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Saudi Arabia Autos Report Q4 2008 (Business Monitor International)
- Market: Automotive and Parts
- Published Date: 02/10/2008
- Report Title: Saudi Arabia Autos Report Q4 2008
- Table of Contents: View Table of Contents
- Report Type: Market Report
- Country: Saudi Arabia
- Number of Pages: 51
Although automotive sales growth in 2007 turned out to be far lower than consensus forecasts, BMI’s latest Saudi Arabia Automotives Report anticipates a radical turn-around in the Saudi market in 2008- 2012 with average annual sales growth of 10.8%
BMI forecasts a strong recovery in 2008 with sales growth of 14.1% to 592,985 units, including 13.4% growth in car sales and 17.1% growth in commercial vehicle sales. Our positive forecast for 2008 is based on a recovery in GDP growth, which is set to rise to 3.8% from an estimated 2.9% in 2007 on the back of increasing oil production, higher oil prices, and strong non-oil sector growth. Thereafter we expect Saudi Arabia to record steady, if not spectacular, economic growth which will average 4.1% annually between 2009 and 2012, leading to a moderation in annual average automotive sales growth to 10.8%. However, during the forecast period, we expect a downturn in growth in 2009 with automotive sales up by just 4.0%, a revision from the 5.0% forecast in the previous quarterly report, as a result of the rising cost of living and a decline in GDP growth
The non-oil economy is also a significant determinant in consumer behaviour, although this is masked by oil-led GDP figures. BMI sees non-oil private sector growth averaging around 5% over the forecast period, with non-oil government sector expansion coming in just under 5%. As such, we have built into our automotive growth forecasts the growing influence of services and manufacturing in employment growth and wealth creation. Consequently, our long-term forecasts for the automotive sector are more upbeat than in our previous quarterly report. By 2012, the automotive market should be growing by 8.5%, with sales of 847,553 units, a rise of 63% over 2007 levels
Saudi Arabia scores 57.4 points (out of a theoretical maximum of 100) in the BMI automotive business environment rating this quarter, up 5.3 points since the previous quarter due to a more positive outlook for the automotive market. This puts it 0.6 points ahead of Bahrain and 1.5 points behind the United Arab Emirates. As a result of the increase in its score, Saudi Arabia’s rank has risen from fourth to third place
Saudi Arabia has the largest automotive market in the Gulf Co-operation Council (GCC), but its score is being pulled back by economic uncertainty and rising inflation, which are impacting on car sales growth
The country falls behind other Gulf states due to its lower country structure score, in particular the labour market. A lack of automotive production and stringent foreign ownership laws weigh down Saudi Arabia’s score. On the upside, despite being the largest automotive market in the Gulf, it has the best penetration potential with a lower per-capita rate of vehicle ownership; the introduction of legislation to enable women to drive would help raise vehicle ownership significantly. Saudi Arabia’s score would be much improved if it can establish large-scale automotive production facilities.
BMI forecasts a strong recovery in 2008 with sales growth of 14.1% to 592,985 units, including 13.4% growth in car sales and 17.1% growth in commercial vehicle sales. Our positive forecast for 2008 is based on a recovery in GDP growth, which is set to rise to 3.8% from an estimated 2.9% in 2007 on the back of increasing oil production, higher oil prices, and strong non-oil sector growth. Thereafter we expect Saudi Arabia to record steady, if not spectacular, economic growth which will average 4.1% annually between 2009 and 2012, leading to a moderation in annual average automotive sales growth to 10.8%. However, during the forecast period, we expect a downturn in growth in 2009 with automotive sales up by just 4.0%, a revision from the 5.0% forecast in the previous quarterly report, as a result of the rising cost of living and a decline in GDP growth
The non-oil economy is also a significant determinant in consumer behaviour, although this is masked by oil-led GDP figures. BMI sees non-oil private sector growth averaging around 5% over the forecast period, with non-oil government sector expansion coming in just under 5%. As such, we have built into our automotive growth forecasts the growing influence of services and manufacturing in employment growth and wealth creation. Consequently, our long-term forecasts for the automotive sector are more upbeat than in our previous quarterly report. By 2012, the automotive market should be growing by 8.5%, with sales of 847,553 units, a rise of 63% over 2007 levels
Saudi Arabia scores 57.4 points (out of a theoretical maximum of 100) in the BMI automotive business environment rating this quarter, up 5.3 points since the previous quarter due to a more positive outlook for the automotive market. This puts it 0.6 points ahead of Bahrain and 1.5 points behind the United Arab Emirates. As a result of the increase in its score, Saudi Arabia’s rank has risen from fourth to third place
Saudi Arabia has the largest automotive market in the Gulf Co-operation Council (GCC), but its score is being pulled back by economic uncertainty and rising inflation, which are impacting on car sales growth
The country falls behind other Gulf states due to its lower country structure score, in particular the labour market. A lack of automotive production and stringent foreign ownership laws weigh down Saudi Arabia’s score. On the upside, despite being the largest automotive market in the Gulf, it has the best penetration potential with a lower per-capita rate of vehicle ownership; the introduction of legislation to enable women to drive would help raise vehicle ownership significantly. Saudi Arabia’s score would be much improved if it can establish large-scale automotive production facilities.
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