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Saudi’s auto market rebounds in 2019 as new vehicle sales surpass half a million units

19 Feb 2020

Kingdom’s vehicle sales grow 60 percent year-on-year new figures reveal on eve of 2nd Automechanika Riyadh trade fair

Riyadh, KSA: Improved macro-economic conditions along with tens of thousands of driving licenses issued to women in the last year have had a positive knock-on effect on Saudi’s auto market and services industry, with sales of both passenger and commercial vehicles surpassing the half a million mark in 2019, new figures have revealed.

After a rough year in 2018, vehicle sales grew 60 percent year-on-year to reach 500,000-plus units in 2019 according to Aranca, a global research advisory firm, with the realisation of some of Saudi’s Vision 2030 initiatives playing a key role.

Chief among these was the decision to allow women to drive in June 2018, and after a slow transition period, new licenses came flooding in; as of June 2019, more than 120,000 women applied for driving licenses, opening up a swathe of new business opportunities, from driving schools and service centres for women, to aftermarket products and services specifically aimed at an entirely new customer profile.

Vishal Sanghavi, Aranca’s Head of automotive practice, said competition among auto manufacturers has never been fiercer, as dealers pursue aggressive growth strategies to make up for lost revenue during 2016-18: “One of the successful strategies adopted by major players is to launch more entry-level models,” said Mr. Sanghavi.

“The share of entry level models in Saudi has increased from 20 percent in 2018 to 25 percent in 2019, and models such as Chevrolet Spark and Nissan X-Trail recorded 100 percent y-o-y growth in their sales volume.  Promotional offers, the launch of women-centric models, and enhancing customer experiences are some of the strategies used by car dealers to capitalise on increased demand.”

The auto aftermarket will also regain momentum as more drivers and cars ply the Kingdom’s roads, added Mr. Sanghavi.

He said Saudi’s auto spare parts and service market stood at about US$8.1 billion in 2019, and is expected to grow around six percent annually over the next four years to reach US$10.15 billion by 2023.

“There’s strong anticipated growth in PVs (passenger vehicles), with more than 6.85 million cars expected to be on Saudi’s roads in 2023, compared to just over five million in 2019,” he said.  “The PV spare parts and service market contributed more than US$5 billion in 2019 and is expected to eclipse US$6.9 billion by 2023.”

The positive outlook comes on the eve of Saudi’s leading trade fair for the auto aftermarket Automechanika Riyadh, which opens doors for its 2nd edition from 24-26 February 2020 at the Al Faisaliah Hotel.

The biennial three-day event will feature leading global suppliers from 12 countries, showcasing 1000’s of products across six aftermarket product groups of Parts & Components, Electronics & Systems, Accessories & Customizing, Repair & Maintenance, Tyres & Batteries, and Car Wash, Care & Reconditioning.

Mahmut Gazi Bilikozen, Show Director for Messe Frankfurt Middle East, which licences the Automechanika brand to Automechanika Riyadh’s Saudi-based organiser, ACE Group, said: “Saudi’s auto industry and subsequent aftermarket is entering 2020 with renewed enthusiasm, as professionals witness the full impact of the Kingdom’s economic diversification strategies in-line with the Saudi Vision 2030.

“Professionals spanning Saudi’s entire aftermarket, from wholesalers, distributors, and retailers, to service providers, garage or workshop owners, will need the knowledge, tools and products to capitalise on the upcoming opportunities.  Fortunately, Automechanika Riyadh 2020 will present an ideal opportunity to find the right partners to give their businesses a powerful edge in this hotly competitive environment.”

Automechanika Riyadh has been dubbed as “the ultimate destination to meet global manufacturers and suppliers, explore key trends across the industry and source the latest solutions to meet the evolving needs of the Middle East’s largest market.”

The biennial trade fair serves as the dedicated automotive aftermarket and services industry trade fair for the country’s central and eastern regions and alternates between the Kingdom’s capital and the Red Sea port city of Jeddah – with the next event hosted in 2021.

Automechanika Riyadh is one of 17 instalments of Automechanika – the most successful automotive aftermarket trade fair brand in the world. The next regional event will be Automechanika Dubai, held from 7-9 June 2020 at Dubai World Trade Centre.