Auto Sales Boost in the Middle East image

Car sales will increase in the Middle East. Volkswagen and Ford Motor plan to invest more in this area. But why invest so heavily in countries torn by rebellion and turmoil?

The answer is that here oil prices are high and several countries invest money to seek social stability among the Arab Spring uprisings. In the past 12 months the price of crude rose 6.7%.

“The rest of the world is struggling, so you think, ‘Why are sales in the Gulf going up?’” said Pierluigi Bellini, a Milan-based IHS Automotive analyst who oversees the Middle East market. “You have oil prices that are not going down, and governments spending more because they want to reassure people.”

Sales of light commercial vehicles and cars in the Gulf Arab region are expected to grow 6.6% (1.28 million vehicles), while in Western Europe a drop of 5.7% (13.6 million vehicles) is expected.

“A stable political situation, of course, is a substantial driver for any economy, and the same is true for the Middle East,” said Bernhard Maier, head of sales at Porsche SE’s car- making business. That is why in Saudi Arabia $130 billion were allocated for extra spending, including 66,000 jobs in teaching and health care, in the United Arab Emirates 7 billion dirhams ($1.9 billion) are allocated for housing loans and 5.7 billion-dirham for water and infrastructure projects.

Ford will bring eight new models, including Focus, Taurus and Escape, which will be presented in the six sales outlets which are to be opened in the near future. Toyota already included the Yaris and Camry, and plans to open two showrooms. VW’s Lamborghini expects high demands of the V12-powered Aventador.

“There is a change, a slow change but a steady change, an opening, which is good for us, which is good for everybody,” said Winkelmann.