New passenger car sales in Saudi Arabia is forecast to increase by 15 percent in 2014 to reach 609,500 units as compared to last year, and sees a 4.8 percent growth in new commercial vehicle sales over 2013 to reach 167,712 units, BMI said in its "Saudi Arabia Autos Report Q3 2013". All told, the total new vehicle market should see growth of some 12.6 percent, to reach 777,212 units.
BMI maintains an upbeat view on the Saudi new car sales market at the mid-point of 2013. Early indications (from the first two months of the year) show that new vehicle sales are up by 14 percent, at 121,583 units. For 2013, BMI maintains its forecast for real GDP growth of 4.1 percent, rising to 4.6 percent in 2014 on the back of a slight rebound in oil exports.
Business activity in the private sector remains supported by the government's loose fiscal policy stance, easy credit conditions and robust consumer confidence.
Looking forward, BMI expects the government's fiscal policy stance "to remain broadly supportive of the economy over the coming quarters, with both current spending and capital expenditure continuing to see strong growth."
Encouragingly for the autos sector, BMI expects private consumption to grow by 5 percent throughout 2013, with the retail sector having undergone a sustained boom since government spending began accelerating in 2011.
BMI believes that the outlook for the retail sector is set to remain bright over the medium term, with sales benefiting from rising disposable incomes, favorable demographics and increasing urbanization.
Consumer loans granted by Saudi commercial banks grew by 20.5 percent year-on-year (y-o-y) in 2012, with loans for the purchase of cars and equipment rising by 16.1 percent to reach SR57.4 billion.
Rounding out a broadly-supportive picture is the fact that inflation remains relatively subdued, averaging 4.5 percent y-o-y in 2012 and set to fall to 4.1 percent in 2013, paving the way for local interest rates to remain at 2 percent. This will help with those customers who need to take out loans for their car purchases.
In 2012, the dominant carmaker on the Saudi new car sales market remained Toyota Motor, which sold 263,851 cars and commercial vehicles, for a market share of nearly 37.5 percent. Some way back in second place was Hyundai on 123,782 units, or 17.6 percent share. Other key players in the Saudi new car sales market include Ford Motor and Chevrolet in the passenger car segment, and Isuzu Motors in the commercial vehicles segment.
The outlook for domestic auto production will be transformed should Jaguar Land Rover (JLR) decide to establish production facilities in the country. The company originally announced plans to set up production facilities in Saudi Arabia in December 2012, in another significant move in the country's efforts to industrialize the economy and move away from its reliance on the oil sector.
It also aligns with BMI's long-held view that the country is the best placed of the Gulf Cooperation Council (GCC) states to begin domestic vehicle production.
The Saudi Gazette