Abu Dhabi vehicle maker leads the way Car industry is nascent in the Gulf region but experts say major brands will get interested
First for UAE as local company launches dune buggies range
A company based in Abu Dhabi has rolled out a new line of dune buggies it says are the first to be produced in the region. Gulf Automobile Industry Corporation (GAIC) launched the utility terrain vehicles at the Abu Dhabi International Hunting and Equestrian exhibition, which ended yesterday.
Nasser Hamad al Hajeri, the chairman of GAIC, said the company aimed to sell about 300 during the next 12 months across the GCC. "There is a growing market for this type of vehicle in the Gulf countries and we found that we could produce this product here at 35 per cent less [cost] than the competitors," he said. The Sammha model, with an 800cc engine, has a starting price of Dh55,000 (US$14,973). The Shahama model, with a 700cc engine, will start at Dh24,000.
GAIC also launched a light-duty lorry, called the Danna, of which it expects to sell between 800 and 1,000 across the region. "In Saudi Arabia and Qatar, the growth is higher than any other Gulf countries … the demand is there," said Mr al Hajeri. "When you talk about the demand for this type of truck, they are consuming every year about 60,000 to 70,000. So we are targeting around 1 per cent." GCC residents have long had a big appetite for cars, with an estimated 969,000 vehicles imported into the region last year. But the domestic vehicle-making industry is still nascent.
In 2007, GAIC produced the first Arab-made vehicle, a twin-cab pickup. Last year, it also launched the Camel forklift. The parts for these vehicles are sourced in part from the UAE and assembled in their Musaffah plant. GAIC is also developing a 4x4 and had aimed to produce a prototype this year, making it the first to be made in the Emirates. But it now plans to produce it by 2015, to allow more time to develop a high-quality 4x4 capable of competing with other commercial brands, Mr al Hajeri said.
By then, the company will have shifted its production to a new plant in Saudi Arabia, a move prompted by what he claimed was a lack of financial support in the UAE. "It's very difficult for the car industry, especially in the UAE. The cost of infrastructure is high and it is less attractive [to do business here] than in other countries," said Mr al Hajeri. The Khalifa Fund to Support and Develop Small & Medium Enterprises provides support for UAE nationals but there is limited backing available for heavy industry such as car production, he said.
GAIC will keep its 14,000 square metre plant in Musaffah to undertake research and development, but production will be transferred to a 109,000 sq metre plant in Dammam in Saudi Arabia. The new plant is expected to be ready for production in six to nine months, he said. "We were looking for government investment to support the project but we had no offer," Mr al Hajeri said. "We started it here because we wanted it to be a UAE industry."
Manufacturers say there is little impetus to build cars and commercial vehicles in the Emirates because the country's import tariffs are among the lowest in the world. And with a transient workforce and few parts suppliers, it is more feasible to build cars elsewhere, they say. Anna-Marie Baisden, the head of car research for Business Monitor International, which is based in London, said these factors had prohibited widespread production in the region.
"There are no real government incentives for establishing facilities, although we are starting to see signs with Abu Dhabi announcing plans in June to develop an automotive industry zone," she said. "While the size of Saudi Arabia's passenger car market is a point in its favour, we also believe Abu Dhabi has an advantage through its outside investment in the industry, such as Aabar Investments' stakes in Daimler and Tesla, giving it access to car makers."
It will take time to put a full-scale industry in place but GAIC's efforts and the first Saudi car, produced at King Saud University, are signs of momentum, she said. The Gulf Organisation for Industrial Consulting (GOIC), based in Qatar, said that with the GCC's car imports expected to grow to 1.9 million by 2015, global car brands would be considering setting up plants in the UAE and Saudi Arabia by this year.