Saudi car industry speeds up growth amid push to be a production hub

Sales of new cars across all original equipment manufacturers in Saudi Arabia surged by 23 percent last year over 2022, a figure that outpaces the global average of 10 percent. (SPA)
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Updated 01 October 2024
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Saudi car industry speeds up growth amid push to be a production hub

  • Key drivers include a young population, increased female drivers, and a substantial influx of expatriates

RIYADH: Saudi Arabia’s automotive industry is experiencing significant growth, driven by government-led initiatives, a strategic geographical location, and ambitious plans to become a manufacturing hub.  

These factors are transforming the Kingdom into a pivotal player in the sector’s global market. 

According to Karim Henain, partner at Bain & Co., key drivers of this growth include a young population, increased female drivers, and a substantial influx of expatriates, leading to over 600,000 new car sales annually. 

“The market is poised for rapid growth, outpacing many Western counterparts,” Henain told Arab News. 

He added: “Vehicle ownership rates in Saudi Arabia exceed those in Western markets, supported by larger family sizes, less developed public transport systems, and a strong culture of personal vehicle dependency.”  

According to Aly Hefny, show manager at Automechanika Riyadh, Messe Frankfurt Middle East, Saudi Arabia’s strategic geographical location at the crossroads of major trade routes further enhances its stature as a regional automotive hub. He told Arab News that the Kingdom’s government is taking a unique approach to leading direct investment initiatives within the automotive sector. 

“Saudi automotive stakeholders, like their international counterparts, are proactively embracing innovation, investing in research and development, and prioritizing sustainability. These are crucial steps the Saudi government is taking to ensure long-term viability and competitiveness in the global market,” the show manager added.

Manufacturing hub

The automotive sector, encompassing design, development, and production, as well as distribution, maintenance and repair, and customization, plays a crucial role in achieving the ambitious goals of Vision 2030. Henain mentioned that the Kingdom had set an ambitious goal to build an automotive manufacturing cluster, with deals already in place to establish a local footprint for original equipment manufacturers as well as tier-1 suppliers. 

“The industry is still nascent and will take some time before it reaches the maturity of other more established automotive manufacturing clusters,” he said.  

He pointed out that the Kingdom is investing heavily in autonomous vehicle technology, with plans to introduce Robotaxis and Roboshuttles in the near future. 

Saudi automotive stakeholders are proactively embracin innovation, investing in research and development, and prioritizing sustainability.

Aly Hefny, show manager at Automechanika Riyadh

“These initiatives demonstrate the Kingdom’s dedication to adopting and integrating state-of-the-art automotive technologies, positioning it as a global leader in the future of mobility,” the Bain & Co. executive added.

Industry dynamics 

The Saudi automotive industry is experiencing notable transformations, according to Matthias Ziegler, managing director of Volkswagen Middle East. Among the key dynamics shaping the sector is the alignment of global SUV preferences with Saudi customers’ preference for larger, family-oriented seven seaters. 

“This focus on family transportation is further amplified by the robust infrastructure and extensive road network,” Ziegler told Arab News. 

He elaborated that consequently, comfort emerges as a crucial consideration, driving increasing interest in advanced comfort and safety features, as well as in-car connectivity. 

“What is unique about the market is the notable brand loyalty among Saudi car buyers, prioritizing after-sales service and vehicle reliability,” Ziegler disclosed. 

In the vehicle mix, over 3 percent of the sold vehicles are luxury models, surpassing the global average of 2 percent, according to Henain of Bain & Co. 

“SUVs, constitute about 36 percent of the market — slightly below the global average of 45 percent — with a preference for larger models, reflecting the demand for spacious vehicles suited for family use and the diverse terrain.”  

Henain highlighted that Asian car manufacturers dominate the market, with Japanese, South Korean, and Chinese brands constituting a remarkable 88 percent of total sales. Notably, Chinese brands have experienced exceptional growth, soaring from 7,000 units in 2018 to 100,000 in 2022. 

Sami Malkawi, managing director of sales at Ford Middle East, emphasized Saudi Arabia’s uniqueness as a market, highlighting the significant developments witnessed in the Kingdom’s automotive industry over the past year. 

He highlighted that sales of new cars across all original equipment manufacturers in Saudi Arabia surged by 23 percent last year over 2022, a figure that outpaces the global average of 10 percent. 

“This is a reflection of the nation’s impressive growth story in a year where its non-oil growth was estimated at nearly 5 percent as it pursued its ambitious Vision 2030 agenda, aided by substantial private and public sector investment,” Malkawi told Arab News.  

He stated that Ford is “deeply committed” to Saudi Arabia and has been making concerted efforts to help grow the Kingdom’s automotive sector. 

The managing director added: “Our focus — including a strong strategy to develop our product offerings while continuing to further improve customer experience — in conjunction with the Kingdom’s impressive growth, saw us end 2023 with sales up 77 percent over 2022.”

Electric vehicles

Meanwhile, aligning with global trends, Saudi Arabia has implemented ambitious plans for vehicle electrification as part of Vision 2030, aiming to achieve a 30 percent electric vehicle penetration by 2030.  

These plans involve local manufacturing of Saudi electric vehicle brands and the establishment of an entity dedicated to developing the country’s charging infrastructure. 

This focus on family transportation is further amplified by the robust infrastructure and extensive road network.

Matthias Ziegler, managing director of Volkswagen Middle East

“The KSA EV sector is nascent with less than 1 percent penetration, lagging behind UAE at around 3 percent, China at an estimated 22 percent, and Europe at near 10 percent, attributed to cheap fuel, under-developed charging infrastructure, and lesser appetite among consumers,” Henain revealed. 

Ziegler of Volkswagen agreed that the transition to electric vehicles is in its early stages, with a continued preference for combustion engines. However, he emphasized that this does not negate the growing interest in electric vehicle technology. 

“Similar to China and the US, the Kingdom implements CO2 regulations, aligning with the international push for sustainability,” Ziegler described. 

This aligns with Saudi Arabia’s Vision 2030 strategy for achieving net-zero emissions, which aims to reduce emissions by 278 million tonnes per annum. 

On sustainable mobility, Malkawi said: “The growing demand for fuel-efficient and electric vehicles paves the way for a cleaner future, as envisioned by Vision 2030’s focus on sustainability.”  

He added that Ford is committed to offering a wider range of Hybrid and EVs in Saudi Arabia and launching vehicles supporting this transition.

Impact on Vision 2030

Industry leaders emphasize that the development of the automotive sector is crucial for achieving Vision 2030’s goals of economic diversification, job creation, and technological advancement.  

“By promoting localization, innovation, and sustainable practices, the automotive industry contributes to economic diversification, job creation, and technological advancement,” Hefny commented. 

FASTFACT

Asian car manufacturers dominate the market, with Japanese, South Korean, and Chinese brands constituting a remarkable 88 percent of total sales. Notably, Chinese brands have experienced exceptional growth, soaring from 7,000 units in 2018 to 100,000 in 2022.

He also highlighted that initiatives aimed at increasing female participation in the workforce have expanded the consumer base, stimulating demand for vehicles and related services.  

Additionally, he emphasized that by aligning with Vision 2030’s objectives, the automotive sector plays an important role in shaping a vibrant and resilient economy for future generations. 

Speaking on behalf of Volkswagen Middle East, Ziegler reiterated how a thriving automotive market is central to Saudi Arabia’s economic diversification goals outlined in Vision 2030. 

“By promoting localization, job creation, and technology adoption, the industry stimulates economic growth and positions the Kingdom as a leader in future mobility solutions,” he concluded. 

The Bain & Co. partner expressed the view that through the development of local manufacturing, the sector enables non-oil gross domestic product growth, stimulates job creation, and fosters technological advancement. 

“The push toward electric vehicles and autonomous technologies aligns with Vision’s goals of environmental sustainability and innovation,” Henain added.   

He noted that international partnerships in the automotive and mobility industry would enhance Saudi Arabia’s global reputation, driving innovation and bolstering trade ties with leading economies.  

“I believe the development of the automotive industry will be pivotal to achieving the country’s development goals set out in Vision 2030,” he concluded. 

Malkawi from Ford emphasized that the automotive industry drives diversification, economic growth, and sustainable mobility, infrastructure, and connectivity. 

“A thriving automotive sector creates jobs, fosters local businesses, and attracts foreign investment, all aligning with Vision 2030’s economic diversification goals,” he explained. 

Malkawi concluded by highlighting the importance of infrastructure and connectivity: “A robust automotive market necessitates improved infrastructure, including better roads and a focus on smart technologies. This aligns with Vision 2030’s goals of developing modern infrastructure and fostering a digitally connected society.”


Closing Bell: Saudi main index closes in red at 10,770

Updated 12 August 2025
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Closing Bell: Saudi main index closes in red at 10,770

  • Parallel market Nomu lost 91.69 points to close at 26,144.11
  • MSCI Tadawul Index edged down 0.26% to 1,391.13

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Tuesday, shedding 21.98 points, or 0.20 percent, to close at 10,769.66. 

The total trading turnover on the main index reached SR4.08 billion ($1.09 billion), with 94 stocks advancing and 159 declining. 

The Kingdom’s parallel market Nomu also fell, losing 91.69 points to close at 26,144.11, while the MSCI Tadawul Index edged down 0.26 percent to 1,391.13. 

The best-performing stock on the main market was Red Sea International Co., whose share price jumped 9.96 percent to SR45.72. BAAN Holding Group Co. rose 4.98 percent to SR2.32, while Astra Industrial Group gained 4.71 percent to SR149. 

The share price of Methanol Chemicals Co. dropped by 9.92 percent to SR10.62. 

On the announcements front, Saudi Electricity Co. reported a net profit attributable to common shares of SR1.86 billion after deducting profit attributable to Mudaraba instruments for the second quarter, up 113 percent from SR0.87 billion a year earlier. 

The company’s net profit before Mudaraba payments stood at SR6.25 billion, compared to SR5.24 billion in the same quarter of 2024, reflecting a 19.26 percent increase. 

The utility’s share price slipped 0.61 percent to SR14.61. 

First Milling Co. announced it had completed the acquisition of a 100 percent stake in Jeddah-based Al Manar Feed Co. in a deal valued at SR77 million. In a Tadawul filing, the company said the acquisition aligns with its strategy to boost feed production capacity. 

With the purchase, First Milling Co. will add a daily production capacity of 450 tonnes in the feed segment, bringing its total feed output to 1,350 tonnes per day. 

The company’s share price rose 0.28 percent to SR53.20. 


OPEC projects global oil demand to rise by 1.38m bpd in 2026

Updated 12 August 2025
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OPEC projects global oil demand to rise by 1.38m bpd in 2026

  • Supply growth from producers outside OPEC+ is trimmed, signaling a tighter market outlook

LONDON: OPEC on Tuesday raised its forecast for global oil demand next year and trimmed its forecast for growth in supply from the US and other producers outside the wider OPEC+ group, pointing to a tighter market outlook.

The outlook for higher demand and a drop in supply growth from outside OPEC+ would make it easier for OPEC+ to proceed with its plan to pump more barrels to regain market share after years of cuts aimed at supporting the market.

World oil demand will rise by 1.38 million barrels per day in 2026, the Organization of the Petroleum Exporting Countries said in a monthly report, up 100,000 bpd from the previous forecast. This year’s expectation was left unchanged.

In the report, OPEC also increased its forecast for world economic growth slightly this year to 3 percent as President Donald Trump’s administration signs some trade deals and the economies of India, China and Brazil outperform expectations.

“Economic data at the start of the second half of 2025 further confirm the resilience of global growth, despite persistent uncertainties related to US-centered trade tensions and broader geopolitical risks,” OPEC said in the report.

Oil supply from countries outside the Declaration of Cooperation — the formal name for OPEC+ — will rise by about 630,000 bpd in 2026, OPEC said, down from last month’s forecast of 730,000 bpd.

OPEC's report said it now expects US output of tight oil, another term for shale, to decline by 100,000 bpd in 2026, versus last month’s outlook for flat output year on year.

“The 2026 forecast assumes sustained capital discipline, additional drilling and completion efficiency gains, weaker momentum in drilling activities and increased associated gas production in key shale oil regions,” OPEC said.

OPEC’s report also showed that in July, OPEC+ raised crude output by 335,000 bpd, a further increase reflecting its decisions this year to increase output quotas.


Cost excellence key to unlock potential of Saudi Arabia’s mining sector: Alvarez and Marsal

Updated 12 August 2025
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Cost excellence key to unlock potential of Saudi Arabia’s mining sector: Alvarez and Marsal

  • Kingdom’s mining and minerals industry is poised for sustainable long-term growth
  • It has already laid strong foundations in the sector

RIYADH: Mining firms operating in Saudi Arabia should implement disciplined financial planning, transparency, and cost ownership in their operating model to reap long-term benefits, according to an analysis. 

In its latest report, professional services firm Alvarez and Marsal said the Kingdom’s mining and minerals industry is poised for sustainable long-term growth with committed investments worth SR246 billion ($65.55 billion) supporting the sector. 

The study was released just days after the Kingdom’s ranking on the Mining Investment Attractiveness Index jumped from 104th in 2013 to 23rd in 2024, cementing the nation’s status as the world’s fastest-rising power in the exploration industry, according to Canadian public policy think tank Fraser Institute.

As a part of its economic diversification efforts, Saudi Arabia is accelerating the development of its mining sector, with the Kingdom’s mineral wealth now estimated at SR9.4 trillion ($2.5 trillion).

Commenting on the latest report, Alexander Shvets, managing director, infrastructure and capital projects – metals and mining at Alvarez and Marsal Middle East, said: “Saudi Arabia’s mining sector is now central to the Kingdom’s economic transformation.” 

He added: “Building on this momentum with embedded cost visibility and performance tracking will help operators to achieve global competitiveness and long-term value creation.” 

According to Alvarez and Marsal, adopting structured financial frameworks can help mining companies seize emerging opportunities and ensure operational excellence as the sector matures. 

“Control is not just a finance function — it’s an operational discipline. In mining, where complexity and capital intensity are high, real-time cost visibility and team capability are what turn strategy into measurable results,” said Renat Akimbitov, managing director, infrastructure and capital projects – metals and mining at Alvarez and Marsal Middle East. 

The report said Saudi Arabia has already laid strong foundations in the sector, with the establishment of institutions such as the Saudi Geological Survey, creating a dynamic and investor-friendly environment.

In March, the Kingdom also launched a new incentive package to attract foreign direct investments into the nation’s mining sector. 

At that time, the Saudi Press Agency reported that the Kingdom’s Ministry of Investment is collaborating closely with the Ministry of Industry and Mineral Resources through an exploration enablement program aimed at simplifying investments in the mineral exploration industry. 

Alvarez and Marsal outlined a strategy for mining and industrial companies to strengthen financial resilience by implementing activity-based budgeting, which links finance directly to operational drivers for greater accuracy and agility.

The report also underscored the vitality of empowering business leaders with digital dashboards to manage costs dynamically, as well as conducting structured cost review meetings to ensure accountability through regular performance tracking. 

Alvarez and Marsal further highlighted the importance of cost-capability building and said that equipping teams with practical tools and training is essential to foster a cost-conscious culture within the organization. 


Saudi Arabia’s mining sector jumps to 23rd globally in Fraser Institute index  

Updated 12 August 2025
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Saudi Arabia’s mining sector jumps to 23rd globally in Fraser Institute index  

RIYADH: Saudi Arabia’s mining sector has leapt 81 places over the past decade to rank 23rd globally in the Fraser Institute’s Investment Attractiveness Index, underscoring the Kingdom’s rapid emergence as a global mining contender. 
The rise from 104th place in 2013 marks one of the steepest climbs recorded by the Canadian think tank and puts Saudi Arabia ahead of several established mining destinations in Asia and Latin America.  
The Fraser Institute credited the surge to sweeping regulatory reforms, strategic investment, and accelerated exploration activity.
These improvements reflect investor confidence in a stable regulatory environment and the vast untapped mineral wealth supported by large-scale geological surveys, new discoveries, and competitive mining licensing rounds. The rise aligns with the rapid growth of Saudi Arabia’s mining industry, a key pillar of the Kingdom’s Vision 2030 diversification strategy.   
Commenting on the Fraser Institute’s 2024 report, Vice Minister of Industry and Mineral Resources for Mining Affairs Khalid Al-Mudaifer said: “It reflects the structural transformation of the Saudi mining sector in line with the targets of Vision 2030.” 
He added: “Our focus remains on maximizing the economic value of our mineral resources, creating jobs for citizens, and localizing supply chains.”  
The vice minister said mining is no longer a traditional sector; rather, “it has become a key driver of industrial and economic growth, and we are committed to building on this momentum to ensure sustainable success.” 
The Kingdom also ranked 20th globally in the Policy Perception Index, up from 82nd a decade ago, and 24th in the Best Practices Mineral Potential Index, rising from 58th. 
This comes as Saudi Arabia issued a record number of new mining exploration licenses in the first half of 2025, registering a 144 percent increase year on year, official data showed.   
The Ministry of Industry and Mineral Resources reported that 22 licenses were granted during the period, up from nine in the same period a year earlier, underscoring rising investor interest and the government’s drive to build a more competitive and attractive mining sector.  
Commenting on Saudi Arabia’s significant jump in the rankings, Minister of Industry and Mineral Resources Bandar Alkhorayef described the progress as “unprecedented positive results that align with the Kingdom’s rise as a global mining power, reflecting the impact of reforms to enhance competitiveness in the mining investment environment, which have increased global investor confidence.”   
“We are proud of this progress and will continue to develop the mining sector to maximize its role in diversifying our economy in line with Vision 2030 targets,” he added. 


The Fraser Institute highlighted the Kingdom’s broad regulatory transformation, covering areas such as security of tenure, taxation, environmental legislation, infrastructure, and community engagement, which enabled Saudi Arabia to rank in the top quartile of the index for the first time.  
The report also noted investors had no concerns regarding political stability — one of the Kingdom’s key strengths — and commended the Mining Exploration Enablement Program for reducing investment risks and boosting early-stage project confidence.  
Data from the report showed marked improvements between 2013 and 2024, including a 305.8 percent increase in the clarity and effectiveness of mining administration, from 17 percent to 69 percent, ranking 11th globally.   
The clarity of land use for mining activities rose by 82.2 percent, from 45 percent to 82 percent, placing the Kingdom 7th globally.  
The effectiveness of labor regulations improved by 102.2 percent, from 45 percent to 91 percent, while the quality of geological databases saw an 81.8 percent increase, from 33 percent to 60 percent.    
The Fraser Institute’s Annual Survey of Mining Companies is considered one of the most trusted global benchmarks for evaluating mining investment environments and is widely used by investors, governments, and financial institutions to assess opportunities in the sector.


Dar Global boosts GDV by 67% to $12.5bn with Saudi expansion, entry into financial services

Updated 12 August 2025
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Dar Global boosts GDV by 67% to $12.5bn with Saudi expansion, entry into financial services

RIYADH: The London-listed luxury real estate developer, Dar Global, has increased its gross development value by 67 percent to $12.5 billion, driven by new large-scale projects in Saudi Arabia and a move into financial services.

Dar Global, majority-owned by Saudi developer Dar Al-Arkan and listed on the London Stock Exchange, announced it secured a joint development agreement with its parent company and completed major land acquisitions for projects in Riyadh and Jeddah, significantly expanding its footprint in the Kingdom.

In Riyadh, the company acquired part of a major integrated scheme worth $2.8 billion, anchored by a $300 million land purchase, replacing a previously announced deal in March. The decision aimed to deliver greater scale, higher profitability, and lower development risk.

In Jeddah, the firm signed another joint development agreement for a landmark mixed-use project on one of the city’s most prominent sites, with an estimated GDV of $1.95 billion.

Both projects will feature luxury villas, a world-class golf course, and a high-end hotel, tapping into Saudi Arabia’s rapid economic transformation and growing demand for premium real estate.

“These milestones mark an important inflection point for Dar Global. In Saudi Arabia, we are delivering landmark projects in prime locations and looking to bring in more overseas investment as the Kingdom opens up,” Ziad El-Chaar, CEO of Dar Global, said.

“The enhanced financing facility reinforces our balance sheet to fuel growth at scale, and the establishment of a financial services arm in DIFC (Dubai International Financial Center) enhances our ability to structure capital and unlock global opportunities,” he added.

To accelerate these developments, Dar Global expanded its Litmus financing facility from $275 million to $440 million, adding $165 million in liquidity.

The facility, underwritten by Emirates National Bank of Dubai and supported by Abu Dhabi Commercial Bank, First Abu Dhabi Bank, and Zand Bank, is secured through pledged shares and corporate guarantees.

The additional funds will strengthen the company’s balance sheet, speed up project delivery, and support expansion across the Middle East, Europe, and North America.

Dar Global acquired a licensed financial services platform in the Dubai International Financial Center, authorized to provide asset management, investment banking, and advisory services.

Operating as an independent subsidiary, the platform will enable the company to attract institutional and private capital into larger-scale projects and create investment vehicles to channel funds from the GCC and beyond.

Dar Global has positioned itself as a bridge between high-growth markets and international investors, leveraging partnerships with landowners, government bodies, and brands to deliver real estate offerings to global clients.