Dips in automotive sales, an aging vehicle population and a challenging economy have presented billion dirham opportunities for the automotive aftermarket industry, said an expert.
The GCC’s aftermarket sector has seen significant growth, with a total consumption for the year estimated to reach $7.5 billion, echoing the US aftermarket industry which registered a 3.5 per cent increase in 2012, according to research firm Frost & Sullivan.
“Two primary factors are pushing growth: the vehicle fleet on the road overall is getting older, and people are generally hanging on to cars longer – this creates a vast segment of out-of-warranty vehicles requiring repairs and replacement parts,” said Asad Badami, managing director of UAE based A-MAP, a leading distributor of aftermarket automotive spare parts, batteries, tires and lubricants.
While parts and accessories take the lion’s share of consumption for the region, tyres, inner tubes, lubricants and batteries also follow closely, he said.
“The recent challenging economy dampened consumer confidence which translated in lower tyre sales, meaning car owners would need to invest in maintaining and repairing the cars they have. There has also been a rapid growth in population numbers over the past year or so which has translated in an increase in the number of vehicles on the road,” added Badami.
The Frost & Sullivan report predicted a compound annual growth rate of around 13 per cent between 2012 and 2017 for parts, accessories, lubricants and batteries, with tyres and inner tubes keeping pace at a rate of 12 per cent over the same period.
The spare parts and tyre industry holds many opportunities for players in the Middle East, which ranks within the world’s fastest-growing markets for automotive products, according to Business Monitor International.
The UAE is a major hub for the re-export of automotive aftermarket parts, with a strong and well-developed re-export trading sector within areas such a Jebel Ali Freezone, where companies can find a local supply niche, said Badami.