Market value

Double-digit growth in C-level executives at Dubai trade shows including Automechanika confirms a welcome return to business for the exhibition industry.

The return of physical trade fairs to Dubai in 2021 has been welcomed by C-level decision makers, with one of the Middle East’s largest organisers confirming senior management visitor registration to its exhibitions last year increased by 78 per cent versus pre-Covid years.

Messe Frankfurt Middle East returned to the live events landscape at Dubai World Trade Centre in September 2021 and has since hosted eight face-to-face exhibitions in the Emirate, welcoming a combined 64,254 trade visitors from 116 countries.

The Dubai-based company lists Beautyworld Middle East, Automechanika Dubai, and Intersec as its three flagship shows. While the total number of visitor attendance is justifiably less than pre-pandemic years, an increasingly positive trend, said Messe Frankfurt Middle East’s CEO Simon Mellor, is the steep rise in visitor registration by the likes of CEOs, Managing Directors, and business owners.

“This growth is mirrored by the number of individuals from the procurement or purchasing function which has increased by an average of 14 percent in real terms compared to 2019,” said Mellor.

“We saw 78 percent more senior management visitor registration to our shows in 2021 compared to 2019, which indicates that, while total attendance may currently be less than the bumper pre-pandemic years, those that do attend our shows are high-level decision makers with a clear intent and purpose.”

“There is pent-up demand by visitors to network and find new suppliers that has been largely unfulfilled by alternatives such as digital or online events,” added Mr. Mellor. “Dubai, and the UAE is a prime destination for international professionals to come and do business safely thanks to the foresight of the country’s leadership.”

The largest international trade show for the automotive aftermarket industry in the Middle East – Automechanika Dubai – was held in December 2021 at the Dubai World Trade Centre (DWTC). It was officially opened by Mattar Al Tayer, Director General, Chairman of the Board of Executive Directors of the Roads and Transport Authority (RTA) & Commissioner General for Infrastructure, Urban Planning and Well-Being.

Lifting the hood on a rapidly transforming and maturing sector where digitisation is the new driver, the 18th edition of the show, organised by Messe Frankfurt Middle East, had exhibitors from 47 countries and 12 national pavilions all demonstrating just how far the sector has come in its technological transformation and signalling more change ahead.

“Technology advances are impacting all segments of the industry and are in evidence across all the show’s six sectors,” said Automechanika Dubai Show Director, Mahmut Gazi Bilikozen.

“This represents a seismic shift in the regional industry, which is advancing rapidly in terms of service provision, product innovation and professional standards. This is an industry which has now come of age.

“Compared to 2019, we have seen a 40 per cent increase in senior management and an 18 per cent increase in procurement and purchasing personnel pre-registering for the show – another signal of increased business activity and interest in finding new partners.”

Visitors from 143 countries pre-registered for the three-day event.

Spread across eight DWTC halls, Automechanika Dubai featured six sectors including tyres & batteries; car wash, care & reconditioning, repair & maintenance; parts & components; electronics & systems as well as accessories & customisation.

For the first time, the show featured a comprehensive awards ceremony recognising excellence in products, services, personnel and training within the regional industry and a Tools & Skills Challenge – an action-packed live stage where workshop specialists can demonstrate their skills in tire changing, tire mounting and smart dent removal.

The scale of transformation impacting the sector has been summed up by Romanian show newcomer Wemzer Industries, which said the sector is now increasingly aware of its need to contribute to global ‘greener world’ endeavours.

With Wemzer now producing OEM specified standard ceramic and carbon-free products, the company’s Managing Director, Amin Uz Zaman, identified additive manufacturing, remanufacturing, e-commerce, hybrid / electric drivetrains and mobility as a service as the new sector drivers.

“The automotive aftermarket is undergoing big disruption,” he said. “With electrification and digitisation driving change, we are reshaping the way customers, automotive suppliers, and industry stakeholders think of cars and driving and how business in the automotive aftermarket is conducted and value is created.”

The massive penetration of internet connections and smartphones has driven the customer’s expectation for a seamless, comfortable, and most importantly a transparent shopping experience. The automotive industry was probably delayed in embracing this transformation, but the pandemic accelerated the process and now we are witnessing a massive digitisation of the industry.”

Despite setbacks due to the impact of the Covid 19 pandemic, Wemzer Industries claims the aftermarket is poised for unprecedented growth.

“There may be challenges related to supply chain, but we have positive indications for economic recovery across our target markets,” said Zaman.

“The automotive aftermarket revenue is anticipated to record $800 billion USD by 2027, according to the most recent study by Global Market Insights Inc. It is a well-known fact that the global automotive industry is dynamically expanding.

“Digitalisation has recently taken an exponential pace. There are certainly dimensions that are yet to be revealed. It is a revolutionary transformation of the business and its value chain, requiring the integration of new layers and partnerships with new enablers to complete the transformation that goes beyond offering a seamless omnichannel shopping experience.”

And with industry analysts forecasting the GCC’s automotive parts retail revenue will grow at a compound annual growth rate of 5.8 per cent to $6.84 billion USD in 2025, there’s much at stake for industry players facing greater than ever competition.

Keys to success are being outlined at the Automechanika Dubai Academy where experts are probing the industry’s region outlook, the impact of electrification within the GCC, digital trends, sector diversification and fourth industrial revolution outcomes.

While experts in the automotive market believe a full recovery could take up to four years, many market analysts and industry leaders have already seen green shoots, spurred on by the implementation of digital tools and the region’s Covid-19 vaccination efforts.

That was the message delivered at the Automechanika Dubai Network, a one-day hybrid event that brought the region’s biggest players together under a central theme of ‘Let’s Talk Business: Adaptation & Innovation During Covid-19’.

Leading the morning’s sessions was Vishal Pandey, Automotive & Mobility Practice, at Glasgow Consulting Group who presented ‘The State of the Automotive Market in Covid and post-Covid Times’, believing regional government’s initiatives have been critical to boosting the economy.

He said: “KSA and the UAE have managed the pandemic particularly well. They have taken the lead on various measures and austerities that have driven and supported the economy.

“And while we saw the passenger car market dip significantly in 2020, with an expected revival by 2022, it is the introduction of new service models – relying heavily on ecommerce, digitalisation and customer relations – that could offset the impact of the pandemic on the industry.

“Digitally-enabled experiences and access to services that evolve the customer’s expectations have helped rebuild confidence in the industry and generate sales. This means the passenger car market is on track to reach pre-Covid levels by 2025.”

In the session led by Harmeet Singh, After Sales Director at Al Masaood Automobiles, he highlighted figures from a recent survey to decipher customer preferences for digital dealership platforms.

“Like the rest of the industries, the automotive market has adapted to the new changes to ensure business continuity. We focused on rolling out our innovative digital solutions and digitising our operational processes.
“The survey uncovered that 95 per cent of respondents expected both real time availability of vehicles and prices of cars and services to be displayed, 73 percent expect real-time communication and 63 percent wanted the option to pay for services through the digital platform,” said Singh.

“We further leveraged our digital channels to provide sales and after-sales services and added further simplicity and convenience to our customers’ experience. Our aim was to ensure the uninterrupted delivery of our services without comprising the health, safety, or convenience of everyone.”

Organised by Messe Frankfurt Middle East, the Network took place ahead of this year’s Automechanika Dubai which will take place from 14-16 December 2021 at the Dubai World Trade Centre.

“How companies and organisations have reacted and adapted to the sweeping changes brought on by the Covid-19 pandemic has already proven the industry’s resilience,” said Bilikozen.

“With the wider automotive market on its way to recovery, Automechanika Dubai aims to drive the back-to-business message across all participants of the show later this year.”

Thought leaders in the aftermarket industry are also bracing for change over the next five or so years based on a series of surveys conducted by GRS Explori.

Commissioned by Messe Frankfurt Middle East, the report reflects on findings based on a sample of almost a thousand participants from around the world.

More than half the Middle East respondents (58 per cent) said they had been negatively, or very negatively, impacted by the Covid-19 pandemic with an astounding 82 per cent saying they are battling parts shortages and delays largely caused by logistics challenges.

Some 69 per cent of Middle East players surveyed said they anticipate major (43 per cent) or minor (26 per cent) changes in their sector over the next five years, with the key drivers being technology advancement, economic shifts and altered consumer behaviour.

“The good news is that 76 per cent of Middle East respondents say they are ready to face the changes which puts the regional industry in a great position for recovery and growth,” said Bilikozen.

“It is also encouraging that 36 per cent view the sector as growing over the next five years – which is up from 29 per cent in the 2018 survey so industry-wide optimism is increasing.

“A further 27 per cent of Middle East respondents in 2021 predict business to continue as usual while 30 per cent of Middle East respondents expect new technology to present significant opportunities.”

Within the Middle East the segments most likely to face disruption, according to respondents, are parts and components, electronics and systems and repair and maintenance.

Electric and hybrid vehicles are seen by regional respondents as bringing in the most considerable disruption to the traditional petrol/diesel vehicle segment, with passenger cars being the biggest change driver. Within the region, 84 per cent anticipate change to an alternative fuel – up 4.0 percentage points on the initial survey in 2018.

“Interestingly, 40 per cent of Middle East operators report receiving customer enquiries for alternative fuel vehicle products and services,” said Bilikozen. “Yet more than half the respondents (55 per cent) from within the garage and workshop sector admit they have not yet invested in the new equipment which will be needed to service electric vehicles though the majority say they know they need to invest but have not yet begun the process.”

Looking ahead five years, almost half the Middle East respondents anticipate electric, hybrid and solar-powered vehicles being commonplace on the region’s roads, with pricing and government policies being change catalysts.
Hydrogen fuel cell vehicles, say the respondents, won’t pick up the same pace until 2031, though almost a third (31 per cent) believe autonomous vehicles will be on the region’s roads within five years, and over half (51 per cent) are expecting private vehicle ownership to be impacted by ride and car-sharing businesses.

With the introduction of electric vehicles and car models that house new technology, the UAE automotive aftermarket must respond with investment in the proper tools and training to ensure the safety of drivers and stay relevant in an evolving market.

This sentiment was echoed during a recent online seminar: ‘Collision Repair Series: Insights on What the Data Trends Are Showing’, hosted by Messe Frankfurt Middle East.

Panellist Stephen Louis, a Key Account Manager for Axalta Premium Brands, believes that the industry will face a number of challenges and opportunities in the advent of these changes.

“New technology is going to present the collision repair industry with a lot of challenges, whether that’s for electric vehicles or cars with other features such as assisted driver systems,” he said.

“For the most part, original equipment manufacturers (OEMs) introduce new models accompanied by the right equipment and training for body shops. But when you look across the general scope of the body shop industry, I think there is a real lack of knowledge, data and understanding.”

While it will take time for the local market to adapt to the changes, Vishal Pandey, Director at Glasgow Consulting Group, remains bullish on the ability of third-party garages and body shops to adopt tools and training to better service the vehicles.

“What we’ve seen is typically the first two years of service are handled by the OEM,” said Pandey. “However, this falls off to a third party workshop afterwards. Even smaller insurance companies insist on this. Couple this with the almost double cost of an OEM authorised workshop compared to a premium third-party, and there is a huge opportunity to capitalise on.”

Ultimately, workshops must invest in training and tools to safely and accurately repair newer models entering the market. Due to the increasing use of complex electronics systems to diagnose and repair vehicles, leading to an increase of 10-20 per cent cost to repairs in the collision repair industry, Pandey foresees greater importance placed on customer relations.

“As a result of increased vehicle costs, labour costs for services due to advanced training, and as more and more technology enters the market, there will be improved transparency between body shops and customers,” said Louis. “This will materialise in digitised interactions and optimised resource allocation, which will ultimately be a win-win to the customer, insurance company and the garage.”

Echoing Pandey, fellow panellist Robert Snook, Group Director of MG Cannon, said: “Why wouldn’t you communicate and educate the customer? You’re missing a massive opportunity if you don’t. The collision repair industry relies heavily on trust, and it is the duty of the body shop to position themselves as the expert in the understanding of the technology and in turn, showcase the skills and capabilities required that will allow the customer to trust in you and your technicians automatically.”

Louis added: “We are in a world of increasing costs and increasing regulation with quality and service being demanded by customers. Above all, body shops will, by default, always look to be as efficient as possible and use the best available equipment, materials and training. I think if you commit to all of these, you will have a good business.”

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