Saudi Arabia 2017 Outlook is positive

Saudi Arabia Automotive 2017 Outlook is positive Mercedes-Benz-GLA45_AMG-2018

Saudi Arabia Automotive 2017 outlook is finally positive following the double-digit fall reported for the 2016. Four key drivers for the growth has been highlighted by our Experts.

Waiting for the final year data, no doubts that the 2016 was tough for the Kingdom automotive industry, breaking the long run started in the 2005 with volume almost doubled in the decade. The double-digit drop in new vehicle sales has also be followed by overstocking of parts an accessories and high stock of vehicles inventory.

Adding the uncertain for  the lack of clarity for the near future (in a sector almost used to plan just positive trends) and the picture is full. However, our Research Team analysis, just released, talk about a 2017 outlook positive and sales are estimated to grow again in the range of 10-15%.

Several reasons behind this projection.

1 –More stable domestic economy

The recent recovery of oil price in the international market will be further enhanced helping the government budget to come back on track with recovery in the customer demand, in particular for the fleet sector, with most benefit for the light commercial segment (counting 22.2% of total light vehicles).

The 2016 crisis has pushed the Government to intensify the programs towards a more diversified economy and the approval of  Saudi Vision 2030 project has been a key milestone on this pathway.

2 – Premium Brands Growth

The re-surging demand will help premium brands to gain terrain and the start of local production for Jaguar Land Rover will definitively enhance this trend. Considering actually the premium segment is still very low (4.8%, the lowest in the GCC near one-third of the premium share globally).

3 – Increasing competition

For years the Saudi Arabia has been the kingdom of Toyota. Recently Koreans Hyundai and Kia have severely challenged the leader but in the 2016 still 81.6% of share was handled by Japanese and Koreans. Now, European brands have moved their eyes on this market thanks to a more competitive line of SUV and pick ups while Chinese brands landed, despite with uncertain steps.

4 – More regulations driving evolution

The country is pursuing several project to improve efficiency and customer respects and new regulations have been introduced (or are near to come) improving business complexity, reducing dealers margins but finally resulting in better process that will generate additional demand. Among these the CAFE (Corporate Average Fuel Economy Standards), which were introduced in Saudi in January 2016, deputy to aligning market power train sales trends with global trends.

5 – Pre VAT customer demand rush

The introduction of the VAT ( Value Added Tax) in the GCC area, expected but not yet confirmed for January 1st, 2018 with a rate of 5 percent will boost demand in the second half of the 2017 as several potential private customers will anticipate their vehicles purchase eventually planned for the following years. In the medium term VAT will just represent a negative impact in the market, as final vehicles price will substantially increase, but its introduction will shift demand from 2018 to the 2017.

Research, Consulting, Data & Forecast

F2M covers intensively this market with several products developed to help any investigation required.

Market Researches in PDF are immediately available for download with study on the market since 2005 and with forecast up to the 2022.

Auto Data in EXCEL are immediately downloadable with annual sales volume, split by month, for all brands and all models distributed in the market. This year data are released year to date, but you will receive a monthly update until the year-end.

All these and more within our  Saudi Arabia Corner Store

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