Global Insight’s new Middle East and Africa Forecast Report shows that since 1995, the 11 Middle East and African markets covered in the report have grown 77%, from 820,000 light vehicles to close to 1.45 million vehicles in 2002.
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According to the study, there has been a clear split between the markets of the Middle East and Africa. The Middle East car and LCV markets have grown 149% since 1995, which is definitely faster than any other region. In the three African markets covered in the report, growth over the same period has been just 8%.
However, markets in this region differ radically in size and structure, making it necessary to address each specific market separately when taking a growth position in Africa. Policy reform and changes to barriers to entry will play a role in shaping demand in several markets. Nonetheless, the MEA region is predicted to grow by over 50% within the next decade. There will continue to be a wide variation in market performance over this period-with some countries continuing to expand, while others languish around current levels – making it imperative not to see the region as one unit. Nonetheless, the MEA region is predicted to grow by over 50% within the next decade.
Across the six Gulf Co-operation Council (GCC) members, growth rates in vehicle sales will also differ enormously. The GCC markets have already risen from 178,000 light vehicles in 1995 to 411,000 in 2002. Saudi Arabia now accounts for 46% market share, the UAE 24% and Kuwait 13%. The looming demographic crisis in Saudi Arabia is placing a heavy burden on its economy, while other GCC markets are often better equipped to deal with the challenges posed by demographic shifts, energy revenues and exchange rate volatilities.
The Iranian market, the largest in the Middle East and its only production location, has seen spectacular growth in recent years. Iran will continue to be the main country of growth over the next decade, and significant progress has been made attracting investment, particularly from PSA and Hyundai. Further moves to open the industry to the international community are taking place prompting recent investment announcements by Renault and VW. Production, exports, and imports will rise in the years ahead, but the market will remain highly regulated with only a small portion of total demand coming from imported models. By 2008, sales are projected to be over 900,000 units, but this opportunity is counterbalanced by significant threats to investment, particularly from the political arena.
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By GlobalDataGlobal Insight Automotive Group senior analyst, Tim Armstrong, said: “Although in total volume terms the markets are still modest, car makers wishing to grow faster than the world average should make sure the Middle East markets form part of their global growth strategy. In contrast, growth in Africa has been much lower. In 2002, Morocco, Egypt, and South Africa were just 8% larger than in 1995.”
