JEDDAH, 8 May 2007 — A recent survey of Saudi car buying and ownership habits suggests that nearly half — 46 percent — of all vehicles sold to the Arab market in Saudi Arabia are second hand. The average age of vehicles on Saudi roads, the survey says, is 6.4 years with models after 2001 bought new and those bought before 2000 were secondhand.
The survey, conducted by AME Info, includes only Arab purchasers, dividing them into Saudis and expatriates. It made no mention of the non-Arab expatriates who constitute a sizeable percentage of the total population of the Kingdom.
The survey concludes that those who bought new vehicles were from more affluent households, with 48 percent of those who bought new where from households with monthly household income (MHI) of SR8,400 and only 23 percent from households with an MHI of SR6,000.
The survey breaks down the households to reveal underlying social trends. Of the households with an income of SR8,400 — of those who bought new vehicles — 48 percent have live-in servants and 64 percent own their own houses.
However when we look at households with an SR6,000 MHI which bought second-hand vehicles, only 23 percent have live-in servants — fewer than half the proportion of the higher income group — but 41 percent own their own houses, indicating that house ownership has taken priority over servants.
Japanese brands, according to the survey, dominate the new car market and currently command 62.5 percent of all new car sales. With the Korean car manufacturers cornering 8.5 percent of all new car sold, then 71 percent of the new car market is derived from the Far East. The survey did not mention the arrival of Chinese manufactured vehicles that have appeared on the streets only over the last year or so, and which will push the Far East market share higher.
The Korean share has increased as a percentage over the survey period, from 0.5 percent in 1994 to 8.5 percent in the period 2004/2006. Over that same period, Japanese dominance hit 58 percent in 1994, peaking at 63.7 percent in 1995/1997 and slipping back to 62.5 percent in 2006/2007.
Sales of US vehicles, however, have shown distinct volatility: 38.1 percent of the market in 1994, back to 28.8 percent in 1995/1997, 34.7 percent two years later and down to 29.5 percent in 2004/2006.
European car sale, on the other hand, have kept a relatively stable but small piece of the action with a low of 5.6 percent in 1994, peaking at 7 percent in 1998/2000 and slipping to 6.2 percent in 2006/2007.
For the new car market, there emerges from the survey a profile of the average Arab buyer in the Kingdom.
Of those who bought new Japanese cars, 80.5 percent were local Arabs and 16.2 percent expatriate Arabs.
The average buyer had a 5.8 person household, 74.6 percent lived in a nuclear family and 45.8 percent in a household where the main breadwinner was a graduate or better with an MHI of SR7,800.
Of those who bought US brands, 91 percent were local Arabs, 7.1 percent expatriate and 83 percent lived in a nuclear family. Only 38.8 percent of the breadwinners were of graduate status or better, but the average MHI was SR8,700 — 11.5 percent higher. In reference to the buyers of US cars, 7 percent had less education but had 11 percent higher income.
The survey did not comment on this apparent anomaly.
Korean and European brands, the survey contends, are bought by marginally smaller local households where only 41.1 percent of breadwinners hold graduate status or better and with an MHI of SR7,700.
European brands however are bought by members of the lowest average household size, the lowest percentage of graduate or better status breadwinners, yet with an MHI of SR8,600, up with the US car buyer.
The statistics revealed an unexplained phenomenon, which is: buyers of European cars, with the lowest level of graduates (31.6 percent), have an MHI of SR8,600; buyers of US cars with the second lowest level of graduates (38.8 percent) have an MHI of SR8,700. Yet buyers of Japanese vehicles with the highest level of graduates (45.8 percent) have the second lowest MHI of SR7,800.
Perhaps they are perspicacious enough and don’t need a college degree to realize the value of money when they see it.
The underlying, counter intuitive and as yet unanswered question is, however: Why do the best-educated families have the lowest monthly household income? Are there no well-paid jobs for local and expatriate Arab graduates or are their qualifications unfitted to the practical requirements of the well-paid end of the job market?
Perhaps a survey of the underlying situation might prove valuable.
