If you follow the commercial vehicles space, you are probably aware that the industry is witnessing tremendous growth, driven by the strong economic fundamentals and robust business environment in the UAE.
Global industry experts such as Standard & Poor’s and the International Monetary Fund (IMF) assert that the UAE is uniquely placed to strengthen its growth prospects, backed adequately by the recent surge in industrial activity.
The resurgence in the real estate market, combined with increased government spending on massive infrastructure projects across the Emirates, will drive growth in the construction sector and the wider UAE economy, including logistics, hospitality and, retail sectors. The much acclaimed Expo 2020 win by Dubai is also expected to help further catalyse the growth of industrial activity.
The commercial vehicle sector is at the heart of this industrial revolution, and we are confident that this rapid growth will play out faster in the UAE than in other GCC countries. The sales witnessed last year in commercial vehicles provide strong evidence that the sector is on a robust growth trajectory.
As per Emirates Money estimates, approximately 16,000 units of heavy and light commercial vehicles were sold in Dubai alone in 2013. Around 35% of these vehicles can be classified as heavy commercial vehicles, while the rest were light and heavy buses. This represents 15% growth compared to 2012 – a trend that we expect will continue over the next few years as a result of developments in Dubai and the wider nation.
Besides massive infrastructure projects and expanding business activity, there is another critical factor that is helping to stimulate the UAE’s commercial vehicles sector – the growing availability of easy financing options.
We believe this will serve to further accelerate commercial vehicles sales in the UAE, which should achieve 10% to 15% growth this year. Signs of this trend were evident in 2013, where financing accounted for 50% to 55% of commercial vehicle sales, as compared to 2012 where only 40% of these vehicles were financed.
It is important to note that the UAE is the growth leader within the Middle East’s commercial vehicles sector. Even so, GCC truck and bus sales are forecast to rise 8.7% annually during the period 2012 to 2017 to reach 155,000 units, according to estimates by Frost & Sullivan. The number of trucks and buses on the road is expected to reach 1.42 million by the end of 2017, representing a compound annual growth rate (CAGR) of 6.9%.
Moreover, increases are not limited to numbers alone. As more banks and finance companies come on board with innovative, customer-friendly financing offers for commercial vehicles, we expect consumers and businesses to move from cash deals towards financing options that offer cost efficiencies on the purchase of trucks and other types of equipment.
This, in turn, is likely to lead to more streamlined growth in the commercial vehicles market, which should continue to follow this trajectory during the coming years. Clearly, with so much happening in this favorable market, my colleagues and I at Emirates Money are confident that the UAE’s commercial vehicles sector is set for a long, smooth ride.
Vikas Thapar is CEO of Emirates Money, a wholly owned subsidiary of Emirates NBD Group.
Smooth ride ahead: commercial vehicles in the UAE
Vikas Thapar offers his assessment of commercial vehicles in the UAE
If you follow the commercial vehicles space, you are probably aware that the industry is witnessing tremendous growth, driven by the strong economic fundamentals and robust business environment in the UAE.
Global industry experts such as Standard & Poor’s and the International Monetary Fund (IMF) assert that the UAE is uniquely placed to strengthen its growth prospects, backed adequately by the recent surge in industrial activity.
The resurgence in the real estate market, combined with increased government spending on massive infrastructure projects across the Emirates, will drive growth in the construction sector and the wider UAE economy, including logistics, hospitality and, retail sectors. The much acclaimed Expo 2020 win by Dubai is also expected to help further catalyse the growth of industrial activity.
The commercial vehicle sector is at the heart of this industrial revolution, and we are confident that this rapid growth will play out faster in the UAE than in other GCC countries. The sales witnessed last year in commercial vehicles provide strong evidence that the sector is on a robust growth trajectory.
As per Emirates Money estimates, approximately 16,000 units of heavy and light commercial vehicles were sold in Dubai alone in 2013. Around 35% of these vehicles can be classified as heavy commercial vehicles, while the rest were light and heavy buses. This represents 15% growth compared to 2012 – a trend that we expect will continue over the next few years as a result of developments in Dubai and the wider nation.
Besides massive infrastructure projects and expanding business activity, there is another critical factor that is helping to stimulate the UAE’s commercial vehicles sector – the growing availability of easy financing options.
We believe this will serve to further accelerate commercial vehicles sales in the UAE, which should achieve 10% to 15% growth this year. Signs of this trend were evident in 2013, where financing accounted for 50% to 55% of commercial vehicle sales, as compared to 2012 where only 40% of these vehicles were financed.
It is important to note that the UAE is the growth leader within the Middle East’s commercial vehicles sector. Even so, GCC truck and bus sales are forecast to rise 8.7% annually during the period 2012 to 2017 to reach 155,000 units, according to estimates by Frost & Sullivan. The number of trucks and buses on the road is expected to reach 1.42 million by the end of 2017, representing a compound annual growth rate (CAGR) of 6.9%.
Moreover, increases are not limited to numbers alone. As more banks and finance companies come on board with innovative, customer-friendly financing offers for commercial vehicles, we expect consumers and businesses to move from cash deals towards financing options that offer cost efficiencies on the purchase of trucks and other types of equipment.
This, in turn, is likely to lead to more streamlined growth in the commercial vehicles market, which should continue to follow this trajectory during the coming years. Clearly, with so much happening in this favorable market, my colleagues and I at Emirates Money are confident that the UAE’s commercial vehicles sector is set for a long, smooth ride.
Vikas Thapar is CEO of Emirates Money, a wholly owned subsidiary of Emirates NBD Group.
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