According to a local newspaper report, prices of vehicles, especially US-made cars, are expected to witness further increase during the current year. They attribute this mainly to a strong dollar against a basket of other currencies. However, Ali Alireza, CEO of Haji Hussein Alireza Company and head of the automobiles committee at the Jeddah Chamber of Commerce and Industry (JCCI), discounted any possibility for further increase in car prices in the local market.
Faisal Abu Shousha, head of the National Committee for Automobile Agents at the Council of Saudi Chambers of Commerce and Industry, told Arab News that variation in the value of major currencies plays a major role in determining prices of vehicles. "Appreciation of the dollar and the yen has resulted in raising prices of vehicles made in the United States and Japan. Similarly, euro's depreciation has affected prices of vehicles made in Europe," he said.
According to Abu Shousha, there are several other factors that have contributed to rising prices of vehicles. These include rising fuel prices, use of highly advanced technologies in manufacturing vehicles, and making available accessories and extra fittings for luxurious services for new car models. At present, prices of vehicles have registered an increase of five percent.
He denied reports that there is a union of automobile agents to prevent a fall in prices of new vehicles. "The element of competition in attracting consumers is the factor that governs the market. All agents are trying hard to attract a major segment of customers at a time when the local market is witnessing huge inflow of vehicles made in South Korea and China," he said, adding that these vehicles are much cheaper compared to vehicles made in the United States, Japan and Europe.
A steady increase in prices of vehicles in the local market has forced several customers, especially youths, to own a car under installment system. Abdul Karim Saleh, a Saudi young man working in the private sector, told Arab News that this is the only option in front of him to own a car even though the monthly installment consumes a major chunk of his salary.
According to a Business Monitor International report, there has been a 30 percent growth in automobile sales in the Kingdom over the last three years. The number of vehicles in the Saudi market, which is the largest in the Middle East, shot up from 676,000 to 880,000 during the period. The simplified credit facilities and bank financing have contributed substantially in strengthening the purchasing power of automobile customers in the Kingdom. The report also showed that nearly 70 percent of automobile sales in the Kingdom are based on credit facilities and loans.
