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RIYADH: Saudi Arabia’s automotive industry is experiencing significant growth, driven by government-led initiatives, a strategic geographic location and ambitious plans to become a manufacturing hub.

These factors turn the Kingdom into a key player in the sector’s global market.

According to Karim Henain, a partner at Bain & Co., key drivers of this growth include a young population, more female drivers and a significant influx of expats, resulting in over 600,000 new car sales annually.

“The market is poised for rapid growth, outpacing many Western peers,” Henain told Arab News.

He added: “Vehicle ownership rates in Saudi Arabia exceed those in Western markets, supported by larger families, less developed public transport systems and a strong culture of dependence on personal vehicles.

According to Ali Hefni, Exhibition Manager at Automechanika Riiadh, Messe Frankfurt Middle East, Saudi Arabia’s strategic geographic location at the crossroads of major trade routes further enhances its status as a regional automotive hub. He told Arab News that the Kingdom’s government is taking a unique approach to leading direct investment initiatives in the automotive sector.

“Saudi automotive players, like their international counterparts, are proactively embracing innovation, investing in research and development and prioritizing sustainability.” These are key steps the Saudi government is taking to ensure long-term sustainability and competitiveness in the global market,” added the show manager.

Manufacturing hub

The automotive sector, which includes design, development and production, as well as distribution, maintenance and repair and customization, plays a key role in achieving the ambitious goals of Vision 2030. Henain noted that the Kingdom has set an ambitious goal to build an automotive manufacturing cluster, with already concluded businesses to establish a local footprint for OEMs as well as Tier 1 suppliers.

“The industry is still nascent and it will take some time before it reaches the maturity of other car manufacturing clusters,” he said.

He pointed out that the Kingdom is investing heavily in autonomous vehicle technology, with plans to introduce Robotakis and Roboshuttle in the near future.

Saudi automotive stakeholders are proactively embracing innovation, investing in research and development and prioritizing sustainability.

Ali Hefni, manager of the Automechanika Riiadh exhibition

“These initiatives demonstrate the Kingdom’s commitment to adopting and integrating cutting-edge automotive technologies, positioning it as a global leader in the future of mobility,” added the Bain & Co. CEO.

Industrial dynamics

The Saudi automotive industry is undergoing significant transformations, says Matthias Zeigler, managing director of Volkswagen Middle East. Among the key dynamics shaping the sector is the alignment of global SUV preferences with Saudi buyers’ preferences for larger, family-oriented seven-seaters.

“This focus on family transportation is further reinforced by robust infrastructure and an extensive road network,” Zeigler told Arab News.

He elaborated that because of this, comfort is emerging as a key consideration, fueling increasing interest in advanced comfort and safety features, as well as in-car connectivity.

“What is unique in the market is the noticeable brand loyalty among car buyers in Saudi Arabia, prioritizing after-sales service and vehicle reliability,” Zeigler revealed.

In the vehicle mix, over 3 percent of vehicles sold are luxury models, exceeding the global average of 2 percent, according to Bain & Co.’s Henain.

“SUVs make up about 36 percent of the market — slightly below the global average of 45 percent — with a bias toward larger models, reflecting demand for spacious vehicles suitable for family use and versatile terrain.”

Henain pointed out that Asian automakers dominate the market, with Japanese, South Korean and Chinese brands accounting for a remarkable 88 percent of total sales. Notably, Chinese brands have experienced remarkable growth, rising from 7,000 units in 2018 to 100,000 in 2022.

Sami Malkawi, General Manager of Ford Middle East Sales, highlighted the uniqueness of Saudi Arabia as a market, noting the significant developments in the Kingdom’s automotive industry over the past year.

He pointed out that sales of new cars by all original equipment manufacturers in Saudi Arabia increased by 23 percent last year compared to 2022, a figure that exceeds the global average of 10 percent.

“This is a reflection of the nation’s impressive growth story in a year where its non-oil growth was estimated at nearly 5 percent as it pursued its ambitious Vision 2030 agenda, aided by significant private and public sector investment,” Malkawi told Arab News.

He stated that Ford is “deeply committed” to Saudi Arabia and is making joint efforts to help develop the Kingdom’s automotive sector.

The CEO added: “Our focus — including a strong strategy to develop our product offering while continuing to further improve the customer experience — combined with the Kingdom’s impressive growth, saw us end 2023 with sales up 77 percent over 2022.”

Electric vehicles

Meanwhile, aligning with global trends, Saudi Arabia has implemented ambitious plans to electrify vehicles as part of Vision 2030, aiming to achieve 30 percent electric vehicle penetration by 2030.

These plans include the local production of Saudi brands of electric vehicles and the establishment of an entity dedicated to developing the country’s charging infrastructure.

This focus on family transportation is further enhanced by robust infrastructure and an extensive road network.

Matthias Zeigler, Managing Director Volkswagen Middle East

“The KSA EV sector is nascent with less than 1 percent penetration, lagging behind the UAE at around 3 percent, China at an estimated 22 percent and Europe at nearly 10 percent, attributed to cheap fuel, underdeveloped charging infrastructure and less appetite among consumers “, revealed Henain.

Volkswagen’s Zeigler agreed that the transition to electric vehicles is at an early stage, with the internal combustion engine continuing to dominate. However, he emphasized that this does not negate the growing interest in electric vehicle technology.

“Similar to China and the US, the Kingdom is implementing CO2 regulations, aligning with international sustainability efforts,” described Zeigler.

This is in line with Saudi Arabia’s Vision 2030 strategy to achieve net zero emissions, which aims to reduce emissions by 278 million tonnes per year.

On sustainable mobility, Malkavi said, “The growing demand for fuel-efficient and electric vehicles is paving the way for a cleaner future, as envisioned by Vision 2030’s focus on sustainability.

He added that Ford is committed to offering a wider range of hybrid and electric vehicles in Saudi Arabia and launching vehicles that support this transition.

Impact on Vision 2030

Industry leaders emphasize that the development of the automotive sector is key to achieving the goals of Vision 2030, which are economic diversification, job creation and technological progress.

“By promoting localization, innovation and sustainable practices, the automotive industry contributes to economic diversification, job creation and technological progress,” Hefney commented.


Asian automakers dominate the market, with Japanese, South Korean and Chinese brands accounting for a remarkable 88 percent of total sales. Notably, Chinese brands have experienced remarkable growth, rising from 7,000 units in 2018 to 100,000 in 2022.

He also pointed out that initiatives aimed at increasing the participation of women in the workforce have expanded the consumer base, stimulating demand for vehicles and related services.

In addition, he emphasized that by aligning with the goals of Vision 2030, the automotive sector plays an important role in shaping a vibrant and resilient economy for future generations.

Speaking on behalf of Volkswagen Middle East, Zeigler reiterated how a thriving automotive market is central to Saudi Arabia’s economic diversification goals outlined in Vision 2030.

“By promoting localization, job creation and technology adoption, the industry is stimulating economic growth and positioning the Kingdom as a leader in future mobility solutions,” he concluded.

Partner Bain & Co expressed the view that through the development of local production, the sector enables the growth of non-oil gross domestic product, stimulates the creation of new jobs and encourages technological progress.

“The push towards electric vehicles and autonomous technologies is in line with Vision’s goals for environmental sustainability and innovation,” Henain added.

He noted that international partnerships in the automotive and mobility industries will enhance Saudi Arabia’s global reputation, fostering innovation and strengthening trade ties with leading economies.

“I believe that the development of the automotive industry will be key to achieving the country’s development goals set in Vision 2030,” he concluded.

Ford’s Malkavy emphasized that the automotive industry drives diversification, economic growth and sustainable mobility, infrastructure and connectivity.

“A thriving automotive sector creates jobs, boosts local businesses and attracts foreign investment, all in line with the economic diversification goals of Vision 2030,” he explained.

Malkavi concluded by stressing the importance of infrastructure and connectivity: “A robust automotive market requires improved infrastructure, including better roads and a focus on smart technologies. This is in line with the goals of Vision 2030 to develop modern infrastructure and foster a digitally connected society.”

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