Cluster Opportunities
Automotive Cluster

Global Auto Market:

The automotive industry is a key pillar of the global economy; a main driver of macroeconomic growth and technological advancement in developing and developed countries. The value chain for automotive industry spans very wide and covers many other adjacent industries and hence creates a multiplier effect much higher than any other industry. This multiplier factor ranges between 5-7 between direct OEM jobs and the eco-system jobs. Global automotive market is projected to grow from 86 million (2014) to 104 million (2022) vehicle/year with 80% of the growth coming from the emerging markets. The global turnover of the industry is estimated to be around $2.41 Trillion with 11.252 Million direct

jobs. With a multiplier factor of 5, the relevant job creation from automotive industry is estimated to be around 50 million+ globally.


- Metals - Fuel
- Mining - Plastics - Rubber - Glass

- Electronics

Core Automotive




Sales & Service

Car Rentals

Fuel Supply


Transportation & Logistics

Original Equipment Manufacturers (OEM)

- Commercial Vehicles
- Passenger Vehicles
- Two Wheelers
- Three Wheelers Component Manufacturers

Adjacent Industries (R&D, Legal, Support Services, Infrastructure)

Figure 1. Automotive Value Chain Kingdom of Saudi Arabia Automotive Market:


Against this strong background, the automotive cluster is committed to developing a Saudi Arabian Automotive industry, encompassing car, truck and bus manufacturing, research & development, design, components, sub-systems and sub-assemblies manufacturing, full vehicle assembly, and logistics. This initiative fits the overall KPI’s of the Kingdom; which are to create highly technological employment and diversification into non-oil based industries.

At the heart of this drive, the automotive cluster is aiming to:
Encourage and support further Saudi Arabian and foreign investment in the sector

1. IBIS World Industry Report Global Car and Automobile Manufacturing 2014 2. (Organisation Internationale des Constructeurs d'Automobiles)

  • Make KSA a major player in vehicle development and production

  • Reduce imports and increase exports

  • Create and sustain employment

  • Assist with national economic diversification

Saudi Arabia is also a major consumer of cars and trucks, all currently imported. Sales in 2015 for Light Vehicle reached 774,0001 units. This number is expected to grow to 800,000 units in 2016. Toyota is the

sales leader with around 34% of the total sales followed by Hyundai-Kia, General Motors, and Nissan- Renault. Saudi Arabia is the largest car market in the Gulf Cooperation Council (GCC) which includes Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates. The strongest segments to be sold in Saudi Arabia are C and D for both Sedan and SUV styles. The GCC has annual car sales of over 1.56 million, highlighting the potential of KSA as being the regional hub of car production.

There is strong demand for commercial vehicle market also, supported in part by the country's booming construction sector. GCC Trucks and buses sales are around 131K and is growing at 8%2 annually. Saudi Arabia is the biggest market of truck and busses with current market size of 21k and 11k yearly respectively. This market is expected to grow to 32K and 20K by year 2022 with overall growth of 62%.

The GCC is one of the fastest growing tire markets at approximately ~ 6% CAGR and is forecasted to reach 41M tires by 2020. Saudi Arabia is the largest market in GCC at 62% of the sales by units and a world-scale tire manufacturing plant in Saudi Arabia would be the first in the region and will gain a competitive access in the GCC market, GAFTA markets and Near East and African markets.

Figure 2. Saudi Arabian 2015 Sales Distribution

  1. IHS 2015 Sales Forecast
  2. Frost & Sullivan Report 

Currently there are around 11 million cars (PARC) on the roads in the Kingdom and hence, there is strong increase in demand for automotive aftermarket parts such as tires (Market size of 20 million) and other aftermarket automotive components.

Advantages and Opportunities:

In addition to the strong local market demands of Saudi and GCC, Saudi Arabia offers access to over 400 million consumers in Middle East-North Africa. MENA has total annual car sales of around 2.3 million, mostly imported from outside the region. Greater Arab Free Trade Agreement (GAFTA) gives duty free access to 17 countries in Middle East and Africa if local value add is 40% or greater.

KSA could serve an even wider area due to its central location between Europe, Africa and Asia covering more than 2 billion consumers are within three hours by air. Saudi Arabia's population of around 31 million - - is increasing by 2.3% a year. The number of households is rising by 3.7% a year. KSA's consumers are relatively affluent, having an GDP per capita of $24,252. The country's GDP is rising by 5% - 6% a year, much faster than in Europe and North America.