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The Saudi Arabian automobile market

Saudi Arabia: Sunday, April 22 - 2007 @ 10:40

Do we know how many vehicles each household owns? How old are their vehicles? How many were bought new and how many second hand? Which countries brands are popular?

To answer questions like these and more TNS Middle East conducted a large scale, 6,000 sample size, syndicated study in Saudi Arabia in 2006.

Firstly, every household has on an average, 1 passenger vehicle. This is true across urban, provincial, and rural Saudi Arabia. Sedans are the most popular passenger vehicle (75%) followed by 4 wheel drive (4X4s) vehicles (20%) with ownership of 4X4s higher in rural areas (27% own a 4X4)

But how old are the vehicles in Saudi Arabia? The average age of vehicles is 6.4 years with 42% of vehicles manufactured in 2001 or later.

Year of Manufacture

Saudi Arabia has a big second hand market – close to half (~46%) of the vehicles owned were bought second hand. Given that the average age of vehicles is 6.4 years, vehicles bought second hand were 2000 models or older. Models bought new were made from 2001 onwards.

new second hand

So what separates the new vehicle buyer from the second hand buyer? Money! Those who bought their vehicles new were from more affluent households.

Evaluation Parameters

Let us look at what are the popular new models and the popular second hand models.

New Vehicles

Japanese brands lead with close to two-thirds of the market followed by American brands (~30%). European and Korean brands account for less than 10% each. In terms of growth, the Japanese and the Korean brands are the only ones to have grown over time with Korean brands having doubled their share over the last decade from 3.1% to 8.5%. Share of American and European brands have declined over time.

Brands bought new

But is the above true across the key markets of Riyadh, Jeddah and Dammam which account for close to 65% of all new vehicles sold in Saudi Arabia? No, American brands are more popular in Dammam than in Riyadh and Jeddah. European brands are stronger in Riyadh vis-à-vis the other key markets, while Korean brands are stronger in Riyadh and Jeddah but weaker in Dammam.

Brands

Moving away from key markets information to profiling people who buy these vehicles, how different are those who buy American brands from those who buy other brands?

American brands are owned by larger local households while European brands are bought by relatively smaller local households. Korean brands are bought by people with lower education levels and incomes.

Evaluations parameters1

Second hand vehicles

Here we will only look at the models bought second hand from 2001 or older as this will indicate what are the current popular models. Japanese brands dominate the landscape but have a relatively lesser share as compared to when bought new (half vs. two-thirds). American and European brands perform better among second hand vehicles than when bought new. Korean brands do not perform that well in the second hand market.

Brands bought second hand

The top 3 cities i.e. Riyadh, Jeddah and Dammam account for close to two-thirds of all second hand vehicles bought. And, once again Dammam is the only city where American brands have a higher share.

Brands1

Now how different are the various buyers?

What separates the American car buyer from the European car buyer is that American brands are bought more often by locals while European brands have a substantial Expat Arab patronage.

Those how buy Japanese and Korean brands have lower income levels but higher levels of education vis-à-vis American/ European brand buyer.

Evaluation parameters1

We have just seen some aspects of the Saudi Arabian vehicle market. To summarise:

1. Average age of vehicles is 6.4 years, with 42% bought after 2001 and Sedans being more popular than 4X4s

2. New vehicles – Japanese brands account for two-thirds of the new vehicle market with American brand accounting for less than a third. Korean brands have been growing over time while the share of European brands has been declining. Dammam is the only place where American brands close the gap to Japanese brands

3. Second hand vehicles – Japanese brands lead but have a relatively lesser share than when bought new. American brands are the next most purchased brands and have a higher share in the second hand market than when bought new. This trend is also true for European brands. Korean brands perform poorly in the second hand car market.

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Sunday, April 22- 2007 @ 10:40 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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