BrazilFrost & Sullivan: Saudi's automotive manufacturing to shift gear
In the coming decade, Saudi Arabia will see its role in the globe’s automotive manufacturing scene shift gear, driven by strong growth in the Kingdom’s new car and aftermarket segment. Aadil Rashid Khan and Fares Al Salamah from Frost & Sullivan provide context to the trend.
With nearly 8 million passenger vehicles currently on the road, and about 650,000 new vehicles being added annually, Saudi Arabia is one of the largest automotive markets in the Middle East.
Traditionally, the largest part of the automotive chain – spanning manufacturing, remanufacturing, distribution and retail – is imported, but a shift towards domestic production is likely to galvanise the road to self-sufficient industrialisation, said Aadil Rashid Khan, Principal Consultant in the Mobility practice of Frost & Sullivan.
“With brands like Lucid setting up vehicle manufacturing facilities in Saudi Arabia, as well as the indigenous electric mobility brand, Ceer, the concept of ‘Made in KSA’ vehicles is expected to become a reality in the years to come,” Khan said. “The expected cumulative manufacturing capacity of these brands is estimated at 150,000 vehicles by 2026 and 300,000 vehicles by 2030.”
Frost & Sullivan analysis suggests that more is likely to come, as Saudi Arabia’s government works towards its ambitious Vision 2030 goals. “The government is investing heavily in building internal capabilities and infrastructure as well as creating a healthy and attractive environment for an increased global investment in the mobility industry,” stated Khan.
Meanwhile, in the slipstream of the growing vehicles market (new and used sales), another demand driver is unfolding: Saudi Arabia’s automotive aftermarket – which provides secondary parts and services for vehicles maintenance.
“The cumulative value of the Saudi automotive aftermarket is estimated at $4.2 billion, which accounts for about 40% of the overall GCC aftermarket industry,” explained Khan. “In the coming years, the Saudi automotive aftermarket is expected to grow at a CAGR of 2.9% to reach over $5 billion by 2028.”
Here too, Frost & Sullivan expects the domestic landscape to ramp up its slice of the market.
Fares Al Salamah, Business Development Executive, said that the firm is already working with major players in the sector to make things happen. “We are working with family businesses, OEMs, government agencies and other companies associated with the mobility sector of Saudi Arabia,” he said.
“With our extensive knowledge of industry practices, we assist our clients in optimizing their revenue potential, logically approach network development, assist in decision-making for diversification or business enhancement, formulate targeted go-to-market strategies, as well as map the industry and its key influencers and stakeholders, up to investor’s outreach.”
Headquartered in the United States, Frost & Sullivan is one of the world’s leading consulting firms for growth-related advisory services. Alongside an office in Riyadh, the firm also has a second regional Middle East base in Dubai.
“We are extremely excited to be a part of Saudi Arabia’s growth journey in the automotive sector, and the rise of a regional powerhouse in future vehicle manufacturing” concluded Khan and Al Salamah.
