Commerce and Industry Minister Abdullah Zainal Alireza, chairman of the Industrial Property Authority (Modon), signed an agreement with Japan’s Isuzu Motors Ltd. on Monday for setting up the plant.
The move comes after King Saud University announced last year its plans to set up a $500 million car manufacturing company in Riyadh with the support of a South Korean firm.
According to an official statement carried by the Saudi Press Agency, the full-fledged Dammam factory would manufacture cars and light and medium-duty trucks. Isuzu aims to start produce a medium-duty “F-Series” truck by the end of 2012.
Annual production would start at 600 units, eventually reaching 25,000 trucks of varying models, said Qusay Al-Abdul Kareem, manager of the project. He said 40 percent of its products would be exported to regional markets. The plant will create 800 new jobs.
“Covering an area of 120,000 square meters in the second industrial city of Dammam, the plant is one of the major projects aimed at transferring automobile technology,” said the statement.
Speaking to reporters after signing the agreement, Alireza described Saudi Arabia as an attractive market for automobile industry as it offers good economic benefits and incentives as well as financial and infrastructure facilities.
“Saudi Arabia is one of the strongest markets in the region for trucks, making the project economically feasible,” the minister said, adding that regional markets would import trucks from the Kingdom.
Tawfiq Al-Rabiah, chairman of Modon, dismissed suggestions that it would be just an assembling plant. “It will be a full-fledged car and truck manufacturing plant. Many parts of trucks will be manufactured in the Kingdom. It will also pave the way for building other supplementary industries,” he said.
The project will lead to the opening of new industries for car batteries, car glasses, oil filters and metallic, electric and plastic parts. “We have allocated a huge area for the plant,” he said and disclosed plans to establish similar projects in other parts of the Kingdom.
The new Ghazal Car Technology and Spare Parts Co. initiated by King Saud University will manufacture low-cost cars at prices ranging between SR35,000 and SR45,000. Mowakaba for Industrial Development & Overseas Commerce, which is owned by prominent Saudi businessman Mohammed Hussein Al-Amoudi, has offered to invest $275 million, 55 percent of the new company’s capital. Riyadh Valley, a KSU affiliate, will have a 15 percent stake while South Korea’s Digm Automotive Technologies will have 30 percent.
The Riyadh company will market Saudi cars in the Gulf and North Africa. Y.K. Jeon, president of Digm, said his company had conducted a study on markets of the region and found that Saudi Arabia has all the success factors to establish a car manufacturing company. He said the new company would make quality cars at affordable prices.
