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In the third of a series of articles, Glasgow Consulting Group’s Vishal Pandey looks at the KSA and UAE aftermarkets
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t is no surprise to hear that most vehicles and parts sold in Saudi Arabia and UAE are imported. Nor is it a shock to hear that the downward trend in sales in the aftermarket reflects a drop in car sales in both the KSA and UAE markets over the past five years. However, Glasgow Consulting Group’s auto-expert Vishal Pandey believes that the passenger car aftermarket can grow as sales return and the second-hand market booms. “The auto parts market potential in Saudi Arabia and UAE is robust and expected to grow at a healthy rate in the next 5 years,” notes Pandey. He adds: “Both the Saudi and UAE automotive markets are now more geared towards a ‘service oriented’ business model with more players focusing on customer experience and after sales service.” Currently there is a small local auto parts and truck production, but no light 18 APRIL 2022
vehicle production, in Saudi Arabia. But this burgeoning sector will be a major beneficiary going forwards. Spurred on by government support, Saudi Arabia is also creating a domestic automotive industry and has encouraged global vehicle manufacturers to establish local operations, which will lead to local job creation, as well as technology and skills transfers, he believes. In the more immediate short term, there is the fall-out of the Covid 19 pandemic to contend with and the disruption caused by events in Europe which are driving volatility in the price of oil and the global economy. “The KSA passenger vehicle aftermarket component market contracted from SAR 12.5 billion in 2019 to SAR 10.6 billion in 2020 due to COVID 19… a dip of 16%,” he notes. “With vehicles in operation remaining same and increasing demand for used cars, the aftermarket demand for auto components is expected to remain resilient. The dip in the
Both the Saudi and UAE automotive markets are now geared towards a ‘service oriented’ business model”
average miles driven by vehicle is likely to have gone down and would have a mild negative impact on parts demand. But this should be back to normal in the second half of 2022.” Indeed, Vishal Pandey predicts that the passenger car market in both KSA and the UAE will recover in 2022 and their dip in 2020. “Owing to the high dependence on personal cars for commutation in KSA, the demand for passenger cars is likely to rise in the short to medium term,” he predicts. “Also, with vehicles in operation remaining same and increasing demand for used cars, the aftermarket demand for auto components is expected to remain resilient.” While the volume growth of aftermarket parts in the aftermarket is expected to remain muted due to the dip in sales of 2016 to 2020 in passenger car sales. Pandey forecasts that in value terms there could be a growth of around 8.5% driven by meconstructionnews.com
