MIDDLE EAST AND AFRICA AUTOMOTIVE AFTERMARKET · Batteries 5% Engine Oil/Lubricant/Coolant 6% Brake System Parts 6% Automotive Filters 5% ... Africa on the other hand is driven by

MIDDLE EAST AND AFRICA

AUTOMOTIVE AFTERMARKET

A KNOWLEDGE REPORT

PREPARED FOR

MIDDLE EAST AND AFRICA AUTOMOTIVE AFTERMARKET © TechSci Research 2

C O N T E N T

1 Spotlight on Middle East & Africa

2 Current status of Middle East Market

3 Overview of Vehicle Fleet, Sales and Automotive Aftermarket

4 Vehicle Fleet Age Distribution

5 Middle East & Africa Vehicle Sales Overview

6 Middle East & Africa Automotive Aftermarket Overview

7 Market of New Automotive Technologies in Middle East & Africa

8 Market Attractiveness Index (Automotive Aftermarket)

9 Factors Impacting Sales of Vehicles

10 Trends & Developments

11 Dealer Survey – Impact of VAT

TABLE OF CONTENT

2


TOTAL ESTIMATED VEHICLE FLEET

42 Million*

89%

11% PASSENGER VEHICLE

COMMERCIALVEHICLE

SHARE OF VEHICLE SEGMENT, VOLUME SALES

VEHICLE SALES VOLUME, 2017

3* Million Units

MIDDLE EAST AFRICA

SHARE OF VEHICLE SEGMENT % SALES

TOTAL VEHICLE FLEET

50 Million*

VEHICLE SALE VOLUME, 2017

1.3* Million Units

AUTOMOTIVE AFTERMARKET SALES VALUE, 2017

$ 12**Billion

TOTAL ESTIMATED No. OF AFTERMARKET OUTLETS

50 Thousand**

SHARE OF AFTERMARKET PARTS, VALUE SALES

AUTOMOTIVE AFTERMARKET SALES VALUE, 2017

$ 10** Billion

TOTAL No. OF AFTERMARKET OUTLETS

45 Thousand**

SHARE OF VEHICLE SEGMENT % SALES

*Includes both passenger and commercial vehicle**Estimated figures

Tyres 22%

Batteries5%

Engine Oil/Lubricant/Coolant7%

Brake System Parts 4%

Automotive Filters5%

Electrical Parts/Lightning2%

Others55%

Source: OICA, Whitepapers, Articles, TechSci Estimates

Middle East includes GCC countries, Iran, Israel, Yemen, Jordan, Lebanon

Tyres 23%

Batteries5%




Electrical Parts/Lightning2% Others

53%

SPOTLIGHT ON MIDDLE EAST & AFRICA

75%

25%PASSENGERVEHICLE

COMMERCIALVEHICLE

3


C U R R E N T S TAT U S O F M I D D L E E A S T M A R K E T

Middle East is witnessing a slowdown in its economy due to impact of lower oil prices and trying to manage by instituting some severe measures and exploring ways to make their economies less oil-dependent.

The decline in oil prices has resulted in the worst economic slowdown since the global financial crisis of 2009-2010. The downturn in oil prices impacted many small and medium enterprises, along with larger corporations.

Some of these corporates in vehicle fleet business had large contracts with oil related businesses. Timelines of these oil projects extended due to economic downturn. This made some of the vehicle fleet companies to extend lease terms because payments were not released and their was large payables owed by governmental entities. This forced fleets to keep vehicles in service longer, extending the vehicle’s lifecycle costs.

In addition, earlier stern steps taken by the government diminished consumer sentiments deferring automotive purchases. However, these strict steps have since been somewhat relaxed. One recent development that may spur future sales is that, for the first-time ever, women will be allowed to drive in Saudi Arabia starting in June 2018.

CURRENT STATUS OF MIDDLE EAST MARKET

4

OVERVIEW OF VEHICLE FLEET, SALES

AND AUTOMOTIVE AFTERMARKET


MARKET ASSESSMENT OF VEHICLE FLEET,

SALES AND AUTOMOTIVE AFTERMARKET

31.06 33.23 34.96 37.00 39.25 41.64

2.88 2.72 3.29 3.14 3.05 3.12

9.75 10.25 10.75 11.25 11.75 12.4

0

5

10

15

0.00

10.00

20.00

30.00

40.00

50.00

2012 2013 2014 2015 2016 2017

AU

TOM

OTI

VE

AFT

ERM

AR

KET

IN

$ B

ILLI

ON

MIL

LIO

N U

NIT

Middle East

Vehicle Fleet (in million units) New Vehicle Sales (in million units)

Automotive Aftermarket (in billion USD)

38.6 40.4 42.4 44.8 47.1 49.5

1.57 1.65 1.72 1.55 1.31 1.26

6.5 7.28.0

8.99.9

11.0

0.0

5.0

10.0

0.0

20.0

40.0

60.0

2012 2013 2014 2015 2016 2017

AU

TOM

OTI

VE

AFT

ERM

AR

KET

IN

$ B

ILLI

ON

MIL

LIO

N U

NIT

Africa

Vehicle Fleet (in million units) New Vehicle Sales (in million units)

Automotive Aftermarket (in billion USD)

✓Middle east market is witnessing a slow growth pertaining to vehicle sales. GCC market is under tremendous

pressure to regain the pace which it has lost in last 3 years. Iran and Israel are the only two countries which had

given a boost to the overall vehicle market.

✓ Automotive aftermarket growth is directly associated with vehicle fleet. With inclusion of new taxes and revised

registration rates in GCC countries, vehicle owners are less interested in buying new vehicles and are focusing

more on maintaining older vehicles which will eventually boost the automotive aftermarket in the long run

✓ Furthermore new automotive technologies & accessories like infotainment, telematics, dashcam etc. are in great

demand which has further .enhanced the growth prospects.

✓ Africa is a huge market for used vehicles imported from different countries. Current infrastructure, usage pattern

etc. have increased the pace of aftermarket growth in the country.


6


4% 6%

47%37%

43%

39%

6%

18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Middle East Africa

PA S S EN G E R C A RS

Less then 2 years 2 to 4 years

4 to 8 years 8 to 15 years

➢ Passenger vehicle fleet in middle east is relatively young with more than half of the fleet under 4 years of

vehicle age. Most of the older vehicles are either exported to Africa or are scrapped.

➢ Africa on the other hand is driven by some of the major countries like South Africa, Egypt etc. where new

vehicle sales is on the rise but parallel import of used vehicles to some of the less developed countries have

increased the average age of the vehicle in use.

3% 2%

37%

25%

48%

45%

12%

28%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Middle East Africa

C O M M E RC I A L V E H I C L ES

Less then 2 years 2 to 4 years

4 to 8 years 8 to 15 years

Source: Whitepapers, Articles, TechSci Estimates

VEHICLE FLEET AGE DISTRIBUTION

7


2.32

2.17

2.68

2.64

2.68

2.78

3.33

0.56

0.54

0.61

0.50

0.38

0.34

0.34

2012

2013

2014

2015

2016

2017

2022F

0.00 1.00 2.00 3.00 4.00

Vehicle Sales (in million units)

Commercial Vehicle

Passenger Cars

While there has been drastic drop in sales of commercial vehicles across middle east, passenger vehicle sales

increased due to demand in countries like Iran & Israel. Sales in GCC countries is largely affected due to

sluggish economy, oil prices and regulatory & policy revisions.

3% 3% 3% 3% 3% 3% 4%

9% 8% 11% 10% 8% 8% 7%

26%

18% 17% 17% 15% 15% 15%

15% 27% 25% 29%28% 28% 28%

46% 44% 44% 42% 46% 46% 47%

2012 2013 2014 2015 2016 2017 2022F

MPV Hatchback Pickup SUV Sedan

5% 4% 5% 3% 3% 3% 3%

11% 14% 16%11% 11% 12% 14%

12% 11% 7%5% 6% 6% 7%

72% 83% 72% 81% 80% 79% 76%

2012 2013 2014 2015 2016 2017 2022F

Light Commercial Vehicles

Medium Commercial Vehicles

Bus

Heavy Commercial Vehicles

PASSENGER VEHICLE – Share by Vehicle Type

COMMERCIAL VEHICLE – Share by Vehicle Type


MIDDLE EAST VEHICLE SALES OVERVIEW

8


1.15

1.20

1.25

1.13

0.98

0.94

0.95

0.42

0.46

0.47

0.42

0.33

0.32

0.33

2012

2013

2014

2015

2016

2017

2022F

0.00 0.50 1.00 1.50

Vehicle Sales (in million units)

Commercial Vehicle

Passenger Cars

The market figures continued to reflect subdued investment sentiment in the economy. Global economic

pressure coupled with collapse in global commodity prices have slowed the growth in African continent.

4% 4% 5% 5% 5% 5% 5%

9% 8% 11% 10% 10% 10% 9%

21%15% 15% 17% 13% 11% 11%

10% 19% 15% 16% 18% 18% 18%

56% 54% 54% 52% 54% 56% 57%

2012 2013 2014 2015 2016 2017 2022F

Sedan SUV Pickup Hatchback MPV

7% 6% 8% 7% 7% 8% 7%

13% 15% 16%11% 12% 12% 14%

18% 16% 15%11% 11% 11% 13%

62% 63% 61% 71% 70% 69% 66%

2012 2013 2014 2015 2016 2017 2022F

Light Commercial Vehicles

Medium Commercial Vehicles

Bus

Heavy Commercial Vehicles

PASSENGER VEHICLE

COMMERCIAL VEHICLE


AFRICA VEHICLE SALES OVERVIEW

9

MIDDLE EAST & AFRICA AUTOMOTIVE

AFTERMARKET OVERVIEW


MIDDLE EAST

Tyres 20%Batteries

6%





Others56%

Tyres 22%Batteries

5%





55%

2017

2022F

Market Value

$ 12 Billion

Market Value

$ 16 Billion

AFRICA

Tyres 21%

Batteries5%





Others55%

Tyres 23%

Batteries5%





53%

2017

2022F

Market Value

$ 11 Billion

Market Value

$ 15 Billion

Middle east automotive aftermarket is forecasted to reach 16 Billion USD by 2022. This market will

majorly be driven by existing vehicle parc coupled with improving vehicle sales.

Africa automotive aftermarket is forecasted to reach 15 Billion USD by 2022. Increase in vehicle parc owing to new as well as used vehicle sales have

improved the demand for aftermarket components and accessories

Source: OICA, Whitepapers, Articles, TechSci EstimatesOthers – Includes engine parts, maintenance

parts, mechanical parts, accessories etc.

MARKET SHARE OF AFTERMARKET

COMPONENTS IN MIDDLE EAST & AFRICA

11


64 67 69 71 74 76 78

279 296 314 332 349 367 384

2012 2013 2014 2015 2016 2017 2022

Batteries ASP in USD

Passenger Car Commercial Vehicle

102 106 111 116 121 126 156265 278 287 300 314 329

406

2012 2013 2014 2015 2016 2017 2022

Tire ASP in USD


35 38 40 43 45 48 5062 65 68 71 74 77 80

2012 2013 2014 2015 2016 2017 2022

Engine Oil/Lubricant ASP in USD


3.5 3.8 4.1 4.5 4.8 5.1 5.47.8 8.6 9.3 10.1 10.9 11.6 12.4

2012 2013 2014 2015 2016 2017 2022

Automotive Filter ASP in USD


58 59 61 62 63 64 70

265 268 272 274 276 281311

2012 2013 2014 2015 2016 2017 2022

Batteries ASP in USD


94 102 109 117 125 132 140248 270 293 315 337 360 382

2012 2013 2014 2015 2016 2017 2022

Tire ASP in USD


32 34 36 38 40 42 4458 61 64 67 70 73 76

2012 2013 2014 2015 2016 2017 2022

Engine Oil/Lubricant ASP in USD


2.8 3.1 3.4 3.8 4.1 4.4 4.76.5 7.1 7.7 8.4 9.0 9.6 10.2

2012 2013 2014 2015 2016 2017 2022

Automotive Filter ASP in USD


MIDDLE EAST AFRICA

MARKET PRICE OF AFTERMARKET

COMPONENTS IN MIDDLE EAST &

AFRICA

12


M A R K E T S I Z E O F L AT E S T A U T O M O T I V E T E C H N O L O G I E S

32.16 35.54 39.38 43.74 48.67 54.31

1.00

21.00

41.00

61.00

2016 2017E 2018F 2019F 2020F 2021F

Value (USD Million)

CAGR 2016-2021F

By Value: 11.05%

Source: TechSci Research

0.941.23

1.632.15

2.84

3.74

0.00

1.00

2.00

3.00

4.00

2016 2017E 2018F 2019F 2020F 2021F

V a l u e ( U S D B i l l i o n )

CAGR 2016-2021F

By Value: 32%

Middle East and Africa Connected Cars Market

✓ According to TechSci research, the growing demand for safety and vehicle assist features specially in

countries like Saudi Arabia where government have allowed women drivers is a point of inflection for

connected cars market which is projected to grow at a CAGR of 32% and reach 3.74 billion USD by 2021.

✓ Automotive technologies such as telematics, advanced infotainment systems, ADAS etc. are increasingly

becoming popular among masses. While some of basic features are available across most of the vehicles

present in middle east, advanced technologies like ADAS is yet to penetrate in a big way.

MARKET SIZE OF LATEST

AUTOMOTIVE TECHNOLOGIES

Middle East and Africa Dashboard Camera Market

13


M A R K E T AT T R A C T I V E N E S S I N D E X O F A F T E R M A R K E T C O M P O N E N T S I N M I D D L E E A S T & A F R I C A

Iran

SaudiArabia

UAE

Israel

Kuwait

Oman

SouthAfrica

Egypt

Libya

Kenya

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

-1.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

Note: The size of the bubble corresponds to the market size in 2017

Low Medium High

CA

GR

(2

01

7-2

02

2F)

Iran, Saudi Arabia, UAE and South Africa are top 4 markets which will continue to generate new demandfor aftermarket auto components. While Iran and Israel are two of the countries with encouragingvehicle demand, Saudi & UAE though under tremendous market pressure will continue to generate thedemand for auto component aftermarket.

MARKET ATTRACTIVENESS INDEX OF AFTERMARKET

COMPONENTS IN MIDDLE EAST & AFRICA

14


FA C T O R S I M PA C T I N G S A L E S O F V E H I C L E S

Type of vehicle First time RenewalTransfer

ownershipRe-registering

Licensing a light vehicle 400 350 350 400

Licensing a vehicle that weighs 3 to 12 tons 500 400 400 500

Licensing a vehicle that weighs more than 12 tonnes 900 800 800 900

Licensing a light mechanical vehicle 600 500 500 600

Licenisng a heavy mechnical vehicle 1,000 800 800 1,000

Licensing Trailers and semi-trailers 120 120 120 120

Licensing a bus with 14-26 passenger capacity 500 300 300 500

Licensing a bus that exceeds 26 passenger capacity 1,200 600 600 1,200

Revised Vehicle Licensing Fees (AED)

✓ Countries like UAE are witnessing revision of vehicle licensing, license renewal fees etc.. This will significantly affect the decision of

customers in buying a new or used vehicle.

✓ While new car license has gone done from Dh460 to Dh400, the second hand car carries an additional transfer ownership fee of Dh350

bumping up the overall fees to Dh750.

✓ Similarly vehicle testing and driver license fees has also gone up adding to the dismay of customers.

Increase in Vehicle Registration/License Fess

Introduction of Value Added Taxes

✓ VAT of 5% is imposed on new vehicle sales, fuel consumption and after sales services/parts as well. This has significantly impacted the

demand of new cars in the region. The market sentiments are low but it is anticipated that as the market matures the taxes will be

accepted.

Regulation Allowing Saudi Women To Drive

✓ Saudi Arabia is the major market for passenger vehicles and half of the GCC vehicle market is captured by this country. With new

regulation allowing Saudi women to drive vehicles is expected to boost vehicle sales and more importantly segments like hatchbacks

will witness higher growth in comparison to previous years. It is also expected that demand for new vehicle technologies like

telematics, advanced infotainment systems, autonomous vehicle etc. with enhanced safety features will be on a rise as women drivers

will prefer to have these features in the vehicles they’ll drive.

FACTORS IMPACTING SALES OF VEHICLES

15


➢ The outlook for future sales of vehicles in Middle East is positive. Anticipated stabilization of crude oil prices,

implementation of favorable government initiatives, growing infrastructure construction and logistics industry

will drive sales of trucks, buses, and vans in the region. In order to accommodate growing vehicle demand of the

Kingdom, countries like Saudi Arabia plans to increase investments toward strengthening and expanding the

country’s road infrastructure.

➢ The Dubai Chamber of Commerce and Industry has formed the Automotive Manufacturers Business Group,

which will be tasked with developing and advancing Dubai’s automotive industry and provide a platform for

industry stakeholders to collaborate.

➢ Rapid industrialisation and modernisation currently sweeping through many African countries has resulted in an

increased demand for capital goods such as machinery, lubricants, spare parts, ball bearings and other

mechanical goods and accessories. The market for automobile spare parts, in particular, has been an attractive

sector for UAE-based enterprises, who have emerged as the leading supplier of these goods to many countries in

East, Central and Southern Africa

➢ Saudi Arabia plan to develop an entertainment city with an investment of 64 Billion USD will pave the way for

increased tourist movement as well as local transportation. It will increase demand for private as well as public

transportation in the country. This is well backed up by introduction of tourist visa for other nationals from 1st

April, 2018 onwards.

TRENDS & DEVELOPMENTS

16


D E A L E R S S U R V E Y – I M PA C T O F VAT

H O W D O Y O U F E E L A B O U T V AT I N C L U S I O N I N A U T O M O T I V E ?

0% 45% 55%

0% 40% 60%

Base: 30 Passenger Car Dealers

Base: 30 Commercial Vehicle Dealers

POSITIVE NEUTRAL NEGATIVE

Post VAT inclusion of 5% imposed on new vehicle sales, fuel consumption and after sales services/parts, TechSci had

a small survey done with some of the dealers in GCC to understand their perception over this new regulation.

Out of 60 dealers interviewed for both passenger and commercial vehicle segment none was found to be positive

about VAT inclusion. More than half of the dealers showed negative sentiments.

DEALERS SURVEY – IMPACT OF VAT

17

ABOUT AMDU 2018

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TechSci Research is a global market research and consulting company with offices in the US, the UK and India.TechSci Research provides market research reports in a number of areas to organizations. The company usesinnovative business models that focus on improving productivity, while ensuring creation of high-qualityreports. The proprietary forecasting models use various analyses of both industry-specific and macroeconomicvariables on a state-by-state basis to produce a unique ‘bottom-up’ model of a country, regional and globalindustry prospects. Combined with the detailed analysis of company activity and industry trends, the result isa uniquely rich evaluation of the opportunities available in the market.

Disclaimer

The contents of this report are based on information generally available to the public from sources believed to be reliable. No representation is made that it is timely,accurate or complete. TechSci Research has taken due care and caution in compilation of data as this has been obtained from various sources including which it considersreliable and first hand. However, TechSci Research does not guarantee the accuracy, adequacy or completeness of any information and it is not responsible for any errorsor omissions or for the results obtained from the use of such information and especially states that it has no financial liability whatsoever to the subscribers / users ofthis report. The information herein, together with all estimates and forecasts, can change without notice. All the figures provided in this document are indicative ofrelative market size and are strictly for client’s internal consumption. Usage of the same for purpose other than internal will require prior approval of TechSci Research.

ABOUT TECHSCI RESEARCH

As the largest international automotive aftermarket trade show in the Middle East, Automechanika Dubai servessome of largest automotive markets such as Saudi Arabia and Iran. The show also acts as the central trading linkfor markets that are difficult to reach connecting the wider Middle East, Africa, Asia and key CIS countries.

Now in its 16th edition, the exhibition offered trade professionals the chance to meet face-to-face 1,955 keyexhibitors across the three day show held from 1 - 3 May 2018.The trade show is a good platform to find out more about the latest products and services, find new suppliers,source products and compare product alternatives.

www.techsciresearch.com

www.automechanikadubai.com

Documents

MIDDLE EAST AND AFRICA AUTOMOTIVE AFTERMARKET · Batteries 5% Engine Oil/Lubricant/Coolant 6% Brake System Parts 6% Automotive Filters 5% ... Africa on the other hand is driven by