Auto Industry Market Brief

The automobile market in Saudi Arabia is the largest in the Middle East. Exploding demographics and changing social patterns are forcing Saudi households to acquire more cars per family. Saudi Arabia imported over 300,000 automobiles and vehicles valued at over $3 billion last year. In 2003, U.S. exports of automobile parts and auto aftermarket parts and accessories reached $685 million.

Although Japanese models continue to be the largest sellers in the Kingdom, American cars follow closely with a 30% market share. Other source countries include South Korea, Germany, France and Malaysia. New cars and SUVs represent almost 46% of the market. Used cars account for about a quarter of the market but only 13% of the value. The United States and Germany lead in used cars sales to Saudi Arabia, with Japan also having a significant share. GM, Ford, and Chrysler’s Jeep brands are among the most popular vehicles in Saudi Arabia.

The Saudi market for spare parts is showing healthy growth and is expected to reach an estimated $281 million in 2004. With improved road conditions and better maintenance facilities, car lifetime has almost doubled to ten years. The aggressive Saudi driving style leads to excessive wear and tear, and the accident rate in Saudi Arabia is one of the highest in the world. Extra features and add-ons to improve vehicle performance are popular. Saudi government authorities and local dealers are fighting the persistent problem of the sale of fake and counterfeit parts in the Kingdom. There are over 200 dealers supplying automotive parts for U.S., Japanese, European and Asian automobile companies in Saudi Arabia.

The Saudi government levies a 5% customs tariff on all automobiles and auto aftermarket imports. The breakdown of Saudi Arabia’s automobile parts market shares is as follows: Japan: 36%; United States: 25%; Germany: 15%; South Korea: 8%; France: 6%; Asia: 5%; others: 5%. U.S. companies command a leading position in the supply of transmission, steering, suspension, and braking components and parts. The favorable U.S. dollar exchange rate against Euro and Japanese Yen is acting to boost U.S. market share.