Saudi Arabia’s Automotive Industry Will Recover Quickly After Economic Downturn, says New Report
Report Buyer, the online destination for business intelligence for major industry sectors, has added a new report which offers a comprehensive guide to the automotive industry in Saudi Arabia.
“Saudi Arabia Autos Report Q1 2009”, available at http://www.reportbuyer.com/
As Saudi consumers have not taken the same opportunities in terms of borrowing for new car purchases, the Saudi automotive market has grown at a slower rate than neighbouring Gulf States. As a result, the market has a larger proportion of lower cost cars than the UAE and the country imports a high number of used cars from neighbouring countries. The tendency to favour cash purchases will help partly insulate the market from the effects of the credit crunch, with cash transactions set to remain the majority of purchases over the near-term, compared with less than a third of purchases in the UAE. The Saudi banking sector, like others in the Gulf, remains solidly capitalised - with around US$286bn worth of assets - and there was no significant downturn in lending in Q408.
According to the report, the main risk factor comes from the Saudi stock market where many consumers have invested money. Having lost more than 57% in 2008, the Saudi bourse was the second-worst performing Gulf Cooperation Council (GCC) market behind Dubai. Declines in the stock market have a significant impact on consumer confidence, with Saudi nationals delaying purchases of big ticket items such as cars. However, authors of the report expect that it will be the first of the region's markets to recover.
The 52-page report estimates that the Saudi automotive market grew 13.5% y-o-y to over 590,000 units, which is lower than the 14.1% forecast in the previous quarterly report, with sales growth negatively impacted by the falls in the stock market. Growth is set to decline to 3.5% in 2009 as the market comes under pressure as a result of a lower economic growth rate and a slowdown in spending. Nevertheless, the rest of the forecast period is set to see annual growth rates averaging 9.6%, reaching over 880,000 units by 2013, a rise of almost 50% over 2008.
Saudi Arabia scores 54.3 points (out of a theoretical maximum of 100) in the BMI Automotive Business Environment Ratings this quarter, down 3.1 points since the previous quarter due to the expected downturn in the automotive market. This puts it 0.3 points ahead of Kuwait and 2.3 points behind South Africa. As a result of the decline in its score, Saudi Arabia's rank has fallen from third to fourth place.
“Saudi Arabia Autos Report Q1 2009” is available from Report Buyer. For more information, go to:
Report Buyer product ID: BMI03392
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