Saudi Arabia is the largest auto market for both new and used vehicles and the largest auto parts market in the Gulf Cooperation Council (GCC) and Middle East region. It is also the region’s largest importer of automotive products with some of their imports being re-exported within the region. There are around 300 automotive assembly and accessories manufacturing plants, which accounts for 60% of auto plants in the GCC region. The country produces trucks but there are no light vehicle production. Almost all types of vehicles and parts sold in the country are imported.
The year 2017 was tough for the Kingdom’s automotive industry. Motor vehicles sales recorded 548,250 units in December 2017, compared with 655,500 units in the previous year. Yet, vehicles and associated transport equipment is the second most imported group of products into the Kingdom with a value of USD 21 million after machinery and mechanical appliances; electrical equipment, according to the 2017 report published by the Saudi General Authority of Statistics.
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Saudi Arabia
Although American exporters are not required to appoint a local Saudi agent or distributor to sell to Saudi companies, it is strongly recommended that all new-to-market U.S. companies consider partnering with a local company for the purposes of monitoring business opportunities, navigating import and standard testing regulations, and identifying public sector sales and contract opportunities.
Imported vehicles and automotive parts are charged a 5% customs duty. Additionally, and as of January 1, 2018, a 5% VAT was introduced on all goods and services that are bought or sold by businesses. The General Authority of Zakat & Tax is the Saudi government authority that is authorized to collect the VAT and each established company must have the General Authority of Zakat & Tax certificate issued.
Shipping: Saudi Arabia gives preference to national carriers for up to 40% of government-related cargos.
Standards and labeling: As part of the GCC Customs Union, the six Member States are working toward unifying their standards and conformity assessment systems. However, each Member State continues to apply its own standard or a GCC standard. A new ICCP mandates that a Certificate of Conformity must accompany all consumer goods exported to Saudi Arabia. Labeling and marking requirements are compulsory for any products exported to Saudi Arabia. The Saudi Arabian Standards Organization (SASO) is responsible for establishing labeling and other guidelines. The Ministry of Commerce and Investment implements SASO guidelines through its inspection and test laboratories at Saudi ports of entry.
Market Entry