The Kingdom of Saudi Arabia is working to attract foreign investments in the automotive sector aiming to become the hub of the booming Gulf region. Among all global players, Ford looks the perfect partner to accept the Saudi invitation.
Following a series of year on year records, Saudi Arabia market in the 2012 achieved the respectable level of 704.000 units, entering the World's Top 25 car markets, as reported by focus2move specialists. Domestic demand is driven by a growing average income, low taxation, full employment and strong workforce immigration.
The Kingdom is developing a wide strategy to differentiate its economy from the oil sector, which is expected to decline from 2030. The Big Cities project is the most advanced and fascinating, but the automotive sector is considered a great opportunity, not only for the large and growing internal demand, but also for the opportunity to become a hub for all the Middle East area, one of the fastest growing worldwide.
In July the Saudi American Business Council held a meeting in Michigan's biggest city, allowing American firms to get a look at the kind of tie-ups on offer in the fast-growing Saudi market. By the end of the event, Saudi media reported General Motors, Chrysler and Ford — the Big Three of the US auto industry — are now considering setting up plants in the kingdom. It's worth pointing out at this stage that there has been no confirmation on this from the manufacturers themselves, although Ford is believed to be interested due to the incentives currently on offer.
Other car makers are already betting on the nascent Saudi auto industry. Japan's Isuzu Motors is already manufacturing trucks in Dammam, and hopes eventually to produce around 25,000 units a year. Jaguar Land Rover is currently conducting a feasibility study to establish a plant in Yanbu, and the Saudi government is prepared to spend $1bn to develop the city as a hub for car manufacturing.
Another major benefit is the presence of low-cost raw materials. As Saudi Arabia attempts to extract even greater value out of its natural resources, its downstream industry is becoming ever more important. Petrochemicals giant SABIC is already working with companies like Volkswagen, Land Rover, and Mitsubishi to provide new materials like lightweight engineering thermoplastics and enhanced fuel additives to their cars.
As far as 2013 domestic car market trend, focus2move is going to release first half data. Actually we can anticipate very positive numbers. The market grew over 14% from the previous year, with sales near the 0.4 million units.
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