A world industry.

The motor car was the one of first major consumer products to be both mass produced and mass marketed, and was the basis of the West's economic growth and industrial preeminence. It could also be argued that the automotive sector was the first manufacturing industry to grasp the concept of globalisation. Car making is now the main industrial employer in the world, dominated by a handful of major groups of which General Motors is the largest. Many car owners would be amazed to learn the true provenance of their cars. Despite the perceived 'nationality' of cars, all the major manufacturers are diversifying their manufacturing operations. A BMW 3-Series, for example, might have been built in South Africa. A VW built in Poland. A Porsche Boxster could well have been assembled in Finland, and a Mercedes-Benz M-class SUV built in Alabama USA. There's every chance that a Toyota purchased in Australia rolled off a South Africa assembly line, as do all the world's right-hand drive Mercedes C-Class cars--and the new VW Beetle is built nor in Germany but in Mexico, as are many Chrysler PT Cruisers. Taking advantage of cheaper labour and the tax incentives offered by host governments, car manufacturers are increasingly setting up assembly lines in developing and transitional countries. The UK's MG Rover Group is intending to build its all-new small car in India, and both Volkswagen Audi Group (VAG) and BMW are investing heavily in China. In Fact VAG is China's biggest auto assembler, and BMW are expecting to produce some 30,000 units of their new 5-Series car each year in the country. This trend of locating in developing countries is expected to increase as, according to a report by the London based research company Autelligence, more than 1.5bn vehicles will be sold in the next 17 years, with global annual vehicle sales running at 100m by 2020. This means that a company with a 10% worldwide market share and sales of 5.8m vehicles in 2000 will need to produce 10m vehicles to maintain that market share in 2020. The extra manufacturing capacity necessary to do this on a global basis is the equivalent of 170 plants capable of turning out 300,000 units a year, and the bottom line is that building car plants in developing countries is a much more profitable option than locating them in OECD nations.

The 2003 Dubai Motor Show (DMS), formerly known as the 7th Middle East International Motor Show, will be the biggest automobile exhibition ever held in the Middle East region. Close to 50,000 visitors are expected to attend the bi-annual event held this month at the Dubai World Trade Centre (DWTC). The DWTC consists of seven interconnected halls with a total of 31,000 sq metres of exhibition space, and all the world's major automotive manufacturers will be taking the opportunity to exhibit their vehicles and present their current developments and latest concepts.

Manufacturers such as Toyota, BMW, Mercedes, Jeep, Ford, Jaguar, Land Rover, Lexus, Porsche, Volvo, Volkswagen, Audi, General Motors, Nissan, Skoda, Mitsubishi, Peugeot, and Hyundai will all be vying to attract buyers to their stands.

For the public, the DMS is a unique opportunity to view and compare all the new cars on the marker under one roof. And it is not just the manufacturers that are represented at the DMS. Car tuning, design, accessories, aftermarket and component manufacturing companies are also showing their wares.

The Gulf states have historically provided one of the world's biggest markets for luxury cars, and the manufacturers exhibiting at the DMS can anticipate total sales, per visitor, probably exceeding any other motor show in the world. Many members of Gulf royal families, dignitaries, VIP's and high net-worth individuals make it a point to visit the event. In past years manufacturers reported their stands filled to capacity with customers pressing, deposits for new cars.

For the world's automotive industry, the DMS is a rare opportunity to conduct serious business with some of the world's most discerning and wealthy customers. For the US majors in particular, whose products have always enjoyed a healthy market-share in the region, it provides some relief from their own unremittingly difficult domestic market.

The big three, General Motors, Ford and DaimlerChrysler are all facing huge problems and have seen their stock market valuations plummet by nearly $140bn or 65% in the past five years.

Profits have been similarly shrinking. The companies were badly hit when the dot com share boom collapsed. Their pension funds had like much of corporate America, invested enthusiastically in the sector, and when the bubble burst they were left with huge losses. To add to their woes, continuing uncertainty about the US economy has seen consumer confidence badly affected. Today, the average US consumer is so wary of buying a new vehicle that the big three have been forced to offer ever-heavier discounts and cheaper finance. The European and Asian-based manufacturers may have their own problems but, by comparison, their domestic markets and profitability are much better than those of their US counterparts.

The DMS's importance to Asian, European and US manufacturers is not simply because or visitor numbers but because the Middle East region, with one of the highest cars-per-household ratios in the world, represents a significant opportunity to develop a lucrative regional market. Just how lucrative is indicated by the growing number of automobiles on Middle East roads--the UAE, for example, posting a 10% average increase over recent years. That growing number of automobiles has brought about a corresponding increase in the demand for after sales service, and the Gulf's spare parts market alone is worth an estimated 11bn [pounds sterling] annually.

Gulf Car Sales

Country            1997       1998       1999       2000       2001

UAE              57,386     71,365     66,025     69,441     87,688
%change           21.3%      24.4%      -7.5%       5.2%      26.3%
Bahrain           8,197     12,078      9,489      8,245     12,495
%change           65.3%      47.3%     -21.4%     -13.1%      51.5%
Kuwait           38,824     47,716     45,144     42,335     46,659
%change           12.7%      22.9%      -5.4%      -6.2%      10.2%
Qatar            13,481     12,903      9,324     12,839     14,380
%change           51.6%      -4.3%      27.7%      37.7%      12.0%
Saudi Arabia     48,583     83,819     90,392    112,795    129,789
%change           -2.7%      72.5%       7.8%      24.8%      15.1%

                              2003
Country            2002      (est)

UAE              90,319     93,029
%change            3.0%       3.0%
Bahrain          14,696     13,641
%change           17.6%      -7.2%
Kuwait           46,870     47,052
%change            0.5%       0.4%
Qatar            13,152     10,487
%change           -8.5%     -20.3%
Saudi Arabia    135,379    139,181
%change            4.3%       2.8%