Automotive sector trade in Jafza posts 400% growth

27/09/2014 08:30:01 PM

Dubai, 27th September 2014 (WAM): The automotive sector trade in Jebel Ali Free Zone (Jafza), the flagship free zone of Dubai and the U.A.E., has seen a whopping 4-fold growth in the last ten years growing from USD 1.1 billion in 2004 to USD 4.7 billion in 2013.

These numbers were given by Talal Al Hashimi, Chief Operating Officer of Economic Zones World ( EZW ), the parent company of Jafza , in his welcome address during a strategic customer forum for automotive sector that the Free Zone organized for the industry last week.

Ibrahim Mohamed Al Janahi, Deputy CEO of Jafza and Chief Commercial Officer of EZW , commenting on the automotive sector's impressive growth in the region and growing opportunities for Jafza companies said: "The dynamic growth in the sector reflects the upcoming boom the industry is slated to experience in the coming years. The buoyant mood in the auto sector in the GCC and the MENA region offer huge long-term growth opportunities to Jafza based existing companies, as well as, the new multinationals who want to capitalize on the world's most attractive market for the auto industry. The total vehicles sales in MENA are estimated to be close to 4 million a year which may grow to nearly 7 million by 2020. The auto component market in the region in the next 3-years is expected to witness double digit growth." Al Janahi was referring to a recent report from the Boston Consulting Group that predicted the above vehicle sales growth by 2020. According to Frost and Sullivan, the total number of registered cars and pick-ups in the GCC is expected to record a CAGR of 6.3% in 2012-17 to total 16.36 million units in 2017. Over the same period, the number of trucks and buses on the road is expected to reach 1.42 million in 2017.

This increase will positively impact on the aftermarket, driving up the demand for auto components and services.

The remarkable growth in the auto sector is largely driven by the region's high national wealth, growing per-capita income and significant government investment on building social and economic infrastructure and buoyant private sector.

"This is the reason demand for luxury cars increased significantly in the last two years," Al Janahi added. "Fiat Chrysler's Maserati, Jaguar Land Rover, Bentley, Porsche, Rolls-Royce and BMW have seen 80%, 46%, 45%, 26%, 17% and 15% growth in their Middle East sales in 2013 respectively. All these companies have their regional headquarters in Jafza . " In the U.A.E., sales of new vehicles rose by 16.7% in 2013, reflecting renewed economic confidence, according to BMI, which forecasts continued annual growth of nearly 20% in the sector over the 2014-17 period.

"Dubai's successful bid to host World Expo 2020 has given further boost to auto industry in the Free Zone and the country," Al Janahi said.

According to Frost and Sullivan, the GCC market for auto parts, batteries, and tyres will grow at a compound annual growth rate of 14.9% to reach USD 13.46 billion by 2017. It will not be out of place to mention that US aftermarket industry registered a 3.5% increase in 2012.

This is the reason why many of the large global brands such as Mercedes, Ford, GM, Honda, Toyota, Mitsubishi, Caterpillar, Scania have established their regional parts distribution centres and fabrication units in Jafza . Jafza has, in the recent years, attracted significant number of companies engaged in Designing, Fabrication and Manufacturing of variety of industry specific vehicles such as Ambulances and Emergency Medical Equipment used for Emergency, Construction and Hospital Care and Fire-fighting and other security vehicles such as armored cars or other security vans.

According to BMI the Middle East is the world's fastest growing market for the automotive products.

The automotive sector is one of the most dynamic business sectors in Jafza . The free zone is currently home to 625 automotive companies. The sector generated trade worth USD 4.7 billion (AED 17 billion) in 2013 posting a growth of 13 per cent on 2012. In the last 10 years the number of companies in the sector has grown about 4-fold.

Commenting on the Forum, Al Janahi said: "The Forum for Automotive Industry is designed to help maintain the sector's leadership as a hub for the Middle East markets. The Forum provides a platform to the industry and industry enablers to exchange knowledge and ideas to enhance their respective capabilities and making the operating environment within Jafza even more conducive for the businesses to grow." Senior Jafza officials briefed the industry gathering on various initiatives the Free Zone has taken to enhance its infrastructure in physical and digital space such as new road networks developed in Jafza South, as well as, several initiatives Jafza in collaboration with Dubai Customs and leading automotive companies in Jafza , has taken to combat the menace of counterfeit products and protecting IPR in the U.A.E.

To support its ongoing growth Jafza continues to invest in upgrading existing infrastructure. Jafza has, in the first half of this year, completed its Gate 4 project under which it has expanded its five lane road to 16-track, 8-lane entry and 8-lane exit, to facilitate smooth passage. The Gate is meant for passenger cars. Under this project it has replaced the Roundabout 6 with a flyover that now facilitates seamless traffic flow direct from the container terminal to Jafza customers and major exit gates. The flyover serves both passenger, as well as, freight movement. The internal road network facilitates connections to other parts of the Free Zone, which were being served by Roundabout 6.

In order to provide more efficient services to clients, Jafza opened new Jafza Service Center, in Jafza South, which offers services such as EIDA for Emirates ID, Fitness Centre from DHA for the residence visa, all under one roof.

In the first half the Free Zone has launched several other facilities and infrastructure projects including the development of a multi-million light industrial facility (LIU-11) and several access gate projects in Jafza South.

In collaboration with NASDAQ Dubai, Jafza , earlier this year, created a new business framework and platform that facilitates Jafza -registered companies to raise capital through equity market by listing on NASDAQ Dubai, to fund their growth.

During the first half of the year Jafza has announced two important initiatives viz. Matajircom and Halal Zone that will have a strong impact on the U.A.E. and the entire Middle East across all sectors particularly the transport and automotive sector.

Leading industry players including Daimler, Volvo, GM, Nissan, Isuzu, Komatsu and Mitsubishi from the automobile segment, Bridgestone, Schaeffler, Diesel Technic, Denso, Hilti from the automotive aftermarket sector and specialist logistics service providers such as Nippon Express among others attended the forum.

Senior Jafza officials and partners including Dubai Customs, DP World, Trakhees, Dubai Trade and Dubai Chamber addressed queries and suggestions to improve free zone operations.

The Forum also discussed ways in which Jafza and its customers could take advantage of emerging opportunities in high-growth markets in Africa, the CIS and the Far East, which Jafza , as the regional business hub, serves.

This year's automotive Forum included a display area which facilitated auto companies to display their new Green Products or Special industry specific products such as Emergency Vehicles that are manufactured in Jafza .


WAM/tfaham