"The Middle East's booming automotive aftermarket is convincing international majors to set up new regional manufacturing and distribution centres"
The Middle East's booming automotive aftermarket is convincing international majors to set up new regional manufacturing and distribution centres, as they look to boost local sales and better serve the fast-growing demand for auto parts and services.
According to analysts Frost & Sullivan, the Middle East and North African (MENA) demand for auto spare parts will be worth US$16.85 billion by 2020, nearly double the US$9.5 billion value in 2013, with the swift rise being driven by rapid urbanisation, increased industrialisation, and the growth of inter-regional road transport.
In response, auto aftermarket leaders at Automechanika Dubai 2015, the industry's dedicated trade and networking platform, are increasingly investing in new regional facilities to grow their presence, stay closer to customers, and capitalise on first-mover advantage.
In February 2015, German manufacturer Cardan Service Network (CSN) - a first-time exhibitor at Automechanika Dubai 2015 - made a multimillion AED investment in a Cardan shaft manufacturing facility in Dubai. CSN expects to reach an annual turnover of AED13 million in 2015, growing 25 per cent annually.
The new facility allows owners of European trucks, light commercial vehicles, and construction machinery to receive custom made Cardan shafts for their operations within 24 hours of ordering in the UAE, and 48 hours throughout the MENA region.
"Previously, workshops were forced to arrange temporary repair solutions until a new replacement part of the correct size is made available from abroad," said Hans Brune, Managing Partner at CSN. "Or they would rely on second-hand parts to keep vehicles and equipment running, which runs the risk of repeat break-downs."
"Now we have in the UAE a factory that can design, develop, manufacture and exchange Cardan shafts for four different segments, with the quick turnaround enabling customers to reduce downtimes and better monetise their businesses."
CSN will showcase its entire range of Cardan shafts at Automechanika Dubai 2015, which takes place from 2-4 June 2015 at the Dubai International Convention Centre.
Another exhibitor, Canadian parts manufacturer Ecobrex, in May 2015 opened a 70,000sqft warehouse distribution facility in Dubai in partnership with Albelad Auto Parts Trading, to provide optimum access to Ecobrex parts throughout the MENA region. The US$15 million facility has an outbound capacity of 5-8 containers per day of quality Canadian parts, with the company projecting an annual turnover of US$50 million through the new facility.
Ecobrex has already established a solid foothold in the MENA region, but in the past, we faced some challenges in terms of delivery," said Ecobrex General Manager Babak Ras. "With this new facility, Ecobrex will substantially increase its capacity to meet regional demand. For us, the biggest and the most important markets are Saudi Arabia and Egypt, but we also serve the UAE, Kuwait, Jordan, Bahrain, Qatar, Oman and Algeria in good quantities."
Meanwhile, Advanced Manufacturing Solutions recently penned deal with Abu Dhabi Ports to establish a steel factory manufacturing automotive spare parts in the Khalifa Port Industrial Zone (KIZAD).
The deal will see products such as brake calipers and brake discs produced for the global automotive industry, and will have a 300,000-metric ton per annum capacity, making it one of the world's largest single-source foundries manufacturing automotive parts.
"The Middle East automotive aftermarket is clearly undergoing rapid growth, and industry majors are tapping into new opportunities by investing heavily in the region with a more robust physical presence," said Ahmed Pauwels, CEO of Messe Frankfurt Middle East, organiser of Automechanika Dubai.
"Automechanika Dubai presents international market leaders with unmatched reach and interaction with buyers, traders and distributors from across the region, enabling fruitful deals and future tie-ups that are vital for the ongoing growth and development of the industry."
Another Automechanika Dubai 2015 exhibitor with regional manufacturing facilities is Emerging Abrasives, the UAE's only coated abrasives producer, which opened in September 2014, and operates from a 10,000sqm plant in Dubai.
Also out in force is Saudi-based OWS, a re-manufacturer of used spare parts; radiator manufacturers Sabah Radiator Industries in the UAE, Siyam Radiators from Jordan, and Super Dolphin Trading, which is also a sole distributor in the UAE for Swedish Lorry Parts.
Now in its 13th edition, Automechanika Dubai is one of the fastest-growing auto aftermarket exhibitions in the world, covering six focus areas of Parts & Components; Electronics & Systems; Accessories & Tuning; Repair & Maintenance; Tyres & Batteries; and Service Station & Car Wash.
The dedicated annual showcase in 2015 will host more than 1,800 exhibitors from over 60 countries and 22 country pavilions including those from Germany, Turkey, Taiwan, Italy, UK, and the USA, while more than 30,000 trade visitors are set to descend upon the must-attend event for the regional automotive aftermarket.