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22 February 2024

Gulf advised to assemble cars

By Nadim Kawach

Gulf oil producers should encourage investment in car assembly projects to take advantage of high population growth and income, a surge in regional automotive demand and the abundance of energy, according to an official study.

The Gulf Co-operation Council states, which sit atop 45 per cent of the world's proven oil deposits, do not have car industries as they rely completely on imports, said the study by the Doha-based Gulf Organisation for Industrial Consulting (GOIC).

While the automotive market grew by about three per cent worldwide between 2007 and 2008, demand in the Middle East was as high as 11 per cent and the level was even higher in the GCC, GOIC said.

The study, to be published this year and partly obtained by Emirates Business, said the GCC countries already possess the infrastructure for such projects given the presence of a large number of auto spare part plants in member countries. It said the UAE and Saudi Arabia alone had more than 22,000 such plants in 2006.

The study cited several factors for the strong vehicle market in the GCC, including the high per capita income, rapid population growth rates, cheap energy and labour, strategic location, and the fact that nearly 30 to 40 per cent of the GCC population is below the legal driving age.

"The level of economic growth in the GCC is also expected to remain robust based on sustained high financial surpluses generated by high oil revenues over the past years. This will drive growth in consumption of automotives even higher in years to come," GOIC said.