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According to forecasts car sales are expected to grow by 9% per annum until 2025. There several reasons behind this projection:
Saudi Government Advocates for Localization of the Automotive Industry
The Saudi Government supports and backs manufactures, distributors, dealers to seek innovative means to consolidate, and realign their efforts with the current market size. Due to the increased imports of auto accessories and spare parts in the Kingdom, the Saudi Industrial Clusters have initiated localization plans for the automotive and aftermarket industries through encouraging foreign investments. These plans include; light vehicle manufacturing plant, aluminum casting manufacturing plant, tire manufacturing plant, aftermarket brake pads plant, aftermarket fuel, air, oil, and transmission filter, and aftermarket fan/drive belts.
Carmakers are responding. Chrysler, Ford, and GM have held talks with the Saudi Ministry of Commerce and Investment and the Saudi Investment Authority about establishing local production in the Kingdom.
Furthermore, Toyota Motor Corp signed a memorandum of understanding (MOU) on March 14th, 2017 with National Industrial Cluster Development Program (NICDP), a Saudi Government Program under Ministry of Energy, Industry and Mineral Resources to conduct a feasibility study into establishment of a manufacturing plant producing vehicles and parts in the Kingdom. The study would take into account the evaluation of development of a local supply base using materials produced by major Saudi companies like SABIC, Maaden, Petro Rabigh, and other major industrial companies in the Kingdom.
The Toyota project would be a big step for the Saudi economy and will create a significant number of high technological jobs and will diversify industrial base beyond oil exports as part of the Kingdom's 2030 Vision.
Isuzu Motors started operations in late 2012 to produce medium and heavy-duty trucks with a plan to export 40% of its production at its peak volumes. Isuzu has an ambitious plan to reach a full CKD assembly and install a capacity of 25,000 trucks/year by 2020.
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