Saudi Automobile Market Rebounding
Hyundai Motor Co.’s sales in Saudi Arabia have increased more than 60 percent compared to last year amid rebounding automobile sales in the Middle East country. Hyundai Motor has drawn up a new marketing strategy as the Saudi Arabian automobile market is expanding due to a rise in the number of female drivers and the Saudi government's policy to encourage the automobile industry.
In addition, Kia Motors has released a new model in Saudi Arabia and SsangYong Motor has signed a deal with a Saudi automaker to manufacture its vehicles in the nation. Korean automakers are now betting on the potential of the Saudi market.
Hyundai Motor sold 87,661 units in Saudi Arabia for the first nine months of this year, up 63.9 percent from 53,499 units sold over the same period last year. The automaker has increased its market share in Saudi Arabia, while its sales in Korea, China and India remain were sluggish in the first three quarters of 2019.
From January to August this year, Korean automakers sold 312,980 vehicles in Saudi Arabia, with Hyundai Motor accounting for about 23.8 percent of the total and Kia Motors about 6 percent. Hyundai and Kia’s combined sales are close to those of Toyota, the top-selling automaker in the nation. According to foreign media reports, vehicle sales in the first eight months of this year in Saudi Arabia increased by 24 percent compared with the same period last year. This means that Hyundai’s sales growth rate is about three times higher than that of the country’s overall automobile market.
Car sales in Saudi Arabia peaked in 2015 at about 844,000 units and then roughly halved last year to 420,000 units. As international oil prices which had surpassed 120 dollars per barrel in the first half of 2010 sharply declined in 2015, decreasing tax revenues from oil which accounted for 80 percent of the nation’s finances, the Saudi government implemented a 5 percent value-added tax and raised tax rates, which in turn accelerated the decrease of consumption. As a result, the sales of Hyundai in Saudi Arabia plunged from 184,535 units in 2015 to 77,332 last year.
However, recently the Saudi government has decided to create jobs in the private sector by boosting its economy. This increased automobile consumption. The government is putting an emphasis on fostering its automobile industry through the Saudi Vision 2030 initiative, the nation’s mid-and long-term development plan. Considering its current sales figures, Hyundai is expected to sell about 120,000 units this year, regaining its sales level in 2012, when the Saudi’s auto market was rapidly growing.
Hyundai expects that, as a result of the Saudi government’s granting of permission for female drivers, the number of women drivers in Saudi Arabia will rise to 3 million, about 30 percent of that of male drivers by the end of next year.
Kia Motors and SsangYong Motor are making efforts to expand their presence in the Saudi market. With the release of the 2020 Kia Soul this month in Saudi Arabia, Kia aims to expand its market share in the nation. It is said that Kia plans to launch more models in accordance with the growth of the market. SsangYong also entered the Saudi auto market by signing a product licensing agreement with Saudi National Automobiles Manufacturing Co. (SNAM) early this month to assemble its vehicles in Saudi Arabia.