Bahrain Autos Report Q2 2012
Business Monitor International, April 2012, Pages: 37
The political situation in Bahrain appears to be becoming the dominant factor in any reading of the country. A determined uprising, in part inspired by the Arab Spring, but also by a degree of Shi’a/Sunni tension, has led Bahrain to potentially be at the flashpoint of any conflict between Iran and Saudi Arabia. A February 2012 Reuters report has identified a distinct lack of calm on the streets, despite the on-going development of security tactics and concessions from the government. There are fears that Shi’ite groups are co-ordinating with Iran, deliberately stoking tensions.
However, these fears have been long standing, and while 2012 presents a potentially unique set of problems, this does not affect the fundamentals of demand. Evidence from autos sales in the rest of the gulf region suggest that there is an elite class who will continue consumptive spending regardless of macro-political factors. However much this situation presents downside risks, BMI still predicts a small growth in the sales of vehicles over the 2012 period – with an expected total of 51,146, against 49,157 in 2011. We see this total rising in a linear fashion to 59,460 in 2016. Bahrain is almost unique in that there was not a drop over the period of the global financial crisis. Added to this, the ownership-per-1,000-population metric, which has shown only modest growth in the recent past, and even more incremental increases in the near future (from 420/1000 in 2009 to 446.42/1000 in 2016), is particularly suggestive of the fact that the market is not going to experience huge growth, and that it may even be at a level of marginal replacement.
This is backed by the fact that Bahrain is experiencing growth of around 4% for 2011 and 3.9% for 2012, which is sub-average for a region averaging around 6%. A contributing factor to this forecast is the lack of significant government subsidies to the population, unlike other local countries, such as the UAE’s US$1.9bn housing loan subsidy. GDP growth in Bahrain is, in our core scenario, not going to be spectacular in the near future.
However, it will likely be sustained by an increase in oil prices due to international political speculation throughout the remainder of 2012, as well as other internal issues – such as the consolidation of Islamic Finance Houses and the completion of some large infrastructure projects in the country. However, it is also distinctly possible that these may be counterproductive to the country – as excess capacity will drag on the economy either way. This is especially possible if a double dip recession in the US or a meltdown in Europe, especially mixed with a soft landing in China, significantly reduces international demand for oil.
Furthermore, Bahrain is the only country in the GCC to have negative fiscal balance, which has resulted in a significant portion of its office and industrial capacity remaining unused. The result has been speculation from some of the industry’s leading figures, including Bahrain’s central bank governor Rasheed al-Maraj, that low GDP growth may slip very slightly into negative figures, as reported in AMEinfo.com. When one adds political instability with macroeconomic concerns, it seems possible that the autos sector may outperform the wider economy.
The number of vehicles registered in Bahrain almost doubled to 478,193 units as of end-2011, compared with 250,978 vehicles registered by end-2002, according to the country's Works Minister Essam Khalaf. He added that the registration figure indicates that every household owns an average of two cars and as the car volume is annually increasing by 7.34%, the use of public transportation is limited to 5% of daily trips. However, the complete execution of the Roads Strategic Master Plan by 2030 will result in at least 25% of drivers shifting from private to public transport. While BMI expects modest growth of over 10,000 units by 2016 from 2011, the steady climb in sales over the next five years will enable Bahrain to break the 50,000 unit mark in 2012 and almost break the 60,000 mark in 2016.
Business Monitor International's Bahrain Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bahrain's automotive industry.
Executive Summary
SWOT Analysis
Bahrain Auto Industry SWOT
Bahrain Political SWOT
Bahrain Economic SWOT
Bahrain Business Environment SWOT
Global Overview
Eurozone And EMs Pose Risks To 2012 Growth Outlook; US And Japan On The Rise
Passenger Car Sales (Units), Jan-December 2011
Replacement Growth?
Industry Risk/Reward Ratings
GCC States Defy Lack Of Production To Top Autos Ratings
Table: Middle East And North Africa Autos Risk/Reward Ratings
Regional Overview
SUVs Will Be Key To Premium Growth As Competition Hots Up
Industry Forecast Scenario
Table: Bahrain - Autos Sales, 2009-2016
Table: Bahrain - Autos Trade, 2009-2016
Macroeconomic Forecast
Competitive Landscape
Table: Bahrain Autos Sector – Key Players
Company Monitor Middle East Becomes Key Battleground In Audi's Global Leadership Campaign
Company Profiles
Al Zayani Investments
BMI Methodology
How We Generate Our Forecasting Model
Sources
- Al Zayani Investments
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