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Kuwait Autos Report Q1 2011
Business Monitor International, Jan 2011, Pages: 54
Kuwait Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kuwait's automotive industry.
Kuwait’s auto market is likely to grow at a predictable and stable rate through the course of 2011. Recent BMI figures show overall annual car sales surpassing 2008, the year before the financial crisis began. Under current projections, year-on-year (y-o-y) growth for 2011 will be just over 3.5%, which should mirror the state of the economy as a whole. BMI projections also see a 0.54% growth in the re-export sector over the course of 2011, down from 5.4% in 2010. This can be partially attributed to the slow-down of Government liquidity being generated around the world, and may also be part of a re-alignment of local import and re-sale practices.
Kuwait’s GDP is based mainly on oil production and export. As such, it is sometimes difficult to view indicators of growth through standard price fluctuations. However, in an interview in November 2010 reported by Bloomberg, the Central Bank Governor stated that, factoring out oil revenues, 6% GDP growth would be expected for 2010, roughly the same as for 2009. While inflation has also been a worry, a recent IMF study states that inflation would be 4.1% towards the end of 2010, but around 3.6% as an average over the course of 2011. This would suggest that Kuwait has been largely spared from exposure to the most recent EU bail-out contagion. Additionally, thanks to oil based exports, the state also enjoys a current account with a healthy surplus. On the back of these projections of growth, Moody’s has upgraded Kuwait’s sovereign rating to Aa2, with a stable outlook.
A report published in November by Boubyan Bank found that Q310 was the most active in terms of car sales for the previous three years with overall trade volume for Q310 reaching US$420mn, clearly displaying the fact that the worst of the financial crisis was over. In Q310, there were 1.5mn registered vehicles on the road, compared with a high of 1.4mn over the entirety of 2009, the report continued. However, the report also highlighted the recent change in the ratio of trade within the country. As the majority of vehicles are imported into Kuwait, small changes in the prices charged in Europe and the United States can have distortive effects on purchasing prices – a trend which has been exploited by smaller traders, and one which has caused larger agencies to lose market share.
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