Analysis: Middle East and Africa recovery will depend on better trade relations, logistics and investment

Automotive markets and supply chains across the Middle East and North Africa have been severely disrupted by the Covid-19 crisis, including vehicle sales and imports in major Gulf markets like Saudi Arabia and the United Arab Emirates, as well as production and export in North Africa, especially Morocco. But while most markets will continue to feel the impacts of the second wave well into 2021, the wider region’s recovery will depend on more than vaccines. Automotive manufacturers, distributors and suppliers will have to navigate the economic disruption from oil price shocks, complicated and inconsistent trade and customs terms, as well as high costs and service issues in logistics and shipping networks. In many cases, external, geopolitical issues will play major roles, whether sanctions on Iran or internal relations between Gulf Cooperation Council (GCC) counties. 

Nevertheless, most of the region is poised to see a resumption of growth in vehicle sale and production beyond pre-crisis levels, according to a new forecast and analysis from Automotive from Ultima Media, the business intelligence unit of Automotive Logistics. New vehicle sales will fall around 25% in the Middle East and North Africa in 2020 compared to 2019 to around 2m units. However, steady GDP growth, market liberalisation policies and strong investment in logistics networks should help propel new vehicle sales and trade.

The analysis highlights challenges including high tariffs and trade blockades for some countries, while others such as Morocco benefit from free trade agreements with Europe and closely integrated supply chains. For local production to grow, smoother trade and customs processes will be essential. 

For 10-year forecasts of the wider region and country profiles of three key markets – Saudi Arabia, Morocco and Egypt – download the presentation below.

This analysis is part of an extensive market report on North Africa and the Middle East that will be available in the first quarter of 2021. If you are interested in the report, please contact our business intelligence team:

Christopher Ludwig, Editor-In-Chief
Daniel Harrison, Automotive Analyst