supplies of Japanese, European
and U.S. vehicles might find opportunities to supply goods to
the U.A.E. market.
Used car market
U.A.E. consumers increasingly want to buy U.S. products to
cater to the growing demand for used car market sector,
specifically targeting classic car buyers, modified vehicles
buyers, and performance vehicle buyers.

11. In use vehicle