The UAE market for commercial vehicles is set to grow 7.5% by 2021, according to a new report by TechSci Research, a global management consulting firm. 

The commercial vehicle market in the country is primarily import-driven, with most of the vehicles being shipped into the Emirates as CBUs (completely built units) or SKDs (semi knocked down) units. 

Factors that will fuel the rise in demand for commercial vehicles include the anticipated growth in the UAE’s infrastructure projects, rising transportation requirements from the tourism sector, as well as the rising demand for buses from schools and staff transportation over the next five years.

Over the past couple of years, however, sluggishness in the UAE’s micro, small and medium enterprise (MSME) and logistics sectors have impeded the sales of commercial vehicles, the report said. Moreover, declining crude oil prices have also taken their toll on the economy, and the country has seen a slowdown in construction and infrastructure development due to higher lending rates, TechSci Research said. 

Nevertheless, the UAE’s economy is expected to recover with the anticipated rise in crude oil prices by 2017, which would in turn revive growth in the construction, infrastructure and logistics sectors. The logistics industry, in particular, is forecast to grow at a CAGR of around 6% over the next five years. Additionally, the Expo 2020, which is expected to boost the construction sector, will also positively influence commercial vehicles sales, TechSci Research said.