Truck takeover: Rising CV focus at Automechanika

Commercial vehicles are moving ever closer to centre stage at the largest trade show gathering of automotive aftersales representatives in the Gulf at Automechanika Dubai

ANALYSIS, PMV

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This year’s Automechanika Dubai 2016 trade show will see more than 900 of the event’s 2,000 exhibitors targeting the GCC’s booming commercial vehicle (CV) aftermarket sector with truck related products, parts, tools and services. And with good reason.

Analysts with Frost & Sullivan (F&S) estimate that CV sales in the region increased by an average of 13.4% annually between 2009 and 2014 — swelling the number of vehicles on the roads to 1.2 million units — and this trend is expected to continue, with the volumes rising by 50% to a total of 1.8 million units by 2020.

With continued investment in commercial, logistical and industrial infrastructure, demand for trucks and buses in the Gulf remains high, and the dramatic double-digit growth in the entire commercial vehicles segment in the GCC — from heavy haulage trucks to lighter logistical vans and pickups — is generating a corresponding demand for aftermarket parts and services that is naturally leading both OEMs and aftermarket manufacturers to identify the region as a key growth market.

And indeed, F&S reveals the Gulf market for CV parts and accessories is expected to rise at a compound annual growth rate (CAGR) of 8.4% to $5.49bn in 2020, up from $3.38bn in 2014. Within the segment, mechanical parts such as bulbs, filters, spark plugs, belts, brakes, pumps, alternators and thermostats, as well as the maintenance service itself, make up nearly 71% of regional demand, while collision parts including bumpers are also highly sought after in the UAE, Saudi Arabia, and Kuwait.

At Automechanika, more than 900 exhibitors are attending under the aegis of the organiser’s ‘truck competence’ initiative, covering the entire CV value chain, from parts and accessories to workshop equipment, body repair and care.

Ahmed Pauwels, CEO of Messe Frankfurt Middle East, the organiser of the show, noted: “Truck competence has enjoyed remarkable growth since it was first introduced in 2012, with exhibitor numbers having more than doubled over the past five years. This underscores the increasing interest in the CV aftermarket in the Middle East, and its particular relevance for sectors such as vehicle fleet operations and maintenance, shipping companies, construction, freight or logistics, auto builders and specialist workshops.”

Among the foremost truck competence exhibitors at Automechanika Dubai is German manufacturer SAF-Holland, one of the world’s leading trailer axles and suspension system manufacturers, and Mann+Hummel, an industry leader in filter technology.

“We are the only German manufactured filter company that stocks automotive and industrial filters for the Middle East market,” said Axel Grossman, managing director of Mann+Hummel Middle East.

“The Middle East and Africa has always been a high growth market which is why there are many international companies setting up offices in the region, and especially in the UAE which is the most preferred trade hub. Since we began stocking our own automotive and industrial filters in Dubai in 2012, we have racked up a CAGR of 20%.”

Indian tyre manufacturer Balkrishna Industries Limited (BKT) is launching its latest series of tyres in the all-steel OTR (off-the-road or off-highway) segment, specifically targeted toward port, construction, earthmoving, and materials handling applications.

Rajiv Poddar, joint MD of BKT, said: “BKT operates in the ‘off-highway’ segment, where there is an ongoing requirement for new sizes and patterns for various applications. Due to this, product development is at the forefront in BKT and Automechanika Dubai provides an excellent platform to showcase our new range developed for the Middle East market.”

Poddar added: “Our new manufacturing facility at Bhuj, Gujarat is now fully operational, and has given us additional capacity for the all-steel OTR radial sizes required for this region.”

The Bhuj plant represents an investment of some $500m by BKT and has the capacity to produce 140,000t of tyre products a year — doubling the company’s production by 2017.

Wolf Oil, a lubricants manufacturer from Belgian, and one of Europe’s leading independent blenders, will also be present.

Nicolas Bailly, the regional sales manager for Wolf Oil, said: “At Automechanika Dubai, we will focus on innovative products adapted to the Middle East for the heavy-duty markets.

“The Middle East and Africa is crucial for us, and we plan for the region to represent around 40% of our Wolf and Champion lubricant brands’ business over the next five years. For this region, we could triple our volume in that period. It’s an ambitious plan, but a challenge we are ready to face with full confidence.”

Many of the Germany heavyweights will be out in force, including the Schaeffler Group, BPW, and ZF, alongside Magneti Marelli, an Italian manufacturer of systems, modules and high-technology components. Also present will be the American companies: Johnson Controls, the world’s largest manufacturer of automotive batteries; Jost International, which specialises in products such as landing gear, fifth wheels, and hydraulic cylinders; Meritor; and, Dana, a worldwide supplier of powertrain components.

All in all, the Middle East and Africa’s largest trade exhibition for the automotive aftermarket will feature, as mentioned, more than 2,000 exhibitors from 60 countries, and is expected to attract 30,000 trade visitors from 134 countries.

The 14th edition of the three-day event, which runs from 8-10 May will also feature a ‘Spare Parts and Maintenance Conference’ on the 9th May as a part of Automechanika Academy — a seminar event with a rotating theme that this year promises to deliver some big announcements from the regional authorities, who are planning to launch a number of new standards regulating spare parts in the region, service warranty structure, and a new workshop ratings and certification programme.

Iranian game

In March earlier this year, Messe Frankfurt also hosted the 7th Automechanika Dubai Network, focusing on opportunities in the Iranian automotive aftermarket — as the Middle East’s largest automotive producer, and the 18th largest automaker in the world according to GfK, returns for business amid lifting sanctions.

With the nuclear agreement between Iran and the P5+1 bringing the Islamic Republic out of three decades of international isolation, European manufacturers such as Daimler and Peugeot are already back in the fray after pulling out of Iran several years ago, and many more companies are expected to follow suit.

According to GfK, 14 million commercial and passenger vehicles are currently plying Iran’s roads, while its automotive sector is the country’s 2nd most active industry behind oil and gas — accounting for 10% of its GDP and 4.0% of its workforce (700,000 people).

Pauwels, noted: “With a population of nearly 80 million and a land mass the size of Western Europe, Iran is a country with huge potential.”

“It’s also the highest international visiting country to Automechanika Dubai. With the conducive business environment, we can expect to see more Iranian exhibitors and visitors as Dubai reaffirms its position as the prime re-export hub for Iran to the world.”

Soodeh Habibi, manager of GfK Iran, added: “Following the nuclear deal and gradual relief of sanctions, the Iranian economy is expected to recover, assisted by a rise in oil revenue, regained access to frozen assets of about $1bn, and renewed foreign direct investment.”

Subhash Joshi, automotive director for Frost & Sullivan MENA, concluded: “Sanctions restricted the technological advancements that the global automotive industry has seen. With the sanctions lifted, the opportunities in this vastly untapped market vary from Tier 1 suppliers to OEMs to service providers.”

Iran’s automotive aftermarket will likely be a hot topic at Automechanika Dubai 2016.

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