The value of Saudi Arabia’s tyre market is likely to reach $2.12bn (SAR7.95bn) by the end of 2016, according to a report from Persistence Market Research.
The US-based firm’s Kingdom of Saudi Arabia (KSA) Market Study on Tire: Industry Analysis and Forecast, 2016-2026 predicts that the kingdom’s tyre market will rise at a compound annual growth rate (CAGR) of 10.8% during the period 2016-2026.
The researchers cited favorable government regulations and rising demand for passenger cars as the main drivers behind the growth of Saudi Arabia’s tyre industry.
A statement issued by Persistence Market Research explained: “The lack of luxury or value-added tax on the purchase of commodities in the region is a major driver, as [an] increasing number of people are opting for cars, including passenger cars, as well as luxury cars due to high temperatures recorded round the year.
“Consumer preference towards OEM [original equipment manufacturer] channels is expected to boost sales. On the other hand, stringent regulations in regard to used tyres and import standards by the Saudi Arabia Standard Organization (SASO) is expected to be a major restraint in the market,” the release added.
The report stated that the passenger car sub-segment – the largest in the Saudi Arabian market – is likely to account for more than $1.43bn (SAR5.36bn) by the end of this year.
From a geographical standpoint, demand in the kingdom’s Western and Central Regions are expected to grow fastest, within the context of tyres for the four-wheel segment. The cities of Riyadh and Makkah, meanwhile, are expected to develop into concentrated hubs for tyre retail outlets.
Persistence Market Research also notes that rising online transactions in the kingdom will also play a role in market growth.