The UAE is on the threshold of a surge in truck sales with prestigious construction and infrastructure projects set for implementation over the next several years
Huge funds marked for the construction and infrastructure sector as well as expected large future investments in the near term will significantly spur the UAE truck market which is dominated by Japanese players, a report says.
According to a TechSci analysis, the market for trucks in the UAE is projected to show revenue growth at a CAGR of around 8.65 per cent during 2016-21.
The country’s truck market had witnessed negative growth during 2011-2015 due to a slowdown in construction projects and a tight liquidity situation, it said. But the situation seems to have radically changed as some investments earmarked in the latter period of 2011-2015 will come into play in 2016-21 and push up the truck market’s revenue. In 2014, a $100 billion investment was allocated for the housing and transport sector in Abu Dhabi, which was in line with the country’s economic vision 2030. In addition, Abu Dhabi’s Executive Council announced an investment of $89 billion for road development and other infrastructure projects in 2013.
Further, around $2 billion is estimated to be invested in developing state-of-the-art housing establishments in the country. Various road construction projects such as the 62 km highway connecting Dubai and Abu Dhabi are scheduled for completion by 2017.
The TechSci study also notes that the UAE is expected to witness new investments in energy, infrastructure, residential and commercial projects over the next five years. Moreover, the country will be hosting the World Expo 2020, which will entail large-scale spending on infrastructure development. The UAE government is focusing on diversification of the economy in the non-oil sector over the next decade, in line with the government’s plan to trim down the share of revenue derived from the oil sector to around 20 per cent by 2030. Diversification activities will spur spending on projects.
Some of the prominent projects, which are likely to raise demand for trucks in the UAE, are the Abu Dhabi Metro, Dubai Metro rail line extension, Emirates Roads Master Plan, Etihad railway network and Abu Dhabi Airport expansions.
The UAE truck market is dominated by Mitsubishi. The company emerged as a leader in the pickup and light truck category backed by its wide product portfolio. The market share of Mitsubishi is estimated to further grow by 2021 supported by an anticipated increase in its market share in the medium and heavy duty truck segments.
The second and third largest market shares in the UAE truck market were held by Nissan and Toyota respectively in 2015. Nissan with its presence in the pickup and light duty truck segment and medium duty truck segment has been playing on volume sales.
However, Toyota along with its subsidiary Hino accounted for the third-largest market share in the pickup and light duty truck category in the same year. Hino was the largest player for medium duty trucks. The market share of Toyota along with Hino is further forecast to increase by 2021 according to the TechSci Research report.