Saudi Arabia’s automotive market surges amid shifting consumer preferences

Saudi Arabia’s automotive market surges amid shifting consumer preferences
The Kingdom imported 93,300 cars in 2023, marking a significant increase from the previous year’s 66,900. This surge brings the total number of cars imported in 2022 and 2023 to 160,000. (SPA)
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Updated 01 October 2024
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Saudi Arabia’s automotive market surges amid shifting consumer preferences

Saudi Arabia’s automotive market surges amid shifting consumer preferences
  • Saudi consumer preferences for new vehicles are increasingly aligned with those in Western markets

RIYADH: Saudi Arabia’s automotive market surges ahead, dominating over half of the Gulf Cooperation Council car sales and claiming a spot among the top 20 global markets.

The Kingdom imported 93,300 cars in 2023, marking a significant increase from the previous year’s 66,900, as revealed by Hamoud Al-Harbi, spokesperson for the Zakat, Tax and Customs Authority. This surge brings the total number of cars imported in 2022 and 2023 to 160,000, with major contributors including Japan, India, South Korea, the US, and Thailand.

Despite the positive figures, lingering questions persist: What exactly are the vehicle preferences of consumers in the Kingdom, and what factors influence these preferences? Moreover, what considerations guide buyers when making a purchase decision?

Additionally, what roles do the National Academy of Vehicles and Cars and the Automotive Manufacturers Association play in alignment with Vision 2030?

Driven by preference

Saudi consumers’ vehicle preferences reflect a nuanced interplay between practicality and lifestyle aspirations.

Aly Hefny, show manager at Automechanika Riyadh, a regional trade event for the automotive aftermarket industry underscores a demand for robust vehicles tailored to navigate the nation’s varied terrain and climatic conditions.

“Saudi consumers prioritize comfort, reliability, and status in their vehicle choices, while also incorporating considerations for environmental impact and technological advancement,” Hefny told Arab News.

He further notes the evolving mindset reflected in the growing interest in environmentally conscious options and technological innovations, such as electric and hybrid vehicles.

Furthermore, Karim Henain, partner at Bain & Co., notes that Saudi consumer preferences for new vehicles are increasingly aligned with those in Western markets. There is a growing demand for advanced connectivity, infotainment systems, and driving assistance technologies such as Advanced Driver Assistance Systems, autonomous parking, and 360-degree cameras, driven by the country’s tech-savvy youth. 




There is a growing demand for advanced connectivity, infotainment systems, and driving assistance technologies. (Supplied)

Moreover, according to Matthias Ziegler, managing director of Volkswagen Middle East, consumer preferences in the Kingdom present a distinct perspective compared to other markets.

“While sedans remain present, a clear trend toward SUVs is evident, particularly for larger 7-seater models that align with the strong emphasis on family transportation within the region,” Ziegler told Arab News.

Within Volkswagen, Ziegler revealed that their top-selling models in Saudi Arabia are the Teramont and T-Roc, “both recognized for their comfortable driving experience, spacious interiors, and comprehensive feature sets.”

The managing director highlighted how these attributes resonate strongly with Saudi car buyers, who increasingly prioritize practicality and comfort for extended journeys and family outings.

“The upcoming all-new Tiguan is also expected to perform well in the market due to its continued focus on these core strengths,” Ziegler asserted.

He noted the growing interest in fuel efficiency as petrol prices fluctuate.

“While not currently the primary decision factor, cost of ownership is an aspect we are actively considering in the development of future offerings for the Saudi market,” he explained.

According to Sami Malkawi, managing director of sales at Ford Middle East, customers in the Kingdom have a refined taste when selecting their next vehicle. While luxury sedans, such as the Ford Taurus, have long been popular, there is a noticeable increase in the popularity of small SUVs.

“Brands have responded to the growth in interest in this kind of SUV, which offers practicality, power, interior space, and ease of handling in a smaller package – and buyers are spoilt for choice. In fact, there are currently more than 40 types of small SUVs available in this market,” Malkawi disclosed.

The managing director highlighted that the company recognized the demand and launched the Ford Territory in the region in November 2022.

“Just over a year later, Territory was the Kingdom’s top-selling small SUV and Ford became the fastest-growing brand in the Kingdom. We’re proud to see it come out on top in such a competitive category, which holds the interest of so many consumers and auto brands.”

Navigating purchase factors

A Bain & Co. survey reveals a pronounced focus on running costs, with fuel and maintenance overshadowing other considerations, particularly among the younger demographic. This aligns with global trends, where operational affordability is crucial.

“Interestingly, dealership service quality, highly valued in other markets, ranks lower among Saudi buyers, possibly reflecting different expectations or experiences with after-sales services,” Henain explained. 

The cost of ownership is an aspect we are actively considering in the development of future offerings for the Saudi market.

Matthias Ziegler, managing director of Volkswagen Middle East

For electric vehicle enthusiasts, charging infrastructure emerges as the linchpin, eclipsing concerns over driving range and speed, underscoring the imperative for robust charging networks.

“Our survey further reveals distinct vehicle preferences across age groups; SUVs are preferred by Saudis aged 35 to 65 for their versatility and capacity, while sedans are favored by the 25 to 34 age group for practicality and economy,” he said. Henain added that convertibles, coupes, and hatchbacks are more popular among female Saudis.

Steering industry vision

The National Automotive and Vehicles Academy and the Automotive Manufacturers Association emerge as linchpins in the Kingdom’s automotive narrative. NAVA’s mandate of nurturing skilled talent aligns seamlessly with Vision 2030’s emphasis on human capital, while the AMA advocates for regulatory coherence and industry growth.

Ziegler stresses the pivotal role of collaboration between industry stakeholders and government institutions, propelling Saudi Arabia toward a future of mobility underscored by efficiency and environmental stewardship.

“The NAVA’s focus on nurturing skilled talent aligns perfectly with the industry’s need for a strong future workforce capable of driving innovation, aligning with Vision 2030’s emphasis on human capital,” he pointed out.

On the other hand, he added:“The AMA’s formation as a united industry front presents a valuable opportunity to advocate for streamlined regulations, ensuring fair competition and fostering a more conducive environment for growth.”

These developments position Saudi Arabia to embrace its sustainability goals while delivering top-tier automotive solutions. Henain underscores NAVA’s role in bridging the talent gap and AMA’s efforts in fostering local manufacturing and maintenance capabilities.

“NAVA’s mandate is to address the local talent gap through specialized technical education programs tailored to the EV industry aiming at preparing a skilled workforce to meet the needs of local EV manufacturing,” he said.

Simultaneously, he added, AMA will lead initiatives to raise awareness in local communities about the ambitions of the Saudi automotive sector and the need to build local capabilities in manufacturing and maintenance, all while protecting the interests of the industry’s stakeholders.

Henain emphasized that similar organizations in countries that have developed their automotive sectors have played instrumental roles in ensuring the success of sector build-up.

“I expect those entities to play an equally pivotal role for the Kingdom’s automotive and mobility sector,” he said.

From Ford’s perspective, Malkawi highlighted the company’s close collaboration with Saudi authorities and associations to meet CAFÉ regulations and requirements.

“While I can’t comment directly on the exact role played by these bodies, I can talk about our own commitment to driving high standards in the industry and pushing the boundaries of automotive innovation,” the managing director emphasized.

He justified Ford’s dedication to continuously developing next-gen technologies that enhance vehicle safety, intelligence, and drivability, along with integrating more sustainable practices and cutting-edge advancements that contribute to the overall growth of the automotive sector.

Malkawi concluded by noting, “As the face of Ford in the Kingdom, our valued distributor partners play a critical role in ensuring our customers enjoy an experience that is always improving, which translates into improved loyalty and, ultimately, growth in the automotive sector.”


Citi gets license for regional headquarters in Saudi Arabia, memo shows

Citi gets license for regional headquarters in Saudi Arabia, memo shows
Updated 22 November 2024
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Citi gets license for regional headquarters in Saudi Arabia, memo shows

Citi gets license for regional headquarters in Saudi Arabia, memo shows
  • Wall Street giant received the approval from the Ministry of Investment Saudi Arabia

RIYADH: US bank Citigroup has received approval to establish its regional headquarters in Saudi Arabia’s Riyadh, according to an internal memo seen by Reuters on Friday.
The Wall Street giant received the approval from the Ministry of Investment Saudi Arabia (MISA), according to the memo.
“This marks a significant leap forward for our franchise in Saudi Arabia and we look forward to our continued growth in the kingdom,” Citi Saudi Arabia CEO Fahad Aldeweesh said in the memo.
Bloomberg News reported the development earlier in the day.
Wall Street titan Goldman Sachs also received a license in May to set up its regional headquarters in Saudi Arabia’s Riyadh.


Saudi Arabia joins global hydrogen fuel partnership

Saudi Arabia joins global hydrogen fuel partnership
Updated 22 November 2024
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Saudi Arabia joins global hydrogen fuel partnership

Saudi Arabia joins global hydrogen fuel partnership

RIYADH: Saudi Arabia has joined a key international alliance designed to enhance cooperation around the development and deployment of hydrogen and fuel cell technologies.

The International Partnership for the Hydrogen and Fuel Cell Economy works to deliver a balanced and effective global transition to cleaner and more efficient energy systems.

The Kingdom’s Ministry of Energy announced Saudi Arabia had signed up to the organization, with a press release saying the move represents a new step that confirms the “pioneering role” that the Kingdom is playing in international efforts aimed at enhancing sustainability and “innovating advanced solutions” in the fields of clean power.

Saudi Arabia has pledged to achieve zero neutrality in terms of carbon emissions by 2060, as well as becoming one of the world’s most important producers and exporters of clean hydrogen.

The press release added: “The Kingdom’s accession to this partnership confirms its firm vision regarding the role of international cooperation and its importance in achieving a more sustainable energy future.”

The IPHE was originally launched in 2003 by the US, and has two active working groups covering Education & Outreach, and Regulations, Codes, Standards, & Safety.


COP29 enters final hours amid key negotiations on climate finance and carbon markets

COP29 enters final hours amid key negotiations on climate finance and carbon markets
Updated 22 November 2024
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COP29 enters final hours amid key negotiations on climate finance and carbon markets

COP29 enters final hours amid key negotiations on climate finance and carbon markets

BAKU: As COP29 nears its conclusion, negotiators are working intensively to finalize agreements that could significantly advance global climate action. 

Hosted in Baku, Azerbaijan, the conference has focused on critical issues such as climate finance, adaptation strategies, and the operationalization of carbon markets under the 2015 Paris Agreement. 

Although decisions remain in draft form, the discussions signal progress on aligning global efforts with the urgent need to combat the climate crisis.

Saudi Arabia has emerged as a key player, leveraging its growing diplomatic influence and domestic climate initiatives to shape the outcomes.

Push for equitable climate finance

One of the most pressing topics at COP29 has been the New Collective Quantified Goal on climate finance. 

Negotiators are seeking to establish a framework that mobilizes $1.3 trillion annually by 2035 to support developing nations in addressing climate change. 

This new goal reflects the escalating financial demands of both mitigation and adaptation efforts, with developing countries requiring $215 billion to 387 billion annually for adaptation alone through 2030.

Saudi Arabia has been a vocal advocate for equitable financing mechanisms, emphasizing the need for practical pathways to unlock funds for countries that bear the brunt of climate impacts yet have limited resources. 

The Kingdom has supported calls for reforming global financial institutions to reduce barriers such as high borrowing costs and restrictive conditions. This aligns with Saudi Arabia’s broader position that climate finance must be accessible and targeted to the most vulnerable nations.

Domestically, Saudi Arabia has backed its advocacy with action. The Kingdom has committed significant investments to its Saudi Green Initiative, which includes billions of dollars for renewable energy projects, reforestation, and environmental restoration. 

These initiatives underscore Saudi Arabia’s dual focus on addressing domestic climate challenges and contributing to global solutions, according to the draft resolution. 

“Through initiatives like the Saudi Green Initiative, the Kingdom has committed to reducing regional emissions by more than 10 percent and leading the planting of 50 billion trees across the Middle East to combat desertification and foster environmental sustainability,” the document stated.

Speeches came to an end as negotiations at COP29 in Baku reached their final hours. AN Photo/Abdulrahman Bin Shulhub

Carbon Markets: A Saudi priority

Discussions on Article 6 of the Paris Agreement, which governs international carbon trading, have been another focal point of COP29. 

Saudi Arabia has taken a prominent role in shaping the rules for carbon markets, advocating for frameworks that promote transparency and equitable participation.

Under Article 6.2, which covers bilateral cooperation, and Article 6.4, which establishes a centralized mechanism for trading carbon credits, Saudi negotiators emphasized the importance of avoiding double-counting emissions reductions and ensuring environmental integrity. 

These safeguards are essential for building trust in the carbon market as a tool for accelerating emissions reductions.

In the draft resolution on financing released by the UN Framework Convention on Climate Change it is outlined that “Saudi Arabia emphasizes the importance of transparency and equitable participation in Article 6 mechanisms, ensuring that developing nations can benefit from international carbon trading frameworks.”

The Kingdom’s engagement in these discussions reflects its broader ambition to become a regional hub for carbon trading. The Kingdom is advancing projects in carbon capture, utilization, and storage, positioning itself as a leader in leveraging market-based solutions to achieve climate goals. 

These efforts align with the Saudi Green Initiative’s targets for emissions reductions and renewable energy expansion.

A commitment to adaptation

While mitigation often dominates global climate discussions, COP29 has seen renewed attention to adaptation – an area where Saudi Arabia has also contributed actively.

Negotiators are working to refine the Global Goal on Adaptation by developing measurable indicators to track progress.

These metrics aim to ensure that adaptation efforts are effective and responsive to the needs of vulnerable communities.

“Saudi Arabia continues its focus on promoting energy efficiency, a critical pillar of its sustainability agenda, as highlighted by top officials during COP29 discussions,” reads the draft resolution.​

The Kingdom has supported these efforts, emphasizing the importance of integrating local knowledge and traditional practices into adaptation strategies. The Kingdom’s approach aligns with its domestic priorities, which include enhancing resilience to desertification and water scarcity, challenges exacerbated by its arid climate, the document added.

Inclusivity and collaboration

Inclusivity has been a central theme at COP29, and Saudi Arabia has demonstrated its commitment to ensuring diverse voices are part of the climate conversation. The Kingdom supported the draft Baku Workplan, which aims to elevate indigenous peoples and local communities in climate governance.

Domestically, Saudi Arabia has prioritized inclusivity through education and workforce development programs that prepare youth and women for leadership roles in green industries. 

These initiatives are part of broader reforms under Vision 2030, which aims to diversify the economy while ensuring equitable opportunities for all citizens.

COP29 began on Nov. 11. AN Photo/Abdulrahman Bin Shulhub

Regional leadership

Saudi Arabia’s influence extends beyond its national borders. Through the Middle East Green Initiative, the Kingdom is fostering regional cooperation to combat climate change.

The initiative includes ambitious goals to plant 50 billion trees across the Middle East and reduce regional emissions by more than 10 percent.

At COP29, these efforts were presented as examples of how regional action can amplify global progress.

By working closely with other Gulf Cooperation Council countries, Saudi Arabia is also driving investments in renewable energy projects that enhance energy security and sustainability. 

These partnerships underscore the Kingdom’s role as a regional leader in climate action, capable of catalyzing collective efforts to address shared challenges.

Challenges and opportunities ahead

As COP29 approaches its conclusion, much remains to be finalized. The draft decisions on climate finance, carbon markets, and adaptation reflect significant progress but also underscore the complexity of reaching consensus among diverse stakeholders.

Saudi Arabia’s contributions to these discussions demonstrate its ability to balance domestic priorities with international leadership. By advocating for equitable solutions, advancing regional cooperation, and showcasing its own climate successes, the Kingdom has positioned itself as a key player in shaping the global response to climate change.

The conference has marked an important step forward in the global fight against climate change. The agreements under discussion – particularly those on finance and carbon markets – highlight the growing recognition that collective action is essential to achieving the Paris Agreement’s goals.

Saudi Arabia’s active participation in these negotiations underscores its evolving role as a climate leader. 


Saudi cement sales up 5% to 12.84m tonnes amid sustainability drive

Saudi cement sales up 5% to 12.84m tonnes amid sustainability drive
Updated 22 November 2024
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Saudi cement sales up 5% to 12.84m tonnes amid sustainability drive

Saudi cement sales up 5% to 12.84m tonnes amid sustainability drive

RIYADH: Cement sales in Saudi Arabia saw an annual increase of 4.93 percent in the third quarter of 2024, reaching 12.84 million tonnes, according to recent data.

Figures released by Al-Yamama Cement showed that 96.18 percent of these sales were domestic, with only 3.82 percent being exported.  

The data covers 17 Saudi cement companies, with Al-Yamama Cement holding the largest share of domestic sales at 12.47 percent, amounting to 1.54 million tonnes, despite experiencing a 27.18 percent decline during the period.

With the successful acquisition of Hail Cement Company by Qassim Cement Company, QCC now leads the market with the highest share among its peers at 13.37 percent, or 1.65 million tonnes, moving Al-Yamama Cement to second place.

Saudi Cement, Southern Cement and Yanbu Cement held 8.96 percent, 8.49 percent and 8.18 percent shares of the domestic market respectively.

The highest growth in domestic sales was recorded by Umm Al-Qura Cement, which saw a 69 percent increase to 372,000 tonnes during this period, despite holding a relatively small 3 percent market share.

City Cement’s local sales rose by 52.69 percent annually to 739,000 tonnes, while Tabuk Cement experienced a 27.3 percent increase, reaching 429,000 tonnes.  

In terms of cement exports, Saudi Cement dominated with 80.45 percent of total shipments, amounting to 395,000 tonnes this quarter.  This figure represents a 13.18 percent increase compared to the same quarter last year.   

Najran Cement accounted for 11 percent of exports for the quarter, totaling 54,000 tonnes, marking a 24 percent decline. Eastern Cement with 8.55 percent share saw a 133 percent rise in exports, reaching 42,000 tonnes. 

Saudi Arabia also exported 1.08 million tonnes of clinker during this period, marking a 41 percent decline compared to the same period last year.

Clinker, a crucial intermediate product in cement production, is commonly exported due to its cost-effectiveness. It is more economical to ship it to other countries for final processing into cement than to produce the finished product and then export.

According to a report by AlJazira Capital, the total utilization rate of the cement sector in Saudi Arabia stood at 72.8 percent in September. 

This figure represents the proportion of the cement production capacity that is actively being used to meet demand.

A utilization rate of 72.8 percent indicates that, on average, the cement industry in Saudi Arabia is using just over two-thirds of its available production capacity.

Saudi Arabia is a prominent player in the global cement industry, ranking among the top 10 producers worldwide. The Kingdom’s production capacity has been bolstered by significant investments to meet both domestic demand and export opportunities.

Key factors driving Saudi Arabia’s cement industry include its robust infrastructure development, housing projects, and initiatives under Vision 2030, which aim to diversify the economy and reduce reliance on oil revenues.

Saudi Arabia’s path to decarbonization

In October, Saudi Arabia’s cement sector took a significant leap towards decarbonization with the announcement of a joint venture between the UK’s Next Generation SCM and Nizak Mining Co., a subsidiary of City Cement.

The collaboration is focused on producing supplementary cementitious materials locally, utilizing an innovative, energy-efficient technology.

This new method requires only one-sixth of the fuel compared to conventional cement production and operates at lower temperatures, significantly reducing operational costs and carbon emissions.

The technology already demonstrates a 99 percent reduction in emissions, producing just 8 kg of CO2 per tonne of calcined clay, compared to the global average of 600 kg per tonne.

The joint venture is part of the Kingdom’s broader decarbonization strategy, which is aligned with Vision 2030 and the Saudi Green Initiative.

As part of these proposals, the Kingdom has set an ambitious goal of cutting carbon emissions by 278 million tonnes annually by 2030.

This venture, which will have its first production plant in Riyadh, is expected to produce up to 700,000 tonnes of low-carbon supplementary cementitious materials in its second year of operations, starting in 2025.

The project is also crucial for the domestic production of low-carbon concrete, as traditional SCM alternatives, like fly ash and slag, are not readily available in Saudi Arabia.

The venture will not only help Saudi Arabia meet its sustainability targets but also strengthen its position as a regional hub for low-carbon materials, generating both economic and environmental benefits.

Speaking in October, Majed Al-Osailan, CEO of City Cement, emphasized the long-term impact of the project, stating that it will create jobs, improve access to sustainable building materials, and create export opportunities for the Kingdom.

According to a study by the Boston Consulting Group in September, Saudi Arabia stands to gain a significant competitive advantage in the global cement industry as the sector moves toward decarbonization through carbon capture and storage.

The competitive dynamics of the industry are shifting due to the high costs associated with CCS, which is essential for achieving net-zero emissions by 2050.

One of the primary factors influencing future competitiveness is a plant’s proximity to CO2 storage sites.

Cement plants located within 200 km of CCS hubs could see abatement costs reduced by half compared to those located farther away.

This geographical advantage will be crucial in determining cost competitiveness on a global scale.

Saudi Arabia, with its lower energy costs, is well-positioned to capitalize on this advantage according to the study. The Middle East, in general, benefits from cheaper energy, which could give Saudi plants a $20 per tonne cost advantage in CCS over the global median.

This would allow Saudi Arabia to emerge as a key export hub in the global cement market. 

Plants in the Kingdom that can minimize their CCS abatement costs will be internationally competitive, particularly as global trade dynamics shift and demand grows for low-carbon cement.

Moreover, Saudi Arabia’s energy infrastructure and strategic location near key shipping routes bolster its potential as a regional and global supplier of cement.

With substantial investments in CCS technology and renewables, the Kingdom could not only meet domestic demand but also serve international markets more efficiently, securing its position in the evolving global cement trade.

As the cost of CCS implementation rises, the global competitive landscape will be reshaped, with plants closer to CO2 storage hubs and renewable energy sources becoming more attractive.

Saudi Arabia’s competitive edge, therefore, lies in its ability to leverage its energy resources and strategic location, potentially making it a leader in the export of low-carbon cement solutions.


Oil Updates – crude heads for weekly gains as Ukraine war intensifies

Oil Updates – crude heads for weekly gains as Ukraine war intensifies
Updated 22 November 2024
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Oil Updates – crude heads for weekly gains as Ukraine war intensifies

Oil Updates – crude heads for weekly gains as Ukraine war intensifies

LONDON: Oil prices inched lower on Friday, but were on track for a weekly rise of nearly 4 percent, as an intensifying war in Ukraine returned a geopolitical risk premium to oil markets.

Brent crude futures fell 65 cents, or 0.88 percent, to $73.58 a barrel by 4:12 p.m. Saudi time. US West Texas Intermediate crude futures fell by 66 cents, or 0.94 percent, to $69.44 per barrel.

Pressuring prices on Friday, eurozone business activity took a surprisingly sharp turn for the worse this month as the bloc’s dominant services industry contracted and manufacturing sank deeper into recession.

Kazakhstan’s largest oilfield, Tengiz, is scheduled to return to full production in early December, Russian news agency Interfax reported on Friday, while elsewhere Kazakhstan’s energy ministry said it plans to produce 90 million tonnes of oil in 2025, up from 88 million tonnes in 2024.

Both contracts are set for gains of nearly 4 percent this week, as Moscow steps up its Ukraine offensive after Britain and the United States allowed Kyiv to strike deeper into Russia with their missiles.

“The Russia-Ukraine escalation has raised geopolitical tensions beyond levels seen during the year-long conflict between Israel and Iran-backed militants,” Saxo Bank analyst Ole Hansen said on Friday.

He added that rising refinery margins and an incoming cold snap had also supported distillate refinery profit margins, and wider oil prices, this week.

The Kremlin said on Friday that a strike on Ukraine using a newly developed hypersonic ballistic missile was a message to the West that Moscow will respond harshly to any “reckless” Western actions in support of Ukraine.

Ukraine has used drones to target Russian oil infrastructure, for instance in June, when it used long-range attack drones to strike four Russian refineries.

“What the market fears is accidental destruction in any part of oil, gas and refining that not only causes long-term damage but accelerates a war spiral,” said PVM analyst John Evans.

Also supporting prices this week, China announced policy measures on Thursday to boost trade, including support for energy product imports, amid worries over US President-elect Donald Trump’s threats to impose tariffs.

China’s crude oil imports are set to rebound in November, according to analysts, traders and ship tracking data.