Selling SUV in Saudi Market

Automobile Market in Saudi Arabia

Saudi Automobile market has a prosperous future. This trend is confirmed by the recent announcement that Saudi Arabia's automobile accessories, repair and after-sales service equipment market has been valued at SAR9bn (US$2.4bn), according to the organizers of the Riyadh Motor Show 2010 and Saudi Autoshop 2010. Moreover, they added Saudi Arabia has great potential and huge investment opportunities as it accounts for more than 2mn out of the total 4.5mn cars in the Gulf Cooperation Council (GCC). Saudi Arabia's vehicle market is large and growing more sophisticated, and manufacturers are betting on its long-term growth. BMI believes that a significant factor that has helped insulate the Saudi economy somewhat from the impact of the global economic downturn has been the aggressive fiscal policies of the Saudi government, which have emphasized capital expenditure as well as more indirect fiscal stimulus measures (Oxford Business Group, 89-126).

Saudi Arabia's King Abdulaziz City for Science & Technology (KACST) unveiled its Aseela homegrown sedan at the Riyadh Motor Show 2010, on December 7. The sedan, manufactured and designed by KACST's National Program for Automobile Technology, is priced at a maximum of SAR50,000 (US$13,331). The sedan's production line will involve an estimated cost of SAR60mn (US$16mn) and will manufacture 2,000-5,000 cars annually, according to officials.

As part of a broader shift to lower cost vehicles, the Chinese automaker Chery has recently entered the Saudi car market. It has launched four models from its normal line-up. Three are the A5, Eastar and V5. The fourth is an entrant into the large and highly competitive Saudi SUV market, the Tiggro. This is not the first time that Chinese automakers have entered the Saudi market. Chinese firm JAC Light Trucks has been present there since 1997 and has operated with Hazar Motor Trading Company. The trucks have performed well on the Saudi market due to their reliability and low-cost compared to many other options. It is hoped by Chery that its entrance into the Saudi market at a time when low-cost models are increasingly popular, will allow it to establish brand presence in one of the key global car markets. The firm is also interested in the broader Middle East and currently has a factory in Egypt which has a 25,000 unit capacity (Shapiro, 168, 267 - 269).

The sales of General Motors (GM) in Saudi Arabia have grown substantially over most of 2010. The firm's overall sales in this key Middle Eastern market grew by 28% year-on-year in the first 10 months of the year. The figures will be viewed as good news by the firm and investors alike as GM has increasingly been focused on expanding its market share outside of the US as it tries to return to financial health and private ownership. New car lines in Saudi Arabia have performed particularly well, with the main four new models seeing 43% growth between Q2 and Q310. The new lines are the Cruze, the Malibu, the Camaro and the ...