US-Saudi Business Council says Saudi Arabia holds 50% of GCC automotive market

Logo of US-Saudi Business Council statement

Saudi Arabia is enjoying a recovery in new vehicles’ sales as well as growing local manufacturing capabilities, which strengthened its position as the largest automotive market in the GCC region, where the Kingdom holds a market share of nearly 50%, the US-Saudi Business Council said in a statement picked up by Argaam.

The Kingdom witnessed the registration (or sale) of 557,000 new vehicles in 2021, according to the International Organization of Motor Vehicle Manufacturers (OICA).

Passenger cars constituted approximately 86% of imported vehicles, while the remaining 14% constituted commercial vehicles.

Saudi Arabia’s new vehicle sales and registrations rose by 23% year-on-year (YoY), exceeding rates of Kuwait and the UAE.

In addition, the Kingdom’s domestic vehicle sales grew by 3% YoY above pre-Coronavirus levels.

Saudi Arabia is projected to sell or register 571,520 vehicles in 2022, divided into 489,680 passenger cars and 81,840 commercial vehicles, the council stated.

The following table shows sales or registrations of new vehicles in Saudi Arabia since 2017:

*Estimated.

The council highlighted that the Kingdom has made great strides in its efforts to become a manufacturing hub across the region.

The National Industrial Development and Logistics Program (NIDLP) included a strategy for the automotive sector to continue importing functional goods such as powertrain, chassis components and electrical components. This is besides the production of some other goods locally.

The council highlighted that vehicle assembly represents another Saudi strategy, as it mainly focuses on heavy commercial vehicles (HCVs) sector.

A total of four global commercial-truck manufacturers are looking to produce vehicles inside the Kingdom.

The launch of Lucid Motors’ car manufacturing facility in Saudi Arabia represents an important achievement and a milestone for the Kingdom’s automotive sector. It is also an indicator for other foreign original equipment manufacturers (OEMs) to consider similar investments, the statement said.

Lucid will leverage existing industrial clusters with leading Saudi business partners such as Saudi Basic Industries Corporation (SABIC), Saudi Arabian Mining Co. (Maaden) and Saudi Aramco, to produce advanced automotive materials that include carbon and synthetic rubber for tires, along with other automotive-related components.

Manufacturing of local components across the supply chains of metals, petrochemicals, rubber and plastics will continue to grow as the Kingdom expands towards the manufacturing of non-oil products.

US-Saudi Business Council expected that Saudi Arabia to remain the largest vehicle importer across the Middle East, and to continue to increase demand for sports utility vehicles (SUVs) and luxury cars.

Also, the growth of establishment activity is forecast to lead to continued demand for HCVs.

The improvement of road infrastructure conceding with the significant tourism spending will positively impact transportation infrastructure expansion in the Kingdom.

Accordingly, the development of leisure tourism on rising flows of domestic and expatriate tourists will stimulate the Saudi taxi market.