PRLog (Press Release)– Jun 16, 2011– There are no comprehensive and reliable vehicle sales and import statistics available for Qatar, which has only a very small car industry, owing to its low population (1.6mn in 2009). However, some dealerships do release their sales figures, making it possible to get a partial handle on local vehicle demand and the overall direction of sales and imports.
The year 2010 was a substantially better year for the Qatari economy, and by extension consumer demand for new vehicles, than 2009. Overall GDP growth nearly doubled in 2010, to 15.9% (despite a slowdown in the construction sector), according to our current estimates. Continued strong activity in the oil and gas sector (where prices were once again very buoyant), together with the stabilising effects of a substantial public injection of funds into the acura banking sector, helped to explain the strong rate of overall economic growth. Several Qatari dealerships reported strong growth in car sales during 2010. Leading the way was Alfardan Automobiles, which had a 66% increase in sales over all of its brands. Sales of Rolls-Royce cars were up by 80%, while sales of Mini cars were up by 85% on 2009.
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The initial indications were that there should continue to be steady growth in car sales in 2011, bolstered by the successful hosting of the inaugural Qatar Motor Show in January 2011. Moreover, our Macroeconomic team is predicting 17.2% annual GDP growth for the current year, a further acceleration from the stellar 2010 performance. In April 2011, Alfardan announced that thanks to the introduction of the Mini audi Countryman, it expected sales growth for the Mini family to build on the strong 2010 performance, when overall sales rose 85%.
However, in April 2011, two separate policy decisions by the Qatar Central Bank (QCB) had very different implications for the outlook for vehicle sales. On the positive side, the monetary authority reduced its key overnight depo cadillac ry/aston-martin">aston martin sit rate by 50bps from 1.5% to 1.0%, bolstering the supportive effects of an August 2010 move to reduce the rate by a similar magnitude. This low rate environment should continue to provide a supportive backdrop to consumer demand - savers will be more inclined to spend (due to lower returns on deposit accounts), while car buyers relying on borrowing to fund (or part-fund) their purchases should be able to access cheaper credit.
Risks to Forecast: On the downside, the central bank also moved to set an upper limit for personal car loans - banks and financial institutions would henceforth only be permitted to lend 80% of the value of a car, with consumers required to put up a down-payment for the remaining 20%, according to Peninsula Qatar. Moreover, there was a lack of clarity as to whether financing offered directly by dealers and carmakers would be subject to the same restrictions. Indeed, the QCB reportedly did not state whether inhouse financing would be affected.
Clarity will give direction as to whether growth will be hindered; or new opportunities created. If the QCB announces that in-house financing will be covered by banking regulations, we expect vehicle sales to be hit. However, if dealer financing can continue as normal, we believe that this will result in a similar uptick in the number of dealer and carmaker-backed finance companies to those seen in other markets in the region, with an associated further boost to sales.
Key Developments
Qatar will host a new autos industrial park, which developer Barwa says will be the first of its kind in the Middle East, it was revealed in March 2011. The project is another feature of the Qatar National Vision of 2030, which has already led to the arrival of the country's first electric car on the back of new CO2 emission targets. BMI sees the project in the context of a trend throughout the Gulf Co-operation Council (GCC) for creating autos hubs, whether for production or other services. Although not intended as an alternative to the existing autos hub in Doha, the Bahara Motor City will accommodate as many autosrelated services as possible. This will include showrooms for all vehicle segments, servicing and finance and insurance. Project Manager Mohamed Saleh Abdulla al-Hiji said the complex might also offer incentives for dealers moving to the new facility. The project is ambitious, with investment of QAR2bn (US$549mn) in the initial phase, which is scheduled for completion in 2014. The whole project should be complete within five years and the Qatar Chamber of Commerce and Industry hopes it will prompt other similar facilities. Barwa Real Estates Investments Director Ibrahim Yousef Fakhroo said that although there are similar autos complexes in the UAE, the infrastructure facilities will make the Bahara Motor City unique. About Business Monitor International
Business Monitor 1086274749 International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010
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