Saudi Arabia is the largest market for automobiles and trucks in the Near East. According to market sources, it is estimated that by the end of this year the secondhand car market will grow 32 per cent to SR600 million (US $160 million). Additionally, due to its size, there is potential for huge financial returns that reflect positively on the national economy. As many as 1,300 secondhand showrooms in Jeddah and Riyadh are proof of the size and dollar value of this opportunity.
The market for imported secondhand automobiles is generally comprised of vehicles with spark ignition capacity over 300cc and an average running life of four or more years. The market for secondhand vehicles is largely sourced from the United States and to a lesser extent from Germany. 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 secondhand automobiles consists of two distinct segments: imported reconditioned passenger cars and four-wheel drive jeeps and locally registered vehicles, which were previously imported. In times of economic difficulties, and with continuing population growth, funding the purchases of new cars and jeeps generally comes under pressure, but can be eased by the availability of consumer loans from banks and liberal installment sales. The market demand for new automobiles is often affected by the import of secondhand or re-conditioned passenger cars and jeeps, as they are sold at very competitive prices to customers who want to buy fairly good models at significantly lower prices.
The economic recovery, which started a few years ago, will likely boost the demand to around 360,000 units, valued at $6.3 billion. A higher per capita income, currently at $13,000, will further enhance the demand for used & new cars and vans. The higher value of the Euro and the Yen against the U.S. Dollar has had little effect on the share of European and Japanese car sales, which control nearly 70 percent of the market. Japan, the U.S., Australia, Germany, and South Korea are the key players in the Saudi automotive market representing more than 90 percent of all vehicle imports.
By Abuelgasim Mukhtar