Massive GCC construction projects set to drive truck sales to Dh10bn

 

 

The value of annual truck sales in the GCC and the Middle East is expected to increase to a massive Dh10 billion in the next 12 months spurred by heavy demand from the booming construction industry, senior industry experts have said.

 

Led by the massive projects, demand for trucks in the region’s construction industry has almost tripled in the past two years. In a couple of years, the industry expects sales to grow to almost 20,000 trucks per annum, said a senior official from Swedish truck and heavy vehicle major, Scania AB.

 

“Sales figures in the 1980s and 1990s were really low. But during the past two years, sales have almost doubled,” said Anders Schultz, area manager of Scania for the Gulf.

The company’s UAE sales figures have increased from 600 in 1996 to 900 in 2007.

 

“We expect sales to rise to 1,200 in 2008. Despite the slowdown in the American and European economies, the Middle East has remained vibrant and sales look promising,” he said.

 

The company plans to sell about 1,800 trucks in the GCC region during 2008.

For market leader Mercedes-Benz, the Middle East region provided the highest growth in truck sales worldwide in 2007. It sold about 6,000 vehicles in the Middle East last year, an increase of 44.3 per cent over 2006 figures, compared to a 27.4 per cent increase in Latin America, 19.6 per cent in Eastern Europe and 6.8 per cent in Western Europe.

 

Due to the record sales, all three production sites of Mercedes-Benz trucks in Wörth (Germany), Aksaray (Turkey) and São Bernado do Campo (Brazil) ran at full capacity and achieved new records in production.

 

Figures released by Volvo, another leading manufacturer of heavy trucks, revealed their Middle East sales until March 18, 2008, had grown by 55 per cent compared to the same period in 2007 – the largest growth for Volvo globally. The Swedish truck maker sold 1,119 trucks in the Middle East last year, compared to just 724 the year before. South America stood second with a 48 per cent increase in sales followed by Europe with 35 per cent.

 

Meanwhile industry experts in the UAE have pointed out that the country is presently facing a severe shortage of trucks and qualified drivers in the construction industry.

“As a result of the massive construction projects there is a severe shortage of trucks and trained drivers. Several companies have to keep their trucks idle because of lack of drivers,” said Saravanan of Al Shirawi Enterprises.

 

To counter the problem, Scania recently announced that once its new production facility at Jebel Ali starts functioning it would begin training programmes for aspiring drivers.

 

The company has decided to tap into this newly-emerged market and start production within the UAE as part of its strategy to strengthen its position in important growth markets.

 

The groundbreaking ceremony of the new facility was held at Jebel Ali last week. It is being built at a cost of more than Dh15 million and will facilitate building truck bodies and turn out completely equipped vehicles. The facility will have the capacity for customisation of about 1,400 vehicles per year and is located in a 20,000 square metres industrial site at Jebel Ali.

 

Schultz told Emirates Business that there is a severe shortage of trucks in the region, especially in Dubai.

 

“The new facility will start its operations in early 2009. It will initially encompass vehicles for construction haulage, such as tipper and concrete trucks, but the facility will also be adapted for future bus chassis delivery,” said Schultz.

 

Establishing the plant in Dubai is in line with Scania’s strategy to reinforce its presence in important emerging markets and growth areas.

 

“Our collaboration with selected suppliers that are well-established in Arab markets, together with the shorter lead and delivery times provided by the Dubai facility, will greatly benefit our expansion in the region,” said Per Hallberg, Scania’s head of production and procurement, at the groundbreaking ceremony.

 

“Scania’s growth scenario for 2009 and onwards also includes increasing our sales in other Gulf states in new segments and gaining market share,” said Klas Dahlberg, regional sales director of Scania.

 

Later this year, Scania will also inaugurate a regional centre for sales and service training in Dubai.

 

“Training and recruitment of personnel is important to enable Scania to increase sales and develop its service market business in the region,” added Dahlberg.