Page 6 - EXPORT GUIDE 2 AFRICA

From second-hand cars to ball bearings, spare parts, lubricants and
1 tires - the UAE is the best place to source. We take a look at the vari-
ous factors that have helped Dubai emerge as one of the leading
suppliers of automobile spare parts to the African continent...

Meeting the Rising Demand for Auto Parts

The rapid industrialization and moderniza- The rise of a sizable second-hand spare
tion currently sweeping through many parts market has posed a further threat to
African countries has resulted in an UAE-based spare parts dealers. This
increased demand for capital goods such as lucrative market has registered a substantial
machinery, lubricants, spare parts, ball growth in the last ve years mainly because
bearings and other mechanical goods and of the rising demand from East African
accessories. The market for automobile countries and CIS. Though not all
spare parts, in particular, has been an attrac- second-hand spare parts sellers in Dubai or
tive sector for UAE-based enterprises, who Sharjah can provide the full range of used
have emerged as the leading supplier of parts for all car models, but these outlets are
these goods to many countries in East, capable of providing nearly 90 per cent of
Central and Southern Africa. such parts. In fact, some of the second-hand
spare parts outlets in Sharjah are reportedly
selling parts of even 2011 models at less
than half the price of genuine parts. As a
result, the business of second-hand spare
parts has developed into a full- edged
multi-million dollar industry involving more
than 100 small and medium-sized enterpris-
es spread throughout the country.

The UAE has long been known as a major
supplier of automobile spare parts both
within the Gulf region as well as for Iran, CIS,
Indian sub-continent and Africa. After
witnessing a depression recently, the
automobile and spare parts industry in the
country has once gain recovered to its Earlier Dubai was considered the main
optimum level. However, the increase in source for second-hand spare parts but over
demand for quality spare parts has encour- the last few years the market has shifted to
aged parallel imports into the country Sharjah, mainly because of relatively lower
forcing leading automobile distributors and overhead expenses. Many second-hand
spare part companies to start a full-blooded spare part outlets in Sharjah deal in used
campaign against illegal importers who used engines which are imported from
operate from neighbouring countries, Japan and then re-exported to many Asian
particularly across the border in Oman. As a and African countries. There is a huge
result of illegal imports into the UAE, the demand for such goods in East African
major players in the local market have countries of Uganda, Kenya and Tanzania as
combined together to curb the in ow of well as other countries like Russia, India,
excessive supply of spare parts through Egypt, Iran and Pakistan.
illegal channels.
Most of the second-hand spare parts are
It has been estimated that almost 30 per sourced from damaged cars sold by
cent of the demand for auto spare parts is insurance companies at throwaway prices
being fed by parallel imports from neigh- and the rest coming from police auctions.
bouring countries. These pirated goods are Most buyers prefer to buy these used parts
preferred by buyers as they are o ered at because they are genuine and are often in
heavily discounted prices. These illegal good condition. While a major portion of
operators are able to beat the local agents used parts are sold in the UAE market itself,
and distributors as they survive on low almost the entire stock of imported used
pro t margins and high volumes. They also engines is re-exported. Used engines are in
do not pass on import tari s and other great demand in many African countries
additional expenses on to their customers in which have a big market for re-conditioned
order to maintain their low prices. automobiles.