By Andy Sambidge
Business Monitor sees kingdom weathering economic storm, growing 2% in 2009.
Saudi Arabia’s automotive sector is showing signs of weathering the economic storm that hit the global economy, a new report has said, with new car sales predicted to grow 50 percent by 2013.
While the fundamentals are still weaker than in previous years, there is gradually increasing confidence that the worst is over for the kingdom’s auto sector and that things could start to improve, Business Monitor International added.
While the UAE, Kuwait and Bahrain are expected to show declines in 2009, growth in the Saudi economy, along with liquidity injections and less dependence on sales to expats, should see its car sales market grow by more than 2 percent this year, the report added.
Overall it is expected that by end-2013, sales should be up by nearly 50 percent compared with 2008 levels, BMI said.
Market revival from 2010 will be spurred on by increased lending, with car loans to rise from under 50 percent to more than 70 percent of car sales, which has been typical of other Gulf markets.
"After tepid growth in 2009 in the value of total car sales of around $600mn from 2008, in the 2010-2013 period growth in the value of auto sales will be more robust," the report added.
The value of sales is expected to reach $18.53bn in 2010, a $2bn increase over 2009, and will rise further to $20.37bn in 2011, $22.73bn in 2012, and $25.05bn in 2013.
Between 2010 and 2013 the number of vehicle units sold in Saudi Arabia is forecast to increase from 676,000 to 880,000, an increase of just over 30 percent.
Although sales for the first half of 2009 were well down compared to the same period in 2008, the decline has not been as dramatic as was expected earlier in the year when the sector’s fundamentals were particularly weak.retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
For anyone who has driven in KSR you will know that simply replacing the thousands of wrecked cars each week will sustain these growth figures. The driving is the worst in the GCC ... and that is just men! Imagine when the leaders become enlightened and allow the women to drive, there will be a quadrupling of car sales, all replacements, mind you.