Three countries in the Middle East are among the top ten richest countries in the world. Thus, the prime target for any automotive business in the Middle East is offering unique and expensive auto component products. Current economies in the middle east region are drastically changing owing to the rise of new technologies, increased automation, and digitization that revolutionized the automotive industry. Further, the ever-increasing vehicle production & sales in the middle east created an exponential demand for auto components such as brake parts, batteries, lubricants, and tires. As a result, it gave rise to disruptive tech-driven trends such as autonomous driving, electrification, diverse mobility, and connectivity.
Hence, the leading automakers are actively working to bring innovative features in the products to cater to the emerging trends of automotive components for enhanced comfort & technological amenities. Further, the mounting influx of tourists & migrants in Qatar, the UAE & Saudi Arabia promulgated the demand for passenger cars, which encouraged the overall growth of the Middle East Auto component market. In fact, according to a recent report analysis by MarkNtel Advisors, The Middle East Auto Component Market is expected to grow at a CAGR of around 7% during 2023-28.
Changing Political Narratives: New Cohort of Female Drivers
Due to strong governmental and political initiatives, and changing preferences in consumer behavior, the Middle East is at the forefront of auto components brought by connected car technology. Thus, manufacturers are actively focussing on connected car technology, which results in efficient operations. Further, women are no longer banned from driving, creating a new cohort of female drivers that increased the demand for connected cars in the region.
The General Authority for Statistics 2020 in Saudi Arabia indicated the overall population to be 35 million, of which 14.7 were females. Thus, the International Trade Administration of the US Department of Commerce reports that in Saudi Arabia, 2.5 million female drivers will lead to an increase in car sales by 9% per annum by 2025.
The young populace’s demand for modified, customized, and personalized vehicles led to increased production & imports of various auto components, specifically in countries like Oman, the UAE, Iran, and Saudi Arabia. Hence, the continuously expanding e-commerce, logistics, and transportation industry ascribed to the burgeoning utilization of passenger cars and heavy commercial vehicles.
Future Inclinations of Auto Components: Strong Car Culture Across the Region
- The trend of miniaturization and communication capabilities in the automotive segment of the middle east exhibited potential standards. Thus, with the rise of the latest technologies, auto components have gone through the trend of reorganizing the industry in managing transportation assets, and customer transactions from ownership to rentals & subscriptions that are set to reshape the future of auto components.
- The middle east is witnessing burgeoning demand for OTR (Off-The-Road) vehicles due to its increasing construction activities. The recent FIFA world cup has played a remarkable role in spurring growth in various construction activities and showed increased utilization of OTR vehicles such as road-rollers, excavators, bulldozers & trucks, etc.,
- The leading automakers are actively working on advanced features to cater to the emerging trend of hyper-customization for enhanced comfort & technological amenities. Thus, customization and personalization have become lucrative businesses and the fastest way to enter the growing automotive sector.
- Digitalization of purchasing auto components spurring phenomenal growth in the middle east. The growing impulse of internet penetration led the markets in UAE & Saudi Arabia to adopt digital platforms for purchase. Thus, the region witnessed a relatively higher level of used car transactions with new players across online platforms.
- Electrification, shared mobility, EV battery, charging solutions, and connectivity solutions are the alternative sources of revenue that are becoming more relevant for car dealers in the middle east. Further, distributors are highly satisfied due to the direct sales approach by EV original equipment manufacturers and the reduction in the aftersales capacity.
Way Forward,
Thus, the middle east is met with its relentless commitment to future readiness demonstrated through the abovementioned trends. Therefore, it is expected to have a multifold influence on dealers and distributors of auto components in the region. Hence, adopting new business models, diversification in new products, and new channels for customer engagement is the potential way forward.
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