Abstract
The Bahrain car market will contract by around 0.5% in 2009. While stagnation
in sales is probably the
best dealers can hope for in the current economic
environment, BMI foresees more fundamental changes
in market trends with
low-cost, smaller and more economical cars likely to lead sales growth over
the
coming years.
In the first half of 2009, sales will be negatively
affected by a fall in residential property prices, job
losses, a credit
crunch and a decline in the expatriate population. However, it remains a
better bet than the
UAE or Kuwait, with the banking sector in a better
position to resume consumer lending for goods such
as cars. Also, Bahrain
is not experiencing the same scale of expatriate flight as Dubai. As
confidence
returns, BMI anticipates a strong recovery in the Bahrain car
market from 2010 that could outpace the
UAE, although it will undoubtedly
remain one of the Middle East' s smallest markets.
BMI believes that by
end-Q109, heavy discounting was approaching its limits. The key for dealers
is
offering attractive car loans in conjunction with banks. With the
expatriate professional workforce
increasingly more cautious of high cost
purchases, growth in the market is shifting towards the
indigenous
population. As a result, smaller, cheaper and more fuel-efficient cars will
lead the market and
the importance of SUVs and premium vehicles will
decline. This will provide new opportunities for
budget car producers,
notably Chinese manufacturers as well as brands such as Renault' s Dacia
subsidiary. Brand competition within the Bahrain automotive market will also
be heavily influenced by
exchange rate movements, with the Bahraini dinar
pegged to the US dollar.
The increasing popularity of low-cost cars
prompted car dealer Mannai Motors to open a new showroom
for Chinese
brands in January 2009. The showroom accommodates the latest new model
launches from
the Geely Automobile passenger car range and JAC commercial
vehicles, which have exceeded
expectations since their launch on the
Bahrain market in August 2008.
Bahrain scores 51.4 points (out of a
theoretical maximum of 100) in the BMI Automotive Business
Environment
ratings this quarter. Bahrain remains in sixth place in our regional rating,
2.6 points behind
Kuwait and 4.6 points ahead of Egypt. Bahrain' s ratings
are strengthened by an open and relatively
lightly regulated economy,
relatively low economic risk and a competitive car market. While the local
market may be small, Bahrain has considerable potential as a retail hub,
supplying the neighbouring Saudi
Arabian and Qatari markets, over which
the island has a competitive advantage.
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