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Viewing report
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Kuwait Autos Report Q4 2011
Business Monitor International, Oct 2011, Pages: 51
BMI forecasts steady growth in Kuwait’s auto market over the medium term against a backdrop of solid economic growth, strong budget surplus and a continued recovery in its banking sector. Although the government appeared to dither in mid-2011 on its spending programme for the 2011/12 financial year, BMI sees Kuwait’s real GDP growth reaching 5.4% in 2011. An increase in social spending – triggered by anti-government protests that gripped the Middle East and North Africa in late 2010 and early 2011 – should help lift private consumption in the country, filtering through to vehicle sales, which will grow 3.95%, to 124,026 units, in 2011, according to BMI calculations.
Car sales are to lead Kuwait’s auto market over the medium term, as expected, with BMI’s data showing a 4.48% increase in sales, to 91,162 units, in 2011, against a 2.61% growth rate, to 87,254 units, in 2010. However, growth in the sale of commercial vehicles will not be far behind, climbing by 2.51%, to 32,864 units, in 2011. BMI expects car and commercial vehicle sales to grow by an average 4.99% y-o-y and 2.91% y-o-y respectively over 2011-2015, reaching 111,317 units and 37,012 units respectively by the end of the forecast period.
Kuwaiti BMW Group importer Al Alghanim & Sons Automotive posted a 13% increase in BMW and Mini sales in H111, compared with same period in the previous year. The distributor saw demand for a number of models surge, returning growth rates of 269% y-o-y for its the BMW 5 Series, 220% y-o-y for the BMW 1 Series and a doubling in sales for the BMW 6 Series Convertible. Minis also registered a 74% y-o-y jump in sales for the first half, during which the Mini Countryman, BMW 6 Series Convertible and BMW 3 Series were locally launched.
Meanwhile, BMW’s ‘Premium Selection’ used-car sales are also being supported by Kuwaiti consumers, while demand for second-hand BMW models surged by 25% y-o-y in Kuwait in H111 and by 75% y-o-y in the Middle East.
The company also attempted to lift sales through August 2011 with an offer of free warranties and registration cost waivers, marking the Islamic fasting month of Ramadan. The exclusive distributor offered potential customers five-year warranties with a 150,000km ceiling with BMW purchases, as well as four-year servicing packages with 84,000km ceilings.
Local rival Al Mulla & Behbehani Motor Company (MBMC) similarly cut prices for its Jeep and Dodge units for Ramadan in 2011 in a bid to increase sales. The distributor offered the Jeep from KWD6,699 (US$24,508) and the Dodge from KWD6,249 (US$22,862).
Ford Motor also registered strong, albeit lower, growth in car and truck sales in Kuwait for H111. Ford car sales jumped by 29% y-o-y over the half, with trucks and SUV sales strengthening by 29% y-o-y. UK luxury carmaker Aston Martin said that it saw significant potential in Kuwait to become one of its biggest markets and possibly its leading market in some months. The company made the comments in July 2011 as it planned expansions in the region with boutique outlets.
Meanwhile, Kuwait Finance House (KFH) introduced financing promotions to customers for car purchases through leasing in July 2011. The promotions include takaful insurance, warranty by agent and lower monthly rental, according to Acting Cars Department Manager Wael Al-Kharraz. He added that KFH has captured a considerable share of the car financing market, which signifies its increasing efforts to boost its presence in the segment. Although KFH will hope that the auto finance products will be taken up through its own showrooms, the Shari’a-compliant financing is available through any car agent in Kuwait and is likely to help lift sales as a result.
Further into the future the picture for the Kuwait auto market also looks healthy. BMI forecasts that total sales will grow to 148,329 units in 2015. This 4.45% growth over the course of four years represents a significant opportunity for companies connected to the auto industry in the country.
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