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RIYADH: Saudi Arabia’s automotive industry is seeing significant growth, driven by government initiatives, a strategic geographic location and ambitious plans to become a manufacturing hub.

These factors make the Kingdom a key player in the global market of this industry.

According to Karim Henain, partner at Bain & Co., the main drivers of this growth are a young population, more women behind the wheel and a significant influx of expatriates, which translates into sales of more than 600,000 new cars a year.

“The market is poised for rapid growth, outpacing many Western peers,” Henain told Arab News.

He added: “Vehicle ownership rates in Saudi Arabia exceed those in Western markets, driven by larger family sizes, less developed public transport systems and a strong culture of reliance on personal vehicles.”

According to Aly Hefny, show manager at Automechanika Riyadh, Messe Frankfurt Middle East, Saudi Arabia’s strategic geographic location at the crossroads of major trade routes further strengthens its position as a regional automotive hub. He told Arab News that the Kingdom’s government is taking a unique approach to conducting direct investment initiatives in the automotive sector.

“Saudi automotive stakeholders, like their international counterparts, are actively embracing innovation, investing in research and development, and prioritizing sustainability. These are key steps the Saudi government is taking to ensure long-term profitability and global competitiveness,” the show manager added.

Production center

The automotive sector, which includes design, development and production, as well as distribution, maintenance and repair and customization, plays a key role in achieving the ambitious goals of Vision 2030. Henain mentioned that the Kingdom has set itself the ambitious goal of building an automotive manufacturing cluster, which already has agreements to establish local coverage for original equipment manufacturers as well as first-tier suppliers.

“The industry is still in its infancy and it will take some time before it reaches maturity comparable to other, more established automotive manufacturing clusters,” he said.

He stressed that the Kingdom is investing heavily in autonomous vehicle technology and plans to introduce robotaxi and robo-shuttles in the near future.

Saudi automotive stakeholders are actively pursuing innovation, investing in research and development, and prioritizing sustainability.

Aly Hefny, Show Manager at Automechanika Riyadh

“These initiatives demonstrate the Kingdom’s commitment to adopting and integrating cutting-edge automotive technologies, positioning it as a global leader in the future of mobility,” added the Bain & Co. executive.

Industry dynamics

According to Matthias Zeigler, managing director of Volkswagen Middle East, the Saudi automotive industry is undergoing significant transformation. Key factors shaping the sector include the alignment of global SUV preferences with Saudi customers’ preferences for larger, seven-seat family cars.

“The emphasis on family transportation is further reinforced by solid infrastructure and an extensive road network,” Zeigler told Arab News.

He explained that, as a result, comfort is becoming a key issue, driving growing interest in advanced comfort and safety features as well as in-car connectivity.

“What sets this market apart is the noticeable brand loyalty among Saudi car buyers, who prioritize after-sales service and vehicle reliability,” Zeigler revealed.

Of the vehicle mix, more than 3 percent of vehicles sold are luxury models, according to Henain of Bain & Co., above the global average of 2 percent.

“SUVs account for approximately 36 percent of the market – slightly below the global average of 45 percent – ​​with a preference for larger models, reflecting the demand for spacious vehicles suitable for family use and varied terrain.”

Henain highlighted that Asian carmakers dominate the market, with Japanese, South Korean and Chinese brands accounting for a remarkable 88 percent of total sales. Remarkably, Chinese brands have experienced exceptional growth, growing rapidly from 7,000 units in 2018 to 100,000 in 2022.

Sami Malkawi, managing director of sales at Ford Middle East, highlighted the uniqueness of Saudi Arabia as a market, highlighting the significant changes that have occurred in the UK automotive industry over the past year.

He stressed that new car sales across all original equipment manufacturers in Saudi Arabia increased by 23 percent last year compared to 2022, exceeding the global average of 10 percent.

“This is a reflection of the country’s impressive growth record in a year where non-oil economic growth was estimated at almost 5 percent, driven by the implementation of the ambitious Vision 2030 programme, supported by significant private and public sector investment,” Malkawi told Arab News.

He said Ford is “deeply committed” to Saudi Arabia and is making concerted efforts to help grow the Kingdom’s automotive sector.

The Managing Director added: “Our focus – including a strong strategy to develop our product offering while continuing to enhance our customer experience – combined with the Kingdom’s impressive growth meant that we ended 2023 with sales up 77 per cent compared to 2022.”

Electric vehicles

Meanwhile, aligning with global trends, Saudi Arabia has implemented ambitious vehicle electrification plans under Vision 2030, which aim to achieve 30% electric vehicle penetration by 2030.

The plans include local production of Saudi brands of electric vehicles and the creation of an entity tasked with developing charging infrastructure in the country.

The emphasis on family transport is further reinforced by solid infrastructure and an extensive road network.

Matthias Zeigler, Managing Director of Volkswagen Middle East

“KSA’s EV sector is in its infancy with penetration of less than 1 per cent, lagging behind the UAE at around 3 per cent, China at around 22 per cent and Europe at almost 10 per cent, which is attributed to cheap fuel, underdeveloped charging infrastructure and lower appetite among consumers,” Henain revealed.

Volkswagen’s Zeigler agreed that the transition to electric vehicles is in its early stages and that the preference for combustion engines is still there. However, he stressed that this does not negate the growing interest in electric vehicle technology.

“Like China and the United States, the Kingdom is implementing CO2 regulations, aligning with international sustainability efforts,” Zeigler described.

This is in line with Saudi Arabia’s Vision 2030 strategy to achieve net zero emissions, which aims to reduce emissions by 278 million tonnes per year.

Speaking about sustainable mobility, Malkawi said, “The growing demand for fuel-efficient and electric vehicles is paving the way for a cleaner future, in line with Vision 2030’s focus on sustainability.”

He added that Ford intends to offer a broader range of hybrid and electric vehicles in Saudi Arabia and launch vehicles that support this transformation.

Impact on Vision 2030

Industry leaders emphasize that the development of the automotive sector is key to achieving the goals of Vision 2030, which are economic diversification, job creation and technological progress.

“By promoting localization, innovation and sustainable practices, the automotive industry contributes to economic diversification, job creation and technological advancement,” Hefny commented.


Asian carmakers dominate the market, with Japanese, South Korean and Chinese brands accounting for a remarkable 88 percent of total sales. Notably, Chinese brands have experienced exceptional growth, increasing from 7,000 units in 2018 to 100,000 in 2022.

He also stressed that initiatives to increase women’s participation in the labor market have broadened the consumer base, stimulating demand for vehicles and related services.

He also emphasized that, in line with the goals of Vision 2030, the automotive sector plays an important role in shaping a dynamic and resilient economy for future generations.

Speaking on behalf of Volkswagen Middle East, Zeigler emphasized that the growing automotive market is crucial to Saudi Arabia’s economic diversification goals set out in Vision 2030.

“By promoting localization, job creation and technology adoption, this industry is stimulating economic growth and positioning the Kingdom as a leader in future mobility solutions,” he concluded.

The Bain & Co. partner said that by developing a local manufacturing industry, the sector enables gross domestic product growth independent of oil, stimulates job creation and supports technological progress.

“The drive to transition to electric vehicles and autonomous technologies is consistent with Vision’s goals for environmental sustainability and innovation,” Henain added.

He noted that international partnerships in the automotive and mobility industries will enhance Saudi Arabia’s global reputation, spur innovation and strengthen trade ties with leading economies.

“I believe that the development of the automotive industry will be key to achieving the country’s development goals set out in Vision 2030,” he concluded.

Ford’s Malkawi emphasized that the automotive industry drives diversification, economic growth, sustainable mobility, infrastructure and connectivity.

“The thriving automotive sector creates jobs, supports local business and attracts foreign investment, all of which is in line with the economic diversification goals included in Vision 2030,” he explained.

In closing, Malkawi stressed the importance of infrastructure and connectivity: “A robust automotive market requires improved infrastructure, including better roads and a focus on smart technologies. This is in line with the goals of Vision 2030, which is to develop modern infrastructure and support a digitally connected society.”

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