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Tue 5 Feb 2008 02:56 AM

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Saudi to establish first ever car plant

Kingdom plans $100mn factory in eastern city of Damman to tap rapidly growing domestic demand.

Saudi Arabia is to establish its first car manufacturing plant in the eastern city of Damman, to meet a rapidly rising demand for vehicles in the kingdom.

The UAE-based Gulf Automobile Manufacturing Company (GAMC) is to launch the plant in a $100 million agreement with the Saudi Authority for Industrial Cities and Technological Regions (SACTR), according to Saudi daily Arab News.

It will launch with a 15,000 capacity, but will move to a new industrial city in Sudair where it will occupy three million square metres with a capacity of 300,000, said SACTR director general Toufique Al-Rabeea.

GAMC is currently in talks with four Saudi investors to establish the Damman plant, which could start operations as early as next year.

The Abu Dhabi company, which currently produces light trucks with a staff of 300, will provide training for Saudi engineers, its chairman said.

Saudi Arabia currently imports vehicles worth more than 22 billion riyals ($5.9 billion) annually, and car sales are expected to rise by 27% in 2008, Al-Rabeea said, predicting that more car manufacturers would open over the next decade.

Essential parts including light systems, breaks, windscreens, batteries, engine oils and exhaust pipes were now available in the kingdom, he added, with investment in the car industry “no more a dream in the light of modern economic trends”.

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