Changan sees boom in demand as Saudis fall in love with Chinese car brands

Changan sees boom in demand as Saudis fall in love with Chinese car brands
Saudi Arabia is emerging as one of the most attractive markets overseas for Chinese car brands as they grab the attention of dealers and drivers in the Kingdom. (Shutterstock)
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Updated 28 July 2021

Changan sees boom in demand as Saudis fall in love with Chinese car brands

Changan sees boom in demand as Saudis fall in love with Chinese car brands
  • ‘Prices and technology are among the factors behind rise in popularity’

DUBAI, RIYADH, JEDDAH: A decade ago, if you would have asked a Saudi whether he would consider buying a Chinese car, the answer most likely would have been no, but this has now changed.

Saudi Arabia is emerging as one of the most attractive markets overseas for Chinese car brands as they grab the attention of dealers and drivers in the Kingdom.

Car sales in China, the world’s biggest market, were down 3 percent year-on-year to 2.13 million in May, ending a streak of 13 months of growth, mainly due to a global chip shortage and increased raw material prices. Last year, despite the coronavirus disease (COVID-10) pandemic, the data showed that sales continued to surge, and at the end of 2020, Changan’s share of the market had risen to 4.3 percent, moving it two places up in the annual car brand rankings to eighth most popular.

Mohammed Ramady, an independent economist and former professor of finance and economics at King Fahd University of Petroleum and Minerals, believes Chinese cars are proving popular because they appeal to medium- and lower-income families. He said the data showed that last year, around one in 10 Chinese cars were shipped to Saudi Arabia. A clear example of the growing popularity of Chinese cars in the Kingdom is the experience of the Changan brand. According to sales data compiled by Bestsellingcarsblog.com, the carmaker, which is owned by the Chinese state, captured 2.3 percent of the Saudi market in 2019, making it the 10th most popular car brand in the Kingdom just a few years after it was introduced to Saudi drivers.

Similarly, data from Google showed that searches for the term Changan increased nearly 50 percent year-on-year in the first half of 2021, peaking in January when the brand opened its service center in Riyadh. 

Dammam-based Wafi Al-Ghanim, marketing communication manager at Almajdouie Changan, the official distributor of the brand in Saudi Arabia, told Arab News there are three reasons the brand has quickly proved so successful: “Prices, quality, and warranty periods.”

“When you think about quality and specifications compared to the price in the car sector, you will definitely find that Chinese cars are far ahead of their counterparts in general, Japanese and Korean cars in particular,” Al-Ghanim said.

Looking to the future, he believes that Chinese cars across the board will continue to see strong growth and by 2022 will have captured 15 percent of the Saudi market, which “in a huge regional market is very good.”

One of the ways to boost sales is physical visibility. In January, Almajdouie built a 2,640-square-meter service center in Riyadh.

“We have had to raise the level of our services to match the high level of Changan cars, as well as to enhance the growing demand for Changan cars in the local market,” Yousef bin Ali Almajdouie, president of Almajdouie Group, said in a press statement at the time.

A report by the China Daily newspaper estimated that around 55,000 Changan cars have been sold in Saudi Arabia up to May this year, but it is not the only Chinese brand that has captured the attention of drivers in the Kingdom.

FASTFACTS

• Last year, despite the coronavirus disease (COVID-10) pandemic, the data showed that sales continued to surge, and at the end of 2020, Changan’s share of the market had risen to 4.3 percent, moving it two places up in the annual car brand rankings to eighth most popular.

• According to data, the carmaker, which is owned by the Chinese state, captured 2.3 percent of the Saudi market in 2019, making it the 10th most popular car brand in the Kingdom just a few years after it was introduced to Saudi drivers.

• An example of the growing popularity of Chinese cars in the Kingdom is the experience of the Changan brand.

Hongqi, one of China’s oldest luxury car brands, this month opened its first sales center in Riyadh, with plans to expand the network to Jeddah and Dammam.

“The market in the Middle East is key for Hongqi. And the Saudi market is crucial in the region,” Ma Zhenduo, general manager of Hongqi’s Middle East division, told Xinhua, the Chinese state news agency. “The sales have exceeded all our expectations across all the models,” said Mohammed Abduljawad, chairman of Universal Motors Agencies, Hongqi’s local partner in Saudi Arabia.

Hatem Khattab, the first marketing manager for FAW Bestune in Saudi Arabia, which sells the Chinese brands FAW, Bestune and Hongqi, told Arab News that the secret to the success of Chinese brands was the combination of price and technology.

“The manufacturers are very good at incorporating the latest technology in their cars. These are economic cars with state-of-the-art technology,” Khattab said. “The reason behind their popularity is their features, and now that they are seen more commonly on the streets, it has had a domino effect. Seeing the cars makes people think they are more reliable. They are affordable as well; we recently had a customer who bought 10 cars just for his family,” he added.

In addition to increased visibility on the roads, Khattab pointed out that Chinese brands also offer more options in terms of the range of models on offer.

“The competition in the automotive market here is huge, and I feel like the Chinese brands stepped up their game to meet the requirement of this cut-throat market. Currently, in Saudi Arabia, we have almost 20-25 Chinese brands as compared to brands of other countries that offer up to 10,” he said. Ramady said engine size was another big catalyst. Western, American, Japanese and South Korean models in the 2,500 to 3,000 cc engine sector still dominate the market, Chinese brands have positioned themselves in the 1,000 to 2,000 cc engine range, which is a growing segment in Saudi Arabia. He believes these models appeal “to a low to middle-income Saudi consumer market, especially during the ongoing COVID-19 pandemic and economic uncertainties, as well as a new niche market for Saudi female drivers owning their first cars.”

The statistics also back this up, according to Motory.com, one of the largest specialized car websites in Saudi Arabia. “Over the last few years, we have seen Chinese cars become increasingly popular with consumers, especially in Saudi Arabia. Online searches for Chinese cars on our Motory.com website have increased by around 400 percent between 2018 and 2020,” a spokesperson told Arab News.

Chinese carmakers saw exports increase by 103 percent year-on-year in the first five months of this year, according to a report by the South China Morning Post, citing data from the China Passenger Car Association. The way trends are going, many will find their way into Saudi garages and carparks, as the Kingdom continues to be a dominant source market. Fahad Al-Arjani, a member of the Saudi Chinese Business Council, echoed the view that technology was at the key factor, as Chinese brands have been “injecting investments in clean energy cars supported by the smartest technologies.” He pointed to the partnership between technology giant Huawei and the state-owned Beijing Automotive Industry Holding Co., Ltd. (BAIC) as an example.

“In addition to developing a highly efficient battery system, as well as emerging technologies, Huawei and BAIC’s first car will offer level three autonomous driving and will include 5G connectivity, which isn’t necessarily surprising given the Chinese company is a leader when it comes to the rollout of this new standard, which will make Chinese cars highly likely to lead the future of this sector for ages,” he told Arab News.


Oil prices up 2 percent on supply outages

Oil prices up 2 percent on supply outages
Updated 01 July 2022

Oil prices up 2 percent on supply outages

Oil prices up 2 percent on supply outages

LONDON: Oil prices rose about 2 percent on Friday, recouping most of the previous session’s declines, as supply outages in Libya and expected shutdowns in Norway outweighed expectations that an economic slowdown could dent demand, according to Reuters.

Brent crude futures were up $2.20, or 2 percent, at $111.23 a barrel by 1348 GMT, having dropped to $108.03 a barrel earlier in the session.

WTI crude futures gained $2.25, or 2.1 percent, to $108.01 a barrel, after retreating to $104.56 a barrel earlier.

Both contracts fell around 3 percent on Thursday, ending the month lower for the first time since November.

We “still see risks to prices as skewed to the upside on tight inventories, limited spare capacity and muted non-OPEC+ supply response,” Barclays said in a note.

Libya’s National Oil Corporation declared force majeure on Thursday at the Es Sider and Ras Lanuf ports as well as the El Feel oilfield. Force majeure is still in effect at the ports of Brega and Zueitina, NOC said.

Production has seen a sharp decline, with daily exports ranging between 365,000 and 409,000 bpd, a decrease of 865,000 bpd compared to production in “normal circumstances,” NOC said.

Elsewhere, 74 Norwegian offshore oil workers at Equinor’s Gudrun, Oseberg South and Oseberg East platforms will go on strike from July 5, the Lederne trade union said on Thursday, likely halting about 4 percent of Norway’s oil production.

Ecuador’s government and indigenous groups’ leaders on Thursday reached an agreement to end more than two weeks of protests which had led to the shut-in of more than half of the country’s pre-crisis 500,000 bpd oil output.

On Thursday, the OPEC+ group of producers, including Russia, agreed to stick to its output strategy after two days of meetings. However, the producer club avoided discussing policy from September onwards.

Previously, OPEC+ decided to increase output each month by 648,000 barrels per day in July and August, up from a previous plan to add 432,000 bpd per month.

US President Joe Biden will make a three-stop trip to the Middle East in mid-July that includes a visit to Saudi Arabia, pushing energy policy into the spotlight as the United States and other countries face soaring fuel prices that are driving up inflation.

Biden said on Thursday he would not directly press Saudi Arabia to increase oil output to curb soaring prices when he sees the Saudi king and crown prince during a visit this month.

A Reuters survey found that OPEC pumped 28.52 million bpd in June, down 100,000 bpd from May’s revised total.

Oil prices are expected to stay above $100 a barrel this year as Europe and other regions struggle to wean themselves off Russian supply, a Reuters poll showed on Thursday, though economic risks could slow the climb.

India introduced export duties on gasoil, gasoline and jet fuel on Friday to help maintain domestic supplies, while also imposing a windfall tax on oil producers who have benefited from higher global crude oil prices. 


Russia seizes control of partly foreign-owned energy project

Russia seizes control of partly foreign-owned energy project
Updated 01 July 2022

Russia seizes control of partly foreign-owned energy project

Russia seizes control of partly foreign-owned energy project

MOSCOW: Russian President Vladimir Putin has handed full control over a major oil and natural gas project partly owned by Shell and two Japanese companies to a newly created Russian firm, a bold move amid spiraling tensions with the West over Moscow’s military action in Ukraine, according to Associated Press.

Putin’s decree late Thursday orders the creation of a new company that would take over ownership of Sakhalin Energy Investment Co., which is nearly 50 percent controlled by British energy giant Shell and Japan-based Mitsui and Mitsubishi.

Putin’s order named “threats to Russia’s national interests and its economic security” as the reason for the move at Sakhalin-2, one of the world’s largest export-oriented oil and natural gas projects.

The presidential order gives the foreign firms a month to decide if they want to retain the same shares in the new company.

Russian state-controlled natural gas giant Gazprom had a controlling stake in Sakhalin-2, the country’s first offshore gas project that accounts for about 4 percent of the world’s market for liquefied natural gas, or LNG. Japan, South Korea and China are the main customers for the project’s oil and LNG exports.

Kremlin spokesman Dmitry Peskov said Friday that there is no reason to expect a shutdown of supplies following Putin’s order.

Shell held a 27.5 percent stake in the project. After the start of the Russian military action in Ukraine, Shell announced its decision to pull out of all of its Russian investments, a move that it said has cost at least $5 billion. The company also holds 50 percent stakes in two other joint ventures with Gazprom to develop oil fields.

Shell said Friday that it’s studying Putin’s order, which has thrown its investment in the joint venture into doubt.

“As a shareholder, Shell has always acted in the best interests of Sakhalin-2 and in accordance with all applicable legal requirements,” the company said in a statement. “We are aware of the decree and are assessing its implications.”

Seiji Kihara, deputy chief secretary of the Japanese cabinet, said the government was aware of Putin’s decree and was reviewing its impact. Japan-based Mitsui owns 12.5 percent of the project, and Mitsubishi holds 10 percent.

Kihara emphasized that the project should not be undermined because it “is pertinent to Japan’s energy security,” adding that “anything that harms our resource rights is unacceptable.”

“We are scrutinizing Russia’s intentions and the background behind this,” he told reporters Friday at a twice-daily news briefing. “We are looking into the details, and for future steps, I don’t have any prediction for you at this point.”

Asked during a conference call with reporters if Putin’s move with Sakhalin-2 could herald a similar action against other joint ventures involving foreign shareholders, Peskov said, “There can’t be any general rule here.”

He added that “each case will be considered separately.”

Sakhalin-2 includes three offshore platforms, an onshore processing facility, 300 kilometers of offshore pipelines, 1,600 kilometers of onshore pipelines, an oil export terminal and an LNG plant.
 

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Riyadh no longer one of the 100 most expensive cities for expats: Mercer

Riyadh no longer one of the 100 most expensive cities for expats: Mercer
Updated 01 July 2022

Riyadh no longer one of the 100 most expensive cities for expats: Mercer

Riyadh no longer one of the 100 most expensive cities for expats: Mercer

RIYADH: Saudi Arabia’s capital, Riyadh, has dropped 72 places in a ranking of the world’s most expensive cities for expats as it tumbled out of the top 100, according to a report issued by Mercer.

Riyadh was positioned at 103 in Mercer's Cost of Living Index 2022, falling from 29 in the previous year’s list. 

Commenting on Riyadh’s fall, Khaled Al-Mobayed, CEO of Menassat Reality Co., a Riyadh-based real estate developer, said: “The results came in contrary to the expectations, due to the pandemic’s ongoing consequences and the rising cost of logistics and supply chain.”

“Being out of the 100 top expensive cities is a good sign despite the challenges that the economy has gone through,” he added.

UAE's Dubai took over Lebanon's capital, Beirut, as the most expensive city among Arab countries in the region, ranking 31.

Despite being placed third in 2021, Beirut was not even on this year’s list of 227 cities due to the country’s economic turmoil.

The city’s fall reflects the severe drop in value of the Lebanese pound, according to Lebanese economic analyst Bassel Al-Khatib, who pointed out the minimum wage is now worth $20, while it was $450 before the economic crisis gripping the country. 

“Lebanon is extremely expensive to those who get paid in Lebanese pounds yet very cheap for those who get pain in US dollars,” he told Arab News, adding: “Lebanon was expensive for both citizens and foreigners, and with the currency dropping 95 percent and the dollar reaching record levels, the situation changed.”

“Everything has become expensive but not for foreigners who have dollars. All services by the government such as water, electricity fees, or internet are still the same but food prices skyrocketed,” he added.

Abu Dhabi was the second highest Arab city from the region, ranked at 61, while Jeddah came in at 111 this year compared to 94 in 2021.

Jordan's capital Amman ranked 115, followed by Bahrain's Manama at 117, Oman's Muscat at 119 and Kuwait city at 131.

Egypt's capital, Cairo, was placed at 154 while Rabat, Algiers and Tunis came as the least expensive in the region, ranking 162, 218 and 220 respectively.

Hong Kong topped the list as the most expensive city in the world in 2022, moving from second rank last year and taking the top spot from Turkmenistan’s capital, Ashgabat.

Switzerland’s Zurikh and Geneva followed as second and third most expensive cities, replacing Hong Kong and Beirut respectively.

Turkey’s capital, Ankara, came in as the least expensive city, ranking 227, taking the spot from Kyrgyzstan’s capital Bishkek.


France eyes ‘good investment opportunities’ in Saudi Arabia: Official

France eyes ‘good investment opportunities’ in Saudi Arabia: Official
Updated 01 July 2022

France eyes ‘good investment opportunities’ in Saudi Arabia: Official

France eyes ‘good investment opportunities’ in Saudi Arabia: Official

RIYADH: France is intensifying efforts to take advantage of Saudi investment opportunities in all sectors, mostly energy, technology, water and other industrial services, the country's Ambassador in Saudi Arabia said.

Saudi Arabia is an attractive region and a suitable environment for investments in all its vital sectors, Ludovic Pouille told a press conference.

The French government and the private sector are working to expand the number of companies operating in the Kingdom, which currently stands at about 135, Aleqtisadiah reported citing Pouille.

The aim is to gain large investment spaces, and to benefit from the reforms and economic developments undertaken by Saudi Arabia, which constitute a good opportunity for French companies, he said. 

The French ambassador said France will take the model of agreements between the Al-Ula Authority and his country’s institutions in the fields of infrastructure and culture, as a starting point for expanding the map of investments in the future.


New Saudi smart city AlNama to be zero-carbon

New Saudi smart city AlNama to be zero-carbon
Updated 01 July 2022

New Saudi smart city AlNama to be zero-carbon

New Saudi smart city AlNama to be zero-carbon

RIYADH: Saudi Arabia’s new AlNama smart city will be a zero-carbon community, according to the company charged with designing the development.

The hospitality hub, located on a 10 sq. km area in Riyadh, will create 10,000 jobs in various sectors, including green-tech industries to create a ‘green circular economy’, Construction Week reported. 

The project is planned to provide 11,000 residential units and an eventual population of 44,000 people.

ALNAMA will be designed by Dubai's URB, and the firm’s CEO Baharash Bagherian said: “AlNama aims to be the next generation of self-sufficient city, producing all the city’s renewable energy needs, as well as the resident’s caloric food intake on site.

“Biosaline agriculture, productive gardens, wadis, and carbon-rich habitats are key features of the development’s innovative and resilient landscape design.

“The city was planned through the design of its landscape, rather than its buildings. This creates an urbanism that is more socially inclusive, more economically valuable, and more sensitive to the environment.”

AlNama will consist of eco-friendly glamping lodges, eco resorts and a nature conservation center to promote ecotourism, while an autism village, wellness center and clinics within the medical hub will help promote medical tourism.

The green-tech hub will provide an innovative ecosystem for urban-tech companies related to food, energy, water, waste, mobility, and building materials