Auto industry one of the most important sectors of the economy in the UAE

In a research by the Emirates NBD, after Saudi Arabia, UAE holds the second-largest automotive market position in the Gulf Cooperation Council (GCC).

UAE Minister of Economic, Abdulla Bin Touq Al Marri, also stated that one of the most vital sectors to be emphasized for the future economy is the automobile industry. The development of the auto industry brings about crucial changes in the manufacturing sector by employing innovation and advanced technologies like artificial intelligence (AI) in cars. Such actions have brought in modern mobility solutions and transformed the transportation sector.

He further mentioned the automobile industry as a crucial part of successfully achieving the vision of UAE in 2021. The sector encourages economic diversification and influences national strategy for a competitive business environment.

If we are to mention a leading global automobile company in UAE, it would most probably be General Motors. Because General Motors in UAE is an international hub for many nations like Europe, Asia, and the US. They have created purpose-built automobiles that serve customers from all over the Emirates, Africa, and the Middle East.

The International Monetary Fund’s World Economic Outlook also projected positive growth of the automotive industry in the UAE. This could happen due to strong economic growth, access to vehicle financings, household spending, and more significantly due to population growth. The increase in development projects and supporting general infrastructure will eventually promote the automotive sector to fill the public demands.

The competitive edge of the Auto Industry in the UAE

Auto Industry in the UAE

The primary industrialization strategy of the UAE lies in the promotion of oil and gas industries. However, as a motive to expand their industrialization for a better and stable balanced economy, the automotive industry is the ideal long-term option.

The automotive industry prevents expensive imports and guides overall development by developing ancillary industries, employment generation for locals, and investment in R&D.

And when it comes to automobiles in UAE, most cars, or other vehicles you see are termed a luxury in other nations. That is the reason why you can get the best car insurance in Dubai. Moreover, it is a mandatory rule for all vehicle owners to have proper vehicle insurance in UAE.

The market of luxury cars in the UAE is strongly growing with investments in various auto firms for better future partnerships.

The auto industry of UAE has a higher scope of growth as they get many quality investment opportunities like:

  • Increase in demand for car accessories and other spare parts in the market due to rugged terrain and climatic conditions.
  • Development of local auto manufacturing sector by building a car assembly plant.
  • Due to the high cost of living, emirates prefer to lease a car rather than buying one with loan money.
  • UAE also attracts solid capital flows as it has the most liberal trade law in the gulf.

New automotive technological developments and mobility advances

technological developments and mobility advances

The UAE is on the way to import hybrid cars and electric vehicles as per the draft standards prepared by European Securities and Market Authorities (ESMA). This draft is created with the objective of standardization and to create a sustainable market for hybrid cars & electric vehicles in the UAE. The standard for these vehicles is to be fit as per the General Services Organization (GSO). If not, there could be problems with vehicle licensing and inconsistent product quality.

And significantly, the Abu Dhabi government has planned to develop “an Auto City” in the Mussafah area of the region. This initiative will likely encourage the development of new production plants for light vehicles, cars, and trucks, service centers, and advanced workshops, along with an assembly line for vehicle accessories and spare parts manufacturing logistics.

This advanced strategy is likely to create opportunities for automotive distributors and manufacturers in the UAE.

And we are talking about automotive distributors because, in the UAE, the auto manufacturer is not allowed to directly make a sale to customers. The presence of auto manufacturers is not so significant in UAE. Most of the mergers and acquisitions and other transactions take place at the distributor level only.

In 2015, the Supreme Council of Energy had established the Dubai Green Mobility Initiative. It was formed as a strategy to create a low-carbon economy and achieve sustainable development by using electric vehicles and hybrid cars in Dubai.

In addition, the Ruler of Dubai and the Prime Minister of the UAE initiated the “Vision 2021” project. One of the objectives of this Vision 2021 project is to build a sustainable infrastructure and environment. This development will be measured by various KPIs (Key Performance Indicators), including improved clean energy contribution and air quality index of 90 percent target by 2021.

The automotive manufacturing industry in UAE is not very significant. However, the government and other official organizations formulate strategies to enable an advanced auto industry with a legal framework.