DAMMAM, 21 July 2003 — The automobile sector in the Kingdom has grown in recent years, sending encouraging signals to dealers who say that market is buoyant and sales figure may see an increase of nearly 15 percent this year.
According to figures made available to Arab News by car dealers in the Eastern Province, last year nearly 180,000 cars were sold in the Kingdom, while in the first half of this year 120,000 units have already been sold. Dealers say that in the last quarter sales usually rise as new models arrive in the market. “Very conservatively, we can expect an increase between 15 to 20 percent,” said a dealer of American models.
Japanese cars continue to be the market leaders followed by American and Korean cars. The rest have a market share of less than 5 percent. However in luxury cars, Germany takes the lead followed by American vehicles.
Car dealers say that over the years the market has matured and buyers are getting wiser. “It is not just brands which sell but also after-sales service,” said Tashfeen Qayyum, general manager of Saab cars in the Eastern Province.
The market environment over the years has drastically changed in the Kingdom. Car leasing and installment sales have given a big boost to turnover.
In the past installment sales were a risky proposition. There were hundreds and hundreds of defaulters, and car agencies had to write off hundreds of thousands of riyals.
Saudi law provided that cars sold on installment be transferred in the name of the buyer after the car left the show room. This law made car dealers uneasy, as there were instances where people sold their vehicles in the market immediately after taking them from the showroom. “The idea was to generate quick revenue and to invest it,” said the manager of an American car agency in Dammam. The leasing system and secure financing from banks ended this insecurity.
Car Dealers say that the present rise in sales has multiple reasons. “First, the social pattern has changed drastically over the years,” said Qayyum. In the past a middle class Saudi household had two vehicles — one for the family and another for the head of the family or the earning member of the house, he said. “But today the need has expanded. The young of the family also need cars.” The return of capital from abroad is another reason for the boom.
Car Dealers admit that the competition in the automobile sector is growing and new players are expected to join the fray. Industry expects that in the next five years the market will double its sales.
