Market Trends of GCC Finished Vehicle Logistics Industry
This section covers the major market trends shaping the GCC Finished Vehicle Logistics Market according to our research experts:
Growing Automotive Industry
The automotive industry is witnessing significant growth in the GCC region owing to a rise in automobile sales, especially in countries such as UAE, and Saudi Arabia. According to the International organization of Motor Vehicle Manufacturers data, in 2021, the highest number of vehicles sold in the Gulf Cooperation Council countries was in Saudi Arabia at about 556.6 thousand vehicles. It was followed by the United Arab Emirates where the number of vehicles sold was about 188.8 thousand vehicles.
Moreover, the growth in the population is leading to the need for automobiles for convenient travel, which is driving the market growth. Some of the major automobile-producing countries in the GCC are Saudi Arabia, Oman, Qatar, etc., During the COVID-19 pandemic, UAE-based third-party logistics company, Gallega Global Logistics, has opened a 325,000-square meter facility in Khalifa Industrial Zone Abu Dhabi (KIZAD) to meet the growing regional demand for automotive supply-chain services. Thus, as the production of automobiles increases, there will be a rise in the need for finished vehicle logistics for transporting and warehousing these vehicles from the manufacturing plant to dealer showrooms. Hence, it will lead to the growth of the market focus during the forecast period.
The automotive industry in the GCC region is highly dependent on imports from different countries. Saudi Arabia announced its Vision 2030 which includes transforming the Kingdom into a preferred logistics hub. Surging automotive manufacturing plants of various brands to contribute to the growth of the automotive logistics industry in Saudi Arabia. Additionally, the government is restructuring the regulations and structures for the logistics sector and opening the way for market liberalization and private sector participation. Therefore, the growth of the automotive industry is expected to fuel the growth of the GCC finished vehicles logistics market during the forecast period.
Increase in Demand for Electric Vehicles
To meet the rise in demand for electric vehicles, in April 2022, the UAE opened its first electric vehicle manufacturing facility in Dubai Industrial City, built at a total cost of USD 408 million. The facility is expected to produce 55,000 cars per year. Saudi Arabia aims for at least 30 percent of its cars to be electric powered by 2030, following its pledge to reach net zero carbon emissions by 2060. Last year, EV manufacturer Lucid announced a long-term plan to build the first international manufacturing plant in Saudi Arabia, targeting 150,000 vehicles per year at the King Abdullah Economic City.
M Glory Holding Group, a technology investment firm based in Dubai, launched an EV production facility in May 2022 as part of the UAE's plan to expand its electric vehicle manufacturing industry. With a total land area of 93,000 square meters, the Dh1.5 billion (0.41 billion) plant at Dubai Industrial City will be one of the largest in the Middle East and aim to produce 55,000 EVs annually as the demand for electric vehicles rises.
Major vehicle manufacturers are investing in the expansion of warehouse facilities which is likely to drive the finished vehicles logistics market in GCC. For instance, in March 2022, the Saudi Ports Authority (Mawani) signed an agreement with CMA CGM Group to build an integrated logistics platform at Jeddah Islamic Port. The new facility of specialized container depots and warehouses will be established on 130,000 sq. meters of land leased by the port administration.
The Kingdom of Saudi Arabia's Ministry of Industry in January 2023 signed a memorandum of understanding with the South Korean company Hyundai Motors to build a factory for the complete assembly of electric cars in the Kingdom of Saudi Arabia. The manufacturing companies rely on their supply chain partners to manage finished vehicle logistics, provide high levels of service and optimize finished vehicle inventories. Hence, an increase in demand for electric vehicles provides lucrative opportunities for the GCC finished vehicles logistics market during the forecast period.
