Galvanized by a great percentage of growth in sales of premium segment cars, a growing list of owners is gearing up to indulge the people living in the Kingdom with a new lineup of different car brands.
With the economy remaining stable and rising usage of cars, and with no visibility in the local production of automobiles, the automotive sector in Saudi Arabia has completely changed the auto industry‘s supply chain.
The major sources of imports are Japan, Germany, America, as well as Korea, China and some other Asian countries.
Automotive as well as auto parts sector plays a crucial role and has a more prominent impact on the economy.
According to the studies led by the automotive sector, it is evident the auto industry will thrive in the Kingdom.
Saudi Arabia is one of the fastest growing automotive markets in the Middle East with massive car sales in its main cities like Riyadh, Jeddah and Dammam.
It is recognized as a destination for premium and budget cars.
The Kingdom has witnessed a growing demand for new cars and made it easier for the customers to buy a new car.
The benefits that come along with a new car are many, but one of the reasons is the assurance that will watch out the unsolicited motoring surprises for the next few years or so.
Living in a country with cheap petrol prices and its infrastructure still developing, many choose to buy cars over public transport or taxis. Moreover, being a tax free country, cars are more affordable.
“The luxury tax or VAT, which is added to cars in different parts of the world, makes the car two or three times expensive than here,” says Mohammed Hassan, manager of Honda Trading Company.
He said Saudi Arabia offers the opportunity to buy a car, which people in general in some other countries cannot afford in their inland markets.
Saudi Arabia offers many ways to help the people to buy a new car either through a deal or website, or sometimes from an auto show or an exhibition.
All the good car showrooms and companies have finance and insurance executives who can help people’s budget and pay for their car in monthly installments. Buying a new car has become much easier than before for the residents in the Kingdom.
Besides, car dealers attract consumers with affordable finance plans, which will let them spread their expenses over longer periods.
The development in the car industry supports the Saudi economy to grow, along with liquidity injections and sales, which are expected to grow by over two to three percent this year. The sales have increased approximately 50 percent in 2013 compared with 2008 levels.
Market revival for 2013 drove the industry by increase in lending car loans from under 60 percent to over 80 percent of car sales.
Dealers offer prices to the customer by a combination of factors, including the resale value of any vehicle.
The dealers offering discounts and financial packages are attracting the customers to buy a new car.
According to one of the Jeddah-based international trading companies, which offers its clients financing solutions to purchase vehicles on lease or installment terms, all transactions are processed ensuring all the requirements of Shariah law and the principles.
“We make the procedure of buying cars easier through our financial offers. The cars are brought through installment sales and for leasing insurance covers,” said the company manager.
Besides buying a car through dealers, customers get the best value of a car through websites. This is one of the options for the people living the Kingdom.
Bandar Al-Shibani, marketing manager of the Saudi Sale-Car Market at You Home website and director of Jeddah Branch says the website deals with new and mostly used and stock cars. According to him, 30 percent of the population has opted to buy cars through classified websites and it is expected to increase by 45 percent in 2015.
“Certified classified website is a better place for the customers to buy car as car prices are mentioned and enables the customers to bargain online,” he said.
The automotive industry has been flourishing and keeps rolling out new models to lure customers, including women in the Kingdom. The marketing director of a leading Saudi car dealer says 10 to 20 percent of both Saudi and expatriate women in the Kingdom are the buyers.
According to an industrial analysis, women buy one in five opulence sedans.
The showroom sales representatives say that women are particular in making the choice for vehicle options and colors.
The auto financing loans offered from the bank is dealt under Shariah-compliant financing services. The maximum period of installment payment for a new car is 60 months and minimum 6 months.
Most of the banks offer a minimum finance of SR50,000 and maximum SR100,000.
However, other financial plans are now emerging in the Kingdom where it is possible for customers to buy a more expensive vehicle over a shorter term with greatly reduced payments.
Moreover, the banks have set similar terms and conditions for the Auto loans. The Kingdom’s banks have set simple requirement for the both Saudi and non-Saudi customers; they should hold a current account with the bank and must not be less than 18 years of age. Apart from the criteria mentioned, the customer working in the public or private sector should be approved by the concerned bank with at least 3 months of service for public sector employees and one year for private employees. The customer’s net income should be SR3,000 at least.
The customer concerned should submit a valid ID that is civil ID or family book for Saudis, and for non-Saudis their iqamas and passports.
In addition to this, the customer is required to fill a car purchase form and submit an introductory letter from the employer confirming the following information: Monthly salary (basic and allowances), job description and the date of employment.
All the banks determine their profit in advance to the customers, making it easier for the customers to decide.
Saudi Arabia has a huge number of cars on the road and they are increasing day by day.
New car buyers in the country are altering their models frequently on the arrival of new vehicles. However, this increases the number of fleet and reposed cars, which manage to keep the used car pool from drying up.
The perceptions about buying second hand cars have to some extent changed as the used car sector has become more structured; still individual car buyers are keen to see that their bargains have value for money.
The personal users can sell their car through a dealer usually or online through a classified website.
Bandar Al-Shibani said a dealer will always offer less because there is a cost involved in readying the car for resale and to warranty it against any possible faults.
But this saves the person from all legal hassles as the dealers take care of transferring the ownership.
Moreover, once the car is evaluated by the dealers, the payment of the car is given immediately.
Whereas selling a car through a website has hit the trend as the price of the car can be bargained and gives the facility to shop from home and choose one’s favorite car.
However, the resale market is facing ups and downs. Many customers are opting for new cars over the used ones.
With the used car prices increasing, the consumers tend to prefer a new one instead.
Automotive sector continues to play crucial role in Saudi economy
