Aullwr: Dr. Richard C'rumne. IICWC. March 2017. UAE NEW SALES CAR MARKET SLUMPS The UAEls car dealerships are having their worst year since 2009. according to industry sources. Car sales this year have slumped 25% from the highs of 2015 - 20 [6. where 420,000 cars were sold. The decline in demand has mostly been in the rc-cxport marital where cars imported from Japan and the USA are unloaded at Jebel Ali Port and reloaded onto ships travelling to other Gulf Cooperation Council {GCCL and Middle East and North Africa {MENA} countries. According to Yousef' Mansoori. the senior analyst at Almanac Global. demand for new cars in these markets is aectcd by the low oil price. which has seen approximately 50.000 people become unemployed throughout the GCC and MENA region over the past two years. Also the continuing unrest. particularly the wars in Yemen and Syria means consumers are waiting for better times before committing to large household purchases. However. not all the news is bad news. The UAE market for luxury cars accounted for 5100!) units in the past 12 months, an increase of 1" percent over the 2015 - 2016 gure. The UAE executives who received large cash bonuses amounting to 5 percent of their salaries last year have been busy updating their models. with the luxury SUV market showing the highest growth. \"Inelastic Price Elasticity of Demand {FED} is also a key player in the UAE car market because of an underdeveloped public transport network and a lack of alternative iels.\" explained Maryam Youscf. an analyst with WAD resources. Looking forward. Maryam expects sales of cars to increase during the second hall'onDl 'i' as a new 5 percent; Value Added Tax (VAT) will be introduced in 2018. For 2918. another impact will be a shift in market share away from USA manufacturers to Asian manufacturers. This is because the Asian nianut'acntrers have offered deep discounts of up to 20 percent to UAE dealers. which has resulted in a 2? percent increase in sales for these manufacturers and dealers. The Asian manufacturers have been able to offer these steep discounts by decreasing their variable costs through the introduction of robotics and the 3D printing of expensive custom parts for their luxury vehicles. Finally, 2018 could be an unsettled year for new car sales as UAE residents increase their use of ride sharing. The country has been using new mobility platforms since 2t] [2 when Uber was launched in Dubai. but its' only now that two of the largest players in the region. Uber and Careem, have started receiving increased attention from the commuting public. It is estimated that for every 1 percent rise in petrol prices there is a l.'i'5 percent increase in ride sharing amongst commuters. Whatever lies ahead1 it seems it will be an interesting next 12 months for the new car industry. This infcmtiun in this case study is ctional and is let-cant to be used for mieroccouomic: It'uining and testing proposes only