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Saudi Arabia Autos Report Q2 2011

Saudi Arabia Autos Report Q2 2011

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Additional Information

Price	$530.00
Publisher	Business Monitor International
Date of Report	Apr 8, 2011

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Quick Overview

BMI expects auto sales in Saudi Arabia to continue their rebound which began last year. Despite sales being hit by the side-effects of the global financial crisis, the Saudi economy has been surprisingly resilient. Growing oil prices mean that the country's economy is set for impressive levels of growth. However, growing political unrest risks disrupting the economy and oil production. Should unrest get out of control and lead to Saudi Arabia joining the ranks of Arab states with significant political clashes, then the auto market is likely to suffer as the country's main source of income is disrupted.
The Saudi government is likely well prepared to weather any Shi’a uprising. So far the situation does not look fundamentally threatening for the regime, as protests among the largest Sunni population have been more muted and less radical. Furthermore, the state has unveiled a massive spending spree as it tries to retain the support or at least quiet disengagement of much of the population. US$37bn will be spent in the near future on improved social services and benefits for the public. This large amount of money is likely to boost spending, particularly for the poorer elements of society. Given the importance of car ownership in Saudi, this is likely to lead to a wave of new car purchases.
The market for family cars in Saudi Arabia has continued to grow, as the population grows significantly. It is expected that the population of Saudi Arabia will increase 39.2% to 36.5mn people by 2030. This growth is expected to lead to a boost in sales for family cars, as Saudi families increasingly prefer to purchase smaller, more compact cars rather than indulging in the sizeable gas guzzlers which have long dominated Saudi auto purchases. This is a significant change in the Saudi market, though it remains to be seen whether this will continue over the longer term.
Sales for General Motors Company (GM) grew by 54% in Saudi Arabia in 2010. The Saudi market was not the only market in the region to see significant growth for the firm's sales – sales grew, for example, by 37% in Qatar – but Saudi Arabia is the largest market for GM in the Middle East. The company is also partially owned by the Saudi businessman HRH Prince Alwaleed Bin Talal. The firm reported the 2010 total sales growth as it also reported that total sales across the Middle East reached 8,312 for January alone.
A joint Saudi Arabian and South Korean project to develop car manufacturing capability has continued, with the project receiving the full investment required. Soon after the program was announced by King Saud University and Digm Automotive Technology, the remaining 55% stake was picked up by the Al- Muwakaba for Industrial Development & Overseas Commerce (MIDROC).
The agreement will see the creation of an organisation dedicated to creating production capabilities in Saudi Arabia for automobiles and automobile parts. All three partners have sacrificed 30% of their shares in order to receive state funding and support, which will be essential for the project to be fully funded, despite the US$500mn which has been raised privately from each of the three partners. South Korean advice is seen as particularly important for the project to succeed, particularly given that the business plan for the company depends on successful exports to other Arab states.

Table of Contents

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 7
Saudi Arabia Auto Industry SWOT ....................................................................................................................................................................... 7
Political SWOT Analysis ....................................................................................................................................................................................... 8
Economic SWOT Analysis ..................................................................................................................................................................................... 9
Business Environment SWOT Analysis ............................................................................................................................................................... 10
Regional Overview ........................................................................................................................................ 11
Business Environment Ratings .................................................................................................................... 12
Table: Middle East And Africa Business Environment Ratings........................................................................................................................... 14
Industry Forecast Scenario ........................................................................................................................... 15
Table: Sales ........................................................................................................................................................................................................ 15
Table: Other Indicators ...................................................................................................................................................................................... 15
Macroeconomic Forecast Scenario .............................................................................................................. 18
Table: Saudi Arabia – Economic Activity ........................................................................................................................................................... 21
Competitive Landscape ................................................................................................................................ 22
Market Trends ..................................................................................................................................................................................................... 22
Dealerships ......................................................................................................................................................................................................... 24
Production ............................................................................................................................................................................................................... 26
Industry Developments ....................................................................................................................................................................................... 28
Chinese Brands ................................................................................................................................................................................................... 29
Luxury Cars ........................................................................................................................................................................................................ 31
Automotive Finance ............................................................................................................................................................................................ 31
After-Sales Business ............................................................................................................................................................................................ 32
Company Monitor .......................................................................................................................................... 34
Company Profiles .......................................................................................................................................... 36
Abdul Latif Jameel Group ................................................................................................................................................................................... 36
Al-Jazirah ........................................................................................................................................................................................................... 38
Aljomaih Automotive Company........................................................................................................................................................................... 39
Al-Hamrani ......................................................................................................................................................................................................... 40
Arabian Vehicles And Trucks Industry ................................................................................................................................................................ 41
Country Snapshot: Saudi Arabia Demographic Data ................................................................................. 42
Section 1: Population .......................................................................................................................................................................................... 42
Table: Demographic Indicators, 2005-2030 ....................................................................................................................................................... 42
Table: Rural/Urban Breakdown, 2005-2030 ...................................................................................................................................................... 43
Section 2: Education And Healthcare ................................................................................................................................................................. 43
Table: Education, 2003-2005 ............................................................................................................................................................................. 43
Table: Vital Statistics, 2005-2030 ....................................................................................................................................................................... 43
Section 3: Labour Market And Spending Power ................................................................................................................................................. 44
Table: Employment Indicators, 1999-2006 ......................................................................................................................................................... 44
Table: Consumer Expenditure, 2000-2012 (US$) ............................................................................................................................................... 44
BMI Methodology .......................................................................................................................................... 45
How We Generate Our Forecasting Model ......................................................................................................................................................... 45
Sources ............................................................................................................................................................................................................... 46