Dubai has very successfully positioned itself as the international automotive hub in the GCC region. This growth is visible in the way the automobile sector has shown tremendous growth in the recent past even though the COVID-19 pandemic disrupted the entire economy across the globe, across sectors, and across other industries. Dubai’s strategic geographical location, increasing demand for high-end cars in the local market, and a robust logistics sector have turned the UAE into a major exporter and re-exporter of automotive products.
One of the biggest factors that have enabled this tremendous growth of the automotive sector is its suitable location, coupled with efficient shipping companies. Being the connector between the East and the West, Dubai has been able to provide several benefits to global automotive giants across the world. As the global oil prices have risen, so has the cost of shipping and thus, the companies are looking for the most economic ways of shipping their products. This is the reason why Dubai has become crucial in the global trade market and a suitable gateway to the GCC region.
This has ensured that most global companies ship through Dubai, bringing a host of responsibilities and expanding opportunities to the logistics companies in this region. Not surprisingly, the logistics companies and shipping companies in the UAE have responded brilliantly to this opportunity by being efficient, committed, and resourceful. Not to forget that the UAE government has created a brilliant infrastructure around the logistics industry to ensure that it is able to meet the rising global pressure of performance. From providing the right business environment to supporting the growth of the logistics industry, the UAE government has made all the right decisions. And the results are for everyone to be seen.
A resilient and growth-oriented industry, automotive set for a brighter future
The COVID-induced global slowdown did hamper the growth of the automotive industry in Dubai, but the road to recovery has been quick. According to the Dubai Chamber of Commerce and Industry, Dubai’s value of export and re-export rose to 21.8 percent year on year, touching a whopping figure of Dh 147.4 billion in 2021. The government has set a target of taking this figure from Dh.1.4 trillion to Dh.2 trillion in the next five years.
While the government is investing heavily in the automotive industry and has included the sector as one of the major contributors to its growing and diversifying economy, global automotive giants are also looking at Dubai for various reasons. The ease of doing business, readily available industrial space in the Dubai Industrial City and other regions, as well as Dubai’s proximity to Jebel Ali Port and Al Maktoum International airport, are some of the major reasons for the growing interest.
Currently, the Gulf region is home to as many as 2 million vehicles which also includes medium and heavy commercial vehicles. This growing vehicle population has also escalated the demand for spare parts, a market that has witnessed an annual growth of 8.4 percent. That apart, the after-sales market is set to reach $18 billion by next year. All these are significant signs of a flourishing industry that is all set to take a bigger leap in the near future.
All these developments have been well-supported by the government. UAE’s low import and fuel cost, business-friendly tax regime, and increasingly high disposable income of a large part of the population in the country have further helped the automotive industry to strengthen its position in Dubai as more and more global giants are looking to establish themselves in the country.
Looking into the future of the automotive industry
Globally, there has been a growing awareness towards developing environment-friendly infrastructure, especially with the growing demand and availability of electric vehicles. Keeping itself abreast with this global trend, the UAE government has been initiating several steps to develop an environment-conscious economy and infrastructure around the automotive industry. From investing and supporting research and development of autonomous, driverless cars, to looking at eco-friendly alternatives such as hydrogen, natural gas, and hybrid vehicles, the government has taken giant steps towards conscious and responsible development.
This can be further seen in the fact that there has been a visible effort toward maximizing electronic vehicle usage in the country. In its aim to reduce carbon emission, the UAE government has been investing heavily in EVs and the data backs their efforts. The country is believed to have the largest number of electric vehicles charging stations in the world, which is in line with UAE’s aim to become emission-free by 2050. In the next ten years, EVs and hybrid vehicles are expected to constitute 10 percent of all vehicles running on the roads in Dubai. The city offers exemptions, discounts, and free parking spaces for EVs to promote this agenda.
All these efforts have ensured that Dubai remains the automotive hub in the region and continues to enjoy its supremacy over other major cities in the GCC. Several ambitious projects in the pipeline and growing awareness about electronic and hybrid vehicles will mean that the automotive sector continues to grow at a rapid pace. While Dubai is taking several steps internally to step up this industry, the global attention due to its strategic location and efficient shipping companies and logistics companies is also helping the industry make its mark triumphantly.