|
Forecast
Period
|
2024-2028
|
|
Market
Size (2022)
|
USD
50 Billion
|
|
CAGR
(2023-2028)
|
6.25%
|
|
Fastest
Growing Segment
|
Electric
|
|
Largest
Market
|
Northern
& Central
|
Market Overview
Saudi
Arabia Automobile Market has valued at USD 50 Billion in 2022 and is
anticipated to project robust growth in the forecast period with a CAGR of 6.25%.
Rapid urbanization, an increase in the disposable income of middle-class
families, and the introduction of new and better-performing vehicles in the market
are driving the sales of automobiles in the country. The growing logistics and
e-commerce industry and the need to develop an efficient supply chain are
expected to accelerate the demand for commercial vehicles in the coming years.
Also, the supportive government policies to boost the automotive industry and
rise in efforts to attract original equipment manufacturers in the country are
expected to create numerous growth opportunities for the market players over
the next five years.
Key Market Drivers
Economic
Diversification and Vision 2030
One
of the primary drivers of the Saudi Arabian automobile market is the ambitious
economic diversification agenda set forth by the government in its Vision 2030
plan. Historically, Saudi Arabia has been heavily dependent on oil revenue, and
the government recognized the need to diversify its economy to reduce this
dependence. The Vision 2030 plan, announced in 2016, has introduced a series of
reforms and initiatives aimed at transforming the country into a more
diversified and sustainable economy. As part of Vision 2030, the government has
been investing in infrastructure development, tourism, and entertainment
projects. This has contributed to a boost in consumer confidence and increased
disposable income, leading to higher automobile sales. The government's
emphasis on diversifying the economy has led to initiatives aimed at
encouraging local automobile manufacturing. Companies like Saudi Arabian
Automotive Manufacturing Company (SAAMCO) have been established to produce
vehicles locally, reducing the country's reliance on imports. The Vision 2030
plan also includes a strong commitment to environmental sustainability, leading
to an increased focus on electric vehicles (EVs) and green technologies. This
has driven investments in EV infrastructure and created a growing market for
eco-friendly vehicles.
Growing
Population and Urbanization
Saudi
Arabia has experienced significant population growth in recent years, with a
predominantly young demographic. The combination of population growth and
urbanization has driven the demand for automobiles. Urbanization has led to the
development of infrastructure, such as roads and highways, which, in turn, has
made owning a car more attractive and convenient. Saudi cities like Riyadh,
Jeddah, and Dammam have seen a substantial influx of people seeking employment
and business opportunities, leading to an increased need for personal
transportation. With more people living in urban areas, the demand for mobility
solutions has risen. As a result, the automobile market has expanded to
accommodate different segments of the population. In some urban areas, traffic
congestion and limited public transportation options have made owning a car a
necessity for daily commuting.
Changing
Consumer Preferences
The
Saudi Arabian automobile market has witnessed a shift in consumer preferences,
driven by evolving socio-economic factors and changing lifestyle choices. This
shift has had a significant impact on the types of vehicles that are popular in
the market. Sport Utility Vehicles (SUVs) have gained immense popularity in
Saudi Arabia. Their larger size and versatility appeal to consumers seeking
safety, comfort, and adaptability in various terrains. Additionally, SUVs are
often favored for their spacious interiors and ability to accommodate large
families. The demand for luxury and high-end vehicles has surged, reflecting a
growing segment of affluent consumers in the country. Brands like
Mercedes-Benz, BMW, and Audi have witnessed strong sales as consumers seek
premium features and brands. Modern Saudi consumers are increasingly tech-savvy
and desire advanced infotainment systems, connectivity, and smart features in
their vehicles. This has led to a push for more technologically advanced cars
and a growing market for EVs.
Regulatory
Changes and Liberalization
In
recent years, Saudi Arabia has undertaken regulatory changes and liberalization
efforts to open up the automobile market. These changes have encouraged
competition, increased consumer options, and stimulated market growth. In 2018,
Saudi Arabia lifted the ban on women driving, which has significantly expanded
the potential customer base for the automobile market. The inclusion of women
as drivers has resulted in a notable increase in car ownership among women and
families. The government has made efforts to encourage competition in the
automobile market by allowing more international automakers to establish
dealerships in the country. This has led to a wider range of vehicle choices
for consumers. Regulatory changes have also contributed to the growth of the
used car market, as older vehicles can now be imported and sold, providing more
affordable options for budget-conscious consumers.
Technological
Advancements and Connectivity
The
Saudi Arabian automobile market has seen an influx of advanced technologies and
connectivity features. These innovations have played a significant role in
influencing purchasing decisions and shaping market trends. Modern vehicles
come equipped with sophisticated infotainment systems that offer features like
GPS navigation, smartphone integration, and advanced audio systems. Consumers
are increasingly seeking these amenities in their cars. The demand for vehicles
with advanced safety features such as adaptive cruise control, lane-keeping
assist, blind-spot monitoring, and automatic emergency braking has grown
significantly as consumers prioritize safety. Vehicles with advanced
connectivity and telematics systems are highly sought after. Features like
remote start, vehicle tracking, and diagnostic alerts are becoming increasingly
common in the market. As part of the broader global trend, the Saudi market has
also seen a growing interest in electric vehicles (EVs) and autonomous driving
technologies. Automakers are introducing EV models, and the government is
investing in charging infrastructure to support this shift.
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Key Market
Challenges
Economic
Dependency on Oil and Fluctuating Oil Prices
One
of the most significant challenges faced by the Saudi Arabian automobile market
is the country's strong economic dependence on oil revenues. Saudi Arabia has
historically relied on oil as a primary source of income and government
funding. This economic model makes the automobile market susceptible to fluctuations
in global oil prices and affects various aspects of the industry. The
performance of the automobile market is closely tied to the overall economic
health of the country. When oil prices are high and the economy is booming,
consumers have more disposable income, which drives higher car sales.
Conversely, during periods of low oil prices, there is a decrease in consumer
spending, leading to reduced demand for new vehicles. The Saudi government's
budget is heavily reliant on oil revenues, which can lead to budget deficits
during periods of low oil prices. This can result in austerity measures and
reduced government spending on infrastructure projects and subsidies that could
otherwise stimulate the automobile market.
Oil price fluctuations also impact government
fiscal policies. For example, a decrease in oil revenues can lead to changes in
taxation, fuel prices, and subsidies, which can affect vehicle ownership costs
and consumer preferences. To address this challenge, Saudi Arabia has initiated
the Vision 2030 plan, which aims to diversify the economy and reduce its
dependence on oil. Diversification efforts include investments in non-oil
sectors, such as tourism and entertainment, which can stimulate economic
activity and, in turn, increase consumer spending on automobiles.
Regulatory
Hurdles and Import Tariffs
The
Saudi Arabian automobile market is subject to a set of regulatory challenges
that impact market dynamics, pricing, and consumer choices. Import tariffs, customs
duties, and regulations play a critical role in the cost and availability of
vehicles in the market. The Saudi government imposes relatively high import
tariffs on vehicles, which can significantly increase the cost of new cars.
These tariffs are implemented to encourage local manufacturing and protect
domestic industries. However, they make it challenging for automakers to offer
competitive pricing to consumers. Customs duties on automobile parts and
components can further raise manufacturing costs, making it less cost-effective
for international car manufacturers to set up production plants in Saudi
Arabia. This can limit the availability of locally manufactured vehicles. Automakers
must adhere to specific technical regulations and standards set by the Saudi
Standards, Metrology, and Quality Organization (SASO). Meeting these
requirements can be a time-consuming and costly process, particularly for small
manufacturers and new entrants to the market.
Consumer
Debt and Financing Challenges
Consumer
debt and financing challenges are significant concerns in the Saudi Arabian
automobile market. High levels of consumer debt, coupled with a limited
understanding of financial products and interest rates, impact the ability of
individuals to purchase new vehicles and access financing options. High levels
of consumer debt, often associated with personal loans and credit cards, can
reduce the purchasing power of individuals, making it difficult to afford car
loans and down payments for new vehicles. Interest rates on car loans can be
relatively high in Saudi Arabia, and these rates vary among banks and financial
institutions. The cost of financing can be a deterrent for potential car
buyers, particularly for those with lower credit scores. Many consumers may not
fully understand the various financing options available to them, which can
result in suboptimal choices when purchasing a car. A lack of financial
literacy can lead to unfavorable financing terms. Efforts to increase financial
literacy and educate consumers about the best financing options for their
individual circumstances could help address this challenge. The government and
financial institutions could collaborate to offer more favorable car loan
terms, making vehicle ownership more accessible to a broader range of
consumers.
Infrastructure
and Traffic Congestion
Saudi
Arabia has witnessed rapid urbanization and population growth, which has led to
an increase in traffic congestion and demand for efficient transportation
infrastructure. The country's vast geography, characterized by sprawling cities
and long distances between urban centers, presents unique infrastructure
challenges for the automobile market. Major cities like Riyadh and Jeddah have
experienced severe traffic congestion, leading to longer commute times and
frustration among drivers. This congestion can discourage car ownership in
urban areas. Efforts to improve and expand road networks have been ongoing, but
there is still a need for substantial infrastructure development to accommodate
the growing number of vehicles and provide efficient transportation solutions. To
alleviate congestion and encourage the use of public transportation, Saudi
Arabia has invested in metro and bus systems in cities like Riyadh and Jeddah.
These alternatives provide an option for urban commuters, potentially reducing
the need for personal vehicles. Traffic congestion contributes to increased air
pollution and environmental concerns. As sustainability becomes a more
significant consideration, the impact of congestion on the environment is a
growing challenge for industry. Saudi Arabia can invest further in public
transportation infrastructure, develop more efficient traffic management
systems, and promote sustainable urban planning to alleviate congestion. These
efforts would not only improve the quality of life for residents but also make
car ownership more appealing and practical.
Environmental
Sustainability and Green Initiatives
With
a global focus on reducing carbon emissions and transitioning to more
sustainable forms of transportation, environmental sustainability is a
challenge that the Saudi Arabian automobile market must address. While the
government has initiated several green initiatives, such as Vision 2030,
significant hurdles remain. The predominantly high demand for large,
fuel-inefficient vehicles, such as SUVs, contributes to increased fuel
consumption and emissions. Efforts to promote fuel efficiency and reduce emissions
have been met with resistance from consumers. While electric vehicles (EVs) are
gaining popularity, the infrastructure for EV charging remains underdeveloped,
particularly in rural areas. Without a comprehensive charging network, EV
adoption faces limitations. Saudi Arabia has introduced environmental standards
and regulations to control emissions, but enforcement and compliance monitoring
can be challenging, hindering progress in achieving green transportation goals.
Promoting awareness about the benefits of environmentally friendly vehicles and
sustainable transportation practices is crucial. Many consumers may not fully
understand the impact of their choices on the environment.
Key Market Trends
Electrification
and the Rise of Electric Vehicles (EVs)
One
of the most prominent trends in the Saudi Arabian automobile market is the increasing
interest in electric vehicles (EVs). This trend aligns with global efforts to
reduce carbon emissions and transition towards more sustainable and
environmentally friendly transportation solutions. In Saudi Arabia, this trend
is primarily driven by government initiatives, changing consumer attitudes, and
advancements in EV technology. The Saudi government has recognized the
importance of reducing the country's carbon footprint and has introduced
policies to promote the adoption of EVs. For instance, in 2019, the Saudi
Standards, Metrology, and Quality Organization (SASO) issued technical
regulations for EVs and their charging infrastructure, providing a regulatory
framework for their adoption. As consumers become more environmentally
conscious and seek to reduce their carbon footprint, there has been a growing
interest in electric and hybrid vehicles in Saudi Arabia. This trend is
particularly visible among the younger generation, who are increasingly
inclined to choose sustainable and energy-efficient transportation options. To
support the growth of EVs, Saudi Arabia has been investing in charging
infrastructure. Companies like Aramco and ACWA Power have made substantial
commitments to expand the charging network across the country, making it more
convenient for consumers to own and operate electric vehicles. The Saudi
government has also encouraged local manufacturing of EVs to reduce reliance on
imports. Companies like Saudi Arabian Automotive Manufacturing Company (SAAMCO)
have taken steps towards producing electric vehicles within the country,
contributing to the growth of the local automotive industry. As this trend
continues to gain momentum, it is expected to shape the Saudi automobile market
significantly, leading to increased EV adoption, reduced carbon emissions, and
a shift in consumer preferences towards sustainable mobility solutions.
Women's
Empowerment and Increased Female Drivers
In
2018, Saudi Arabia made a historic decision to lift the ban on women driving,
marking a significant societal shift and impacting the automobile market in
several ways. This change has not only empowered women but also expanded the
customer base for the automotive industry. The decision to allow women to drive
has led to a surge in the number of female drivers in Saudi Arabia. Many women
now have the autonomy to purchase and operate their vehicles, leading to an
increased demand for automobiles in the country. With more women entering the
driver's seat, the automobile market has seen a shift in vehicle preferences.
Smaller and more compact cars are gaining popularity among female drivers, as
they often prioritize convenience and ease of maneuverability. Women drivers
often prioritize safety features and advanced technology in their vehicles. The
demand for vehicles equipped with advanced safety systems, such as automatic
emergency braking and parking assistance, has increased. Automotive
manufacturers and dealerships have adapted their marketing strategies to cater
to the growing number of female customers. They offer women-centric services
and create campaigns that resonate with female drivers. This trend has not only
contributed to the growth of the Saudi automobile market but also brought about
positive social and economic changes by enhancing the mobility and independence
of women in the country.
Shift
towards SUVs and Crossovers
Saudi
Arabia, like many other markets worldwide, has witnessed a significant shift in
consumer preferences towards Sports Utility Vehicles (SUVs) and crossovers.
This trend has reshaped the market and influenced automakers' strategies and
offerings in the country. The popularity of SUVs and crossovers in Saudi Arabia
can be attributed to their adaptability to different terrains and road
conditions. Saudi Arabia's varied landscapes, including deserts and mountains,
make SUVs an attractive choice for consumers looking for versatile and reliable
vehicles. SUVs and crossovers are known for their spacious interiors, making
them ideal for large families and those who prioritize comfort during their
journeys. The need for accommodating extended families during travels and daily
commutes has driven the demand for these vehicles. SUVs are often perceived as
safer due to their larger size and elevated driving position, a consideration
that resonates with safety-conscious consumers. The luxury SUV segment,
featuring brands like Range Rover, Mercedes-Benz GLE, and BMW X5, has gained
traction among affluent consumers in Saudi Arabia. The combination of luxury
and versatility has made these vehicles particularly popular. As a result of
this trend, many automakers have adapted their product portfolios to cater to
the growing demand for SUVs and crossovers, and they continue to play a pivotal
role in the Saudi Arabian automobile market.
Digital
Transformation and E-commerce in Auto Retail
The
rise of digital transformation and e-commerce has disrupted various industries,
and the Saudi Arabian automobile market is no exception. The digitalization of
the automotive retail process has brought about numerous changes, from vehicle
research and purchasing to after-sales services. Many automotive dealerships
and platforms have established online sales channels, allowing consumers to
research, configure, and purchase vehicles through the internet. This trend has
gained traction, especially during the COVID-19 pandemic, when online shopping
and contactless transactions became increasingly important. Virtual showrooms
and 360-degree vehicle tours have become common in the Saudi automobile market.
Consumers can explore vehicles from the comfort of their homes, enhancing their
pre-purchase experience. Digital platforms also offer financing and insurance
solutions, simplifying the paperwork and approval processes. This convenience
has made it easier for consumers to complete their vehicle purchases. After-sales
services, including maintenance and repairs, have also been digitized.
Consumers can schedule maintenance appointments and access vehicle service
records online, ensuring smoother post-purchase experiences. Online platforms
have enabled customers to leave reviews and ratings, influencing the purchasing
decisions of prospective buyers. This trend has made customer satisfaction and
transparency critical for dealerships and manufacturers. The integration of digital
technologies in the automobile market has improved convenience, transparency,
and accessibility for consumers, while also streamlining operations for
industry stakeholders.
Ride-Sharing,
Car Subscription Services, and Shared Mobility
The
concept of shared mobility, including ride-sharing services and car
subscription models, has been gaining momentum in Saudi Arabia. This trend
reflects changing mobility preferences, especially among urban consumers. Ride-sharing
platforms like Uber and local alternatives have become popular in major Saudi
cities. These services offer an affordable and convenient transportation
option, particularly for daily commutes. Car subscription services, such as
monthly or annual vehicle rentals, have gained traction. These services provide
flexibility to consumers who prefer not to commit to long-term ownership. Users
can switch between different vehicle models based on their needs. Carpooling
has become a cost-effective and environmentally friendly transportation
solution. Several platforms in Saudi Arabia encourage commuters to share rides
and reduce the number of single-occupancy vehicles on the road.
Segmental Insights
Propulsion
Type Insights
The
ICE Vehicle dominates the market segment. Conventional ICE vehicles, which run
on gasoline and diesel, still dominate the Saudi Arabian automobile market.
Challenges in this category include Fluctuations in global oil prices directly
impact the cost of gasoline and diesel in Saudi Arabia. This price volatility
can affect consumers' fuel expenses and the overall cost of ownership for
conventional vehicles. As the global automotive industry moves towards cleaner
and more fuel-efficient vehicles, conventional ICE vehicles continue to
contribute to air pollution and greenhouse gas emissions. This challenge
necessitates the adoption of stricter emission standards and the promotion of
cleaner fuels. Despite being an oil-producing country, Saudi Arabia still
imports a significant portion of its refined gasoline and diesel, which can
lead to economic vulnerabilities, especially when oil prices rise. Electric
vehicles, which run solely on electricity, present unique challenges and
opportunities in the Saudi Arabian market: The development of an extensive and
reliable EV charging infrastructure is critical for widespread EV adoption.
While progress has been made, particularly in urban areas, rural regions may
still lack sufficient charging options. While the Saudi government has
introduced initiatives to support EV adoption, including subsidies and reduced
customs duties, continuous regulatory and policy support is needed to promote
the growth of the EV market.
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Regional Insights
The
Northern and Central Region dominate the market in Saudi Arabia Automobile
Market. The Central Region, with Riyadh at its core, is the economic and
administrative hub of Saudi Arabia. It has a diverse population, including both
Saudi nationals and a significant expatriate community. The region boasts a
strong economy, with a focus on finance, commerce, and industry. The Central
Region has the highest consumer spending on automobiles, ranging from economy
cars to luxury and high-end models. Diverse population contributes to a wide range
of preferences, from practical and budget-friendly vehicles to high-performance
and luxury cars. Strong economic
activity stimulates demand for commercial vehicles and fleets. Makkah Province,
part of the western region, is significant for its religious and tourism
activities, including the annual Hajj pilgrimage and Umrah. The region
experiences a surge in population during religious events, leading to increased
traffic and congestion. The western region provides opportunities for car
rental companies and transportation services due to the influx of pilgrims and
tourists. There is a need for a well-managed and efficient transportation
system to accommodate the temporary population increase during religious
events. Tourists' preferences for comfortable and reliable transportation
options impact the market.
Recent Developments
- Toyota
Motor Corporation reported in January 2023 that it has attended the World
Future Energy Summit in Abu Dhabi. Throughout the three-day event, the business
displayed a hydrogen-powered Toyota Mirai Fuel Cell Electric Vehicle (FCEV) and
a Fuel Cell Forklift.
- Tata
Motors said in December 2022 that the business would be raising the price of
its commercial cars by up to 2% beginning in January 2023. This action is
anticipated to enable the business to keep up with the rise in raw material
prices.
Key Market Players
- Toyota Motor Corporation
- Hyundai Motor Company
- Stellantis
- MAN SE
- Honda Motor Company
- Ford Motor Company
- Daimler AG
- AB Volvo
- Hino Motors, Ltd
- Tata Motors Limited
|
By Vehicle Type
|
By Propulsion Type
|
By Battery Capacity
|
By Region
|
- Two Wheeler
- Passenger Car
- Commercial Vehicle
- OTR
|
|
|
- Northern & Central
- Eastern
- Western
- Southern
|
Report
Scope:
In
this report, the Saudi Arabia Automobile Market has been segmented into the
following categories, in addition to the industry trends which have also been
detailed below:
- Saudi Arabia Automobile Market, By Vehicle Type:
o Two Wheeler
o Passenger Car
o Commercial Vehicle
o OTR
- Saudi Arabia Automobile Market, By Propulsion Type:
o ICE
o Electric
- Saudi Arabia Automobile Market, By Battery Capacity:
o Manual
o Automatic
- Saudi Arabia Automobile Market, By Region:
o Northern & Central
o Eastern
o Western
o Southern
Competitive
Landscape
Company
Profiles: Detailed
analysis of the major companies presents in the Saudi Arabia Automobile Market.
Available
Customizations:
Saudi
Arabia Automobile Market report with the given market data, Tech Sci
Research offers customizations according to a company's specific needs. The
following customization options are available for the report:
Company
Information
- Detailed analysis and profiling of
additional market players (up to five).
India
Saudi Arabia Automobile Market is an upcoming report to be released soon. If
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release, please contact us at [email protected]