The decision to allow women to drive (implemented in June 2018) came as part of the Government’s reforms outlined in Vision 2030. In anticipation of this initiative, the first women-only car showroom was opened a shopping mall in the western Red Sea port city of Jeddah, five months prior to the decision (January 2018). It was believed that the addition of this new customer segment (women) would boost the car demand and bring the kingdom’s automotive industry back on track. However, as months passed by, the enforcement of this initiative had only a minimal impact on car sales.
In the first six months since women driving came into existence, only about 40,000 women driving licenses were issued. Saudi women, although rejoicing, were bound by strict guardianship laws and found it difficult to acclimatize to changing dynamics. As a result, KSA roads observed a very limited footfall of women driving on the streets. However, with passing time and the KSA automotive industry shifting its focus to women by introducing promotional initiatives, the number of women driving license issuances began to witness exponential growth. During February-March 2019, about 30,000 women driving licenses were issued, almost doubling the number of women driving in just two months as per Aranca, a global research and advisory firm.
The entire automotive industry value chain is now undergoing a profound transformation with a number of women driving schools already functioning across the kingdom. The kingdom’s auto sales, which grew by approximately 40% in 2019 (3,40,000 in 2018 to ~4,86,000 in 2019) owing to recovering economy, has also been positively impacted by growing demand from women, who have contributed to about 10-15% of total sales in the same year. Several car dealers in KSA have registered strong inflow of women customers. For instance, Volkswagen dealer in KSA has experienced an increase in sales specifically to women, accounting for 25 percent of total sales for H1-2019. Since the new legislation came into force, women have accounted for 25 percent of Jaguar Land Rover MYNM retail sales, with the Jaguar E-PACE being especially popular with women, who account for 61 percent of total sales.
According to Vishal Sanghavi, Head of Automotive Practice at Aranca, with growing penetration of women driving, automotive OEMs and car dealers are striving to latch onto the opportunity and capture a significant chunk of the new customer segment. For example, Hyundai has positioned its Kona SUV as a women-centric model. Also, by June 2019, 25% of vehicle insurance sales agents of ALJ’s insurance arm were women and during Q1 2019, over 6% of motor insurance policies were sold to women. Initiatives such as these are expected to further complement the sales of cars to women and thereby aid the KSA automotive industry in the long run.
*Source: Aranca