General Motors, a Chairman’s Circle member of the U.S.-Saudi Business Council (USSBC) and a global giant in the automotive industry, has maintained a leading presence in the Kingdom for over 90 years. Luay Al Shurafa, President and Managing Director, GM Africa & Middle East, recently spoke with the Council about the company’s strategy for maintaining its market share within the Kingdom’s giant automotive industry, its contribution to the Kingdom’s localization and clean energy objectives, and its goals to collaborate with Saudi start-ups to enable opportunities for innovation in the Kingdom.
How did the COVID-19 pandemic impact GM’s business in the Kingdom? And how was GM’s business recovered over 2021 and 2022?
Globally our team members moved mountains to assist health care workers in saving lives in 2020. In the Kingdom specifically, GM extended warranties and 24/7 roadside assist services across its Cadillac, Chevrolet and GMC brands during the pandemic to help people stay home and stay safe, while retaining peace of mind their vehicle would remain looked after.
GM also accelerated its’ e-commerce platform Shop. Click. Drive, empowering customers to browse and purchase a vehicle outright at the push of a button.
In terms of our business, recovery has taken place in leaps and bounds within Saudi Arabia, the largest market where our SUV portfolio performs very well. Some examples of this include sales of compact SUVs up 626% YoY between 2020 and 2021, driven by the likes of the Chevrolet Equinox and Captiva as well as the GMC Terrain. Meanwhile our medium sized SUVs were up 319% YoY for the same period, spearheaded by the GMC Acadia and Chevrolet Blazer and Traverse. Given the affinity for sports cars amongst the Saudi market, we also saw sales on the Chevrolet Camaro up by 186%. From a fleet perspective, the van segment performs very well with vehicles like Chevrolet Express and GMC Savana up by 800%
What notable consumer trends have been observed in the Saudi market?
It comes as no surprise that the automotive industry growth in Saudi Arabia is significant, with the Kingdom holding more than 50 percent of the entire Gulf Cooperation Council (GCC) demand for cars, equivalent to 1.3 billion vehicles to date, as found by Market Research Saudi. Saudi Arabia’s infrastructure development that supports domestic car productions will bring forth the Kingdom’s unleashed potential in the automotive industry.
A Global Auto Shopper Study conducted in conjunction with Google, looking into the region, found that auto shoppers are digitally savvy and visit the dealership less, relying instead on online research, mobile and video to stay informed and make decisions. It was also seen that search engines are key influencers, with 57% of buyers in the KSA starting their research with queries on a search engine, and 83% of KSA auto purchases taking place within two months of the search commencing.
Furthermore, with a median age of just 31.8 years for the population in the Kingdom and the growing number of female drivers, there is huge growth potential. And as we have seen across the world the pivot to EVs is often driven by the younger generations. We know the people of Saudi Arabia are ready for EVs and we look forward to working with the Government and Leaders of Saudi Arabia to accelerate the shift to Electric Vehicles.
Saudi Arabia has begun rolling its first electric vehicle charging stations and has been a slower adopter of EVs due to a lack of infrastructure. How do you view the Saudi market’s potential for EVs over the next decade?
The Kingdom has an ambitious plan to reach Net Zero by 2060 through the Carbon Circular Economy approach and 30% of vehicles on Riyadh’s roads to be electric by 2030, which will no doubt champion further infrastructure development and public awareness towards EVs. Our future mobility focus is aligned with the nation’s wider sustainability plans. Looking ahead, there is irrefutable transformation in the works and we are thrilled to see the pathway to certification for EVs opened by Saudi Arabia in 2021. At GM, we will be working closely with government entities and our strong network to bring vehicles to market and ensure we’re ready on all fronts for this evolution. Watch this space and we’ll be speaking EV in Saudi Arabia soon!
How competitive do you expect U.S. OEMs to be over the next decade with some shift towards Asian OEMs in recent years?
The next decade is no doubt going to be a critical one for the region as nations including the Kingdom work towards carbon neutral goals, and OEMs roll out EV portfolios. GM is championing the future of mobility in the region, as we want everybody in on EVs and are committed to an electric future. Supporting our company’s vision of Zero Crashes, Zero Emissions and Zero Congestion, at GM Africa and Middle East we are focused on delivering the widest range of EVs in the region across our Chevrolet, GMC and Cadillac brands, spearheading an electric revolution in the Middle East and bringing customers EVs for all needs and price points. Aligned with the Kingdom’s Net Zero 2060 target and Riyadh’s goal to have 30% of all vehicles to be electric by 2030, GM has outlined its’ plan to launch 13 all-new EVs by 2025. We aim to have the broadest and best EV line-up n the region, with an EV for every wallet and every customer. From affordable entry-level EVs through to the mighty GMC HUMMER EV, GM is leading the way in EVs in the Kingdom.
Furthermore, in-line with the advancement of our software systems and considering the global pandemic, here in the Middle East, we have expanded our e-commerce sales platform – Shop. Click. Drive, so that potential customers can enjoy a seamless digital shopping experience as and when the EV nameplates are rolled out. This is growing steadily in popularity, particularly in Saudi Arabia.
While GM is committed to an all-electric future, petrol-powered vehicles will continue to play a key role for many years to come, catering to needs to of all our customers. And our latest truck and SUV offerings across all our vehicle brands are setting new sales records across KSA.
What market barriers exist for U.S. OEMs and other industry players looking to grow their business in the Kingdom?
To grow business in the Kingdom, it is important is to work with the government to accelerate infrastructure and to achieve the industrial goals of the vision 2030. GM share the same vision with the Saudi government when it comes to zero emissions. We’ll work together to electrify transport, evaluate a range of solutions, look at combinations of public infrastructure, home and community solutions and even mobile charging to suit each market’s needs. Tackling infrastructure is the first challenge, however we see leadership across the GCC, notably in KSA, working towards harmonized legislations and investing in the infrastructure and education required to make alternative propulsion the norm.
The second step is driving consumer buy-in, which is already underway as Saudi Arabia’s electric vehicle market continues to grow. As more motorists adopt sustainable transport, KSA was included for the first time in the latest Automotive Electrification Index released by AlixPartners, a New York-based consultancy, showing the rising awareness of consumers when it comes to the benefits of going electric.
How is GM contributing to the Kingdom’s localization objectives? Does the company plan to expand its role in localization over the next decade, such as through the Industrial Cluster program?
GM is committed to the Kingdom and supporting the ambitious growth plans of the country’s leadership. We are currently in the process of finalizing the opening a regional office in Saudi Arabia, and will also be launching OnStar – GM’s world-leading safety and convenience connected car technology – in the Kingdom by the end of the year. Further to this, we also appointed Petromin Corporation, a renowned market leader in lubricants and automotive services in Saudi Arabia as our Wholesale distributor for ACDelco. Through their local expertise spanning manufacturing, industrial, and automotive oils and lubricants, car servicing, fuel retailing and car dealerships, we are aiming to grow our Independent Aftermarket business in KSA with an emphasis on non-GM maintenance parts and commodities.
And this is just the start of GM’s plans to expand our presence in Saudi Arabia.
What barriers exist for Saudi Arabia attracting international companies and establishing a broader local manufacturing base in the Kingdom?
What is exciting about Saudi Arabia as a market is that the youth, aged 18-34 comprise the largest segment of the population, at 43%, as found by BCG. While this brings with it an abundance of opportunity, it also comes with its challenges, as automotive brands will have to tailor their approach, in conjunction with local authorities to drive familiarity, appeal and loyalty within the preferred online environment and social media. Further to this the sheer diversity of audience in the market, also gives rise to the need for international companies to invest time in understanding the multi-faceted demographic, to best establish manufacturing bases to suit their needs. From a GM perspective, we are moving towards rolling out a rich portfolio of vehicles that will drive the future of mobility, suiting every wallet and consumer across the region.
How do you see the relationship between GM and start-ups in Saudi Arabia?
KSA is rapidly emerging as a global hub for startups and entrepreneurs enabling new opportunities for innovation which is supported by a 54% increase in startup funding deals in 2021 vs 2020. According to Startup Genome, Riyadh ranks one of the top 5 regional cities for startup ecosystem performance.
GM has a vision of zero crashes, zero emissions and zero congestion. And we know we can’t achieve this alone. Strategic partnerships and harnessing the power and opportunity of start-ups in the Kingdom is a key strategic pillar for GM.
GM is in discussion with a number of universities, accelerators, incubators, venture capital firms and government entities in the Kingdom to explore opportunities to collaborate.