Kingdom can gain much from local car production

Saudi Arabia is a huge car market with nearly 650,000 units entering the Kingdom annually and the number is growing by 10 percent. Sales are expected to reach SR 94 billion this year.
“It’s a cascade industry,” said Samer M. Ajjan, GM of Rashed Al Thunayan Cars, dealer of Malaysian-made Proton cars. But these cars are imported from foreign manufacturers, he pointed out.
“It’s high time the Kingdom started its own car industry. Its economy is strong and has the needed capital. If it makes the right moves now to embark on car production now, it could be manufacturing its own vehicles within the next few years,” Al-Ajjan said.
Al-Ajjan said King Saud University (KSU) students developed a prototype sport utility vehicle — Gazal — which is an economical SUV.
In starting a car factory, he said the Kingdom should initially forge a tie-up with foreign companies in manufacturing car spare parts.
“There are foreign car spare parts manufacturers. They specialize only in engines, batteries, spark plugs, brakes, tires, among others. After learning the technology from them, the Kingdom could sever ties with them and start its own car production,” he said. He cited the experience of Proton cars, which are available in the Kingdom.
He said Malaysia partnered with Japan’s Mitsubishi for the engine. Only three years ago, Proton started manufacturing its own engines, he said.
“It takes time but after learning the technology, the Kingdom could sever ties with foreign firms. It could also start hiring local manpower. The local car industry could generate some 100,000 jobs,” he said.
Asked about foreign car manufacturers who could be ideal partners for the Kingdom, he said: “Japanese companies are preferred because aside from having the technology already. They are also aggressive.”
He said the Kingdom could gain valuable expertise from Japanese carmakers, who had earlier learned the technology from American manufacturers.
There are already positive signs. Isuzu Motors Ltd. is building trucks in a assembly plant in Dammam. It’s expected to deliver 25,000 vehicles annually to Asian countries.
Moreover, the KSU has already reached an accord with Digm Automotive Technology in South Korea to develop a car that would carry a price tag of around $ 10,000.
Regarding marketing, industry players said there’s no problem.
“...The Kingdom is a leading automative market with firm restrictions on the age of imported vehicles, a rapid population growth, an increasing per capita spending power, and robust economy. Currently, it is the largest in the Gulf...,” said Maher Al-Nabawi, deputy GM of Suzuki Saudia.
Others claim that the Kingdom can also find a niche market in Africa. But some questions arise. Won’t Nitaqat adversely affect local moves to start a car industry?
“Initially yes, but the Kingdom should make some consideration. It could initially hire skilled foreign manpower in the car industry. Gradually, Saudi manpower will be hired and trained to take over from foreign workers,” said a an auto industrialist.