DAMMAM, 25 August 2003 — The government decision to increase the price of gasoline in 2007 has already begun to affect the automobile market. According to many car dealers in the Eastern Province, demand for Japanese cars is increasing while that for American cars is slipping.
The government announced recently that it would raise the price of gasoline from the present SR0.90 per liter to SR1.02 per liter in 2007. In addition, there will be a cheaper kind of gasoline available for SR0.80 per liter. According to industry sources, the cheaper gasoline will not be of high quality and can only be used in old cars.
Market sources say that an increase of nearly 12 percent in gasoline prices will have a big impact on car owners who have not given much thought to their vehicles’ average consumption of fuel.
“We are already replacing our fleet of American cars with Japanese and Korean ones. American cars consume far more fuel than Japanese cars,” said the manager of a limousine company in Alkhobar.
American cars are no doubt strong and sturdy but they certainly consume more fuel than Asian vehicles. Many car rental agencies are also considering buying Japanese cars instead of American ones.
The Japanese share of the Saudi automobile market is nearly 65 percent, and market observers say that if present trends continue, its share may increase by another five to eight percent. Korean cars are also expected to benefit from the fuel price hike.
A market survey has indicated that the prices of Japanese vehicles are already increasing because of increased sales. “It is simple supply and demand,” said an automobile showroom manager in Alkhobar. “The prices of Japanese cars are bound to increase as more and more people prefer them to American cars,” he added.
“Korean cars made a late entry into the Saudi market but they are gaining ground slowly and effectively,” he said, “and they will probably soon prove to be real competition for American cars.”
