This quarter, BMI maintains its sales forecast of 3% growth for the UAE new vehicle sales market in 2015. We continue to believe that the combination of a slowing economy in Abu Dhabi and the rising likelihood of an increase in local interest rates will weigh on the market's near-term prospects slightly. Certainly, we are not anticipating a repetition of last year's double-digit sales growth across the emirate.
Early sales indications would seem to back up our near-term caution, with Q115 sales across the emirate reportedly up by just 1% y-o-y, at 101,676 registrations. However, we expect this figure to improve as additional monthly data are released, especially as a significant proportion of UAE new vehicle sales take place during the month of Ramadan. This is also a time when many dealerships have special offers.
Looking forward, BMI remains broadly favourable on the medium-term outlook for local new vehicle sales, with further growth of 21.8% forecast for the 2016-19 forecast period. This should take total new vehicle sales to above the 500,000 unit mark by end-2019.
Recent statistical analysis carried out by BMI underpins our medium-term optimistic view. A comparison of GDP per capita (PPP basis) and passenger cars per 1,000 people for markets in the Middle East and North Africa (MENA) shows that the UAE is a regional laggard in car ownership terms, despite being a strong market for sales. With a GDP per capita (PPP) of over USD58,000, it had a car ownership level of just 108 cars per 1,000 people as of 2013, far below regional peers such as Bahrain, with 305/1,000.
At just over 400,000 units, the UAE represents one of the biggest passenger car markets in the region, certainly among the markets of the Gulf Co-operation Council. It has also been growing rapidly, with double-digit growth for the past three years and average annual growth of 4.6% forecast by BMI to 2019, meaning it is far from unattractive for carmakers. If anything, its low car ownership means it has room to grow. We forecast car ownership to reach 172/1,000 by 2019 and while this is still far below the highest rates in the region, it represents growth of 59% on current levels.
This growth potential reflects the view of BMI's Country Risk team that the UAE will be a regional outperformer over the next five years in terms of private consumption growth. We believe that the country will continue to have the highest household consumption per capita in the MENA region, supported by Dubai's strength in tourism and retail, as well as growing investment in the northern emirates. With the income per capita of both the richest 10% and the middle 60% of the population forecast to rise by 17.5% over the next five years, there will be opportunities in both the premium and volume car segments. This supports our long-held view that rising incomes and increased access to financing will drive the popularity of volume brands in a market that has traditionally been dominated by premium brands.
Looking at the macroeconomic backdrop for the emirates as a whole, BMI expects the UAE to continue to record impressive rates of growth over the coming years, even in a context of lower oil prices, which will ensure strong support for new vehicle sales in the years ahead. We forecast real GDP growth of 4.0% in 2015 and 3.8% in 2016, broadly in line with the previous three years. The oil sector will see only minimal gains as weaker prices weigh on investment; however, this will not have a significant bearing on the non-oil sector with construction and private consumption set to continue growing apace.
The outlook for household spending - another key indicator of the potential demand for new vehicle demand in UAE - over the coming quarters is also encouraging. According to a recent report by Hay Group, 83% of firms in the UAE increased salaries in 2014, while an average nominal pay rise of 5.6% throughout the country is forecast for 2015 (compared to our projections which see consumer price inflation averaging only 2.9%). Moreover, the latest consumer and business confidence surveys by Bayt also appear to indicate that household consumption will gradually accelerate over the coming quarters, with both the 'consumer confidence' and 'consumer expectations' indices gradually trending higher. We forecast household spending to expand 7.2% in real terms in 2015 and 7.0% in 2016, up from an estimated 6.5% in 2014.
In June 2015, Gulf News reported on figures released by Dubai Customs that showed Dubai's trade in automotive spare parts and accessories had risen by 10% in 2014, to reach a value of just over AED44bn. Automotive aftermarket imports stood at AED26bn (USD7.07bn), while exports and re-exports from Dubai were valued at AED18bn (USD4.90bn). The top five partner countries for auto parts trade with Dubai in 2014 were Japan (AED6.14bn, USD1.67bn), South Korea (AED3.57bn, USD972.02mn), China (AED3.31bn, USD901.23mn), Germany (AED3.16bn, USD860.39mn) and the US (AED3.11bn, USD846.77mn). The Emirate's largest export and re-export markets were Saudi Arabia (AED2.37bn, USD645.29mn), Iraq (AED1.08bn, USD294.05mn) and Afghanistan (AED800mn, USD217.82mn), which collectively accounted for 23% of Dubai's exports and re-exports of auto parts, accessories, tyres and engine components during the year.
Lastly, there is rising demand for motorcycles within the UAE at the present time, both at the lower end, for use by expatriate workers, as well as at the higher end, for use by richer UAE consumers. Looking to tap into this growing market for two-wheeled transport is Indian motorcycle company Royal Enfield. In June 2015, Zawya reported on the company opening its first store in Dubai. The store, which is located at Al Qouz Industrial Area 4, will sell Enfield's popular bikes including the Bullet, the Continental GT 535cc cafe racer, the Rumbler and the Classic retro street model.