SUMMARY:

Saudi Arabia’s automotive market is the largest in the Middle East and consists almost entirely of imported vehicles. Longstanding relationships with international OEMs such as Ford and General Motors (GM) through local agents and distributors have served as the conventional model for the Saudi auto market. In recent years, vehicle assembly plants and components manufacturing activity has risen through agreements between local firms and international automotive companies. The knowledge transfer from such agreements is part of the Kingdom’s strategy to stimulate economic diversification into key non-oil sectors.

During 2021, sales and registrations of new vehicles in the Kingdom rose 23 percent YoY as demand rebounded strongly from 2020 lows. While Asian manufacturers have increasingly dominated the Saudi market, leading U.S. OEMs Ford and GM still hold an estimated 11 percent of the market share. Both manufacturers saw Saudi demand for U.S. vehicles exceed pre-COVID levels in 2021 while market leaders Toyota, Hyundai-KIA, and Nissan remained below pre-COVID levels. Demand for U.S. passenger sedans have lagged compared to the highly competitive SUV market where several Ford and GM models are among the top sellers. Lucid Motors’ announcement of a major manufacturing facility to be built in Saudi Arabia highlights the importance and emergence of the electric vehicle (EV) segment for the future of the auto industry. Saudi Arabia’s strategic focus on expanding petrochemical, metals, and plastics supply chains to produce auto components and the growth of the EV segment represent key market opportunities.