New Market Study Published: Qatar Autos Report Q3 2013

BMI remains positive on the outlook for new vehicles sales in Qatar, forecasting a further 17% rise in 2013, to take annual sales to nearly 100,000 units, with risks to our forecast very much weighted towards the upside.

Although our Country Risk team believes that GDP growth will slow from an estimated 6% in 2012, down to 5% in 2013, this is still a strong number. Encouragingly for the longer-term development of the Qatari economy, we believe that growth will be largely driven by the non-hydrocarbon sector over 2013. In particular, expanding domestic consumption and progress on infrastructure investments, both supported by public spending, will help to stimulate economic activity.

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Adding further support to the autos sector is the fact that we expect 8.0% growth in private expenditure in Qatar over 2013. Although the effects of increases to salaries and pensions of public sector workers, approved in September 2011, are waning, an array of structural factors is set to leave household spending on an expansionary path over the medium term.

Demographics also remain largely in Qatar's favour: the total population reached 1.9mn in January 2013, up by 8.2% y-o-y (or by 7.0% y-o-y on a six-month moving average basis, which reduces seasonal volatility). As more expatriate workers enter the country in preparation for the 2022 FIFA World Cup, the consumer base is set to expand further. The unemployment rate, at 0.5%, remains among the lowest in the world. High per capita income also generates strong demand for retail and luxury products - with sales figures for Rolls- Royce Motor Cars Doha, for instance, up by 20% y-o-y in 2012.

Rising tourism flows should also benefit the key rental car market. Qatar is expected to increase its hotel room numbers by 5,635 this year, the strongest y-o-y growth in the Middle East, with occupancy rates having come in at a robust 70.0% in October 2012.

More support to the market is likely to come from the booming vehicle financing segment. In September 2012, Qatar's Commercialbank joined with Saleh Al Hamad Al Mana Co, authorised dealer of Nissan, Infiniti and Renault car brands, to launch a Vehicle Finance event, offering discounted rates for vehicle loans and insurance. BMI believes that such initiatives have partly been prompted by strong prospects for vehicle demand and partly as an outcome of the overall boom in credit levels in the country. After a challenging period in the aftermath of the global financial crisis in late 2008, we expect strong growth across the economy to keep demand elevated for new credit, which in turn, this will help boost auto sales.

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