The report titled “KSA Automotive Industry Outlook to 2025 – Focus on Technology Adoption & Trends for Dealers, Distributors, Spare Parts Suppliers, Fleet and Leasing Companies and Car service providers” observed that the there is a vast opportunity to disrupt the traditional & conservatively operating automotive Industry in the Kingdom of Saudi Arabia. The report discuss the current technology adoption amongst the various segments of players like Importers, Distributors, Spare Part Dealers, Dealerships, Workshops, car Spas, Rental & Leasing Players amongst more.
The report further analyze each segment in detail, providing a brief overview along with market size, segmentation, competition analysis, trends, developments & future analysis of various segments, focusing keenly on entity relationships & business models.
These segments are then further analyzed to gain a better understanding of the ERP & CRM modules required to pave the way for digitization amidst the industry, across KSA.
KSA Automotive Industry
KSA Automotive is currently dominated by local retail & distributing partners, facilitating growth of international OEMs & other brands amidst a shortfall of domestic manufacturers with good quality products. The demand for automotive vehicles & spare parts is majorly fulfilled via imports from countries like USA, Japan, China, Korea, India & other gulf countries. The ecosystem is made up of big trading organizations who harness their retail & distribution networks across KSA to compete in the market for Tier 1 & 2 cities, while majority of rural areas & tier 3 cities still rely on unorganized market for local demand. KSA communicates a lot with surrounding gulf countries in terms of imports & re-exports & is looking forward to develop domestic manufacturing & exporting capabilities for South Africa & other African & gulf nations with stronger tax & driving policies, development of industrial hubs, efficient bilateral relationships & allies, technological competence & its enhancement.
Automotive Import/Distributors & Dealerships
The import of vehicles in KSA consists of majorly of sedans & SUVs amidst sport & luxury cars, facilitated via international OEMs in collaboration with local partners. The space is majorly dominated by big trading corporations with strategic partnerships with OEMs, who act as sole distributors & traders of particular brands. Some of the biggest players include, Abdul Latif Jameel (Toyota), Mohammad Yusuf Naghi (Hyundai & BMW), Haji Hussien (Mazda) & few more. But the competition is witnessing a shift with Hyundai & Nissan taking on Toyota in various segments of market like passenger vehicles & sedans to grab a bigger market share. Current market trends regarding vehicle purchase & ownership are also changing affecting market segmentation of vehicles as more women enter the market with EVs & hatchbacks taking a more pivotal part of market in comparison to Sedans & SUVs. However, the focus in the future is set to shift towards utilizing domestic capabilities, with KSA government pushing FDI inclusion amidst series of relaxations & support schemes.
Automotive Aftermarket Industry
Aftermarket industry is split between organized & unorganized sector with organized sector leading in terms of revenue generation capabilities & quality of services. Unorganized segment of the market majorly tries to cater in tier 3 & other rural areas as they can target a lower income group who are not fixated on the quality of service. Majorly the parts used are also refurbished & not completely genuine (First copies). Organized players on the other hand provide an array of exiting & better quality services. Players in organized sector comprises of Multibrand aftermarket workshops & spare parts retailers or genuine agency repairs (dealership led). They either provide complete auto care services or specializes in quick lube, crash repair & periodic maintenance services. Another segment of the market called the mobile service centers provides on road assistance catering car spa & maintenance services across KSA
Rental & Leasing Industry
Rental & leasing industry in KSA is the most utilized industry with target segment of Expats & pilgrim/business tourism showing promising growth across the year. Certain new developments like women driving laws, employment emphasis on Saudi nationals & other investment schemes related to digitization is further helping the market to grow across KSA. Current industry practices have witnessed a unilateral move of rental players into leasing opportunities & used car retail to sustain their business amidst the global pandemic. We also witness new market segmentation on the basis of end users, vehicle type & regions, along with a focus on various strategic partnerships amongst ride hailing companies & leasing/rental players to develop innovative business model as the markets focus shifts from ownership to user ship.
Technology Adoption & Trends amidst Covid-19
The covid impact on automotive industry of KSA has seen decline in the foot fall across various showrooms of brands, which used to be the major mode of sales, pre covid. We see a shift towards e-commerce in the KSA automotive industry with higher online penetration levels across various segments, but not a major move from physical to online sales. Various new vehicle maintenance models are also witnessed with varying ownership periods amidst job loss & closing of many offices. Share mobility market also witnessed a decline as people move towards hygienic ways impacting different market segments. Corrective measures taken by various entities & government itself to sustain business & are providing incentive to move towards innovative business models in various industry segments.
The technology trends & developments also witness a major shift towards radical ERP & CRM systems being utilized in the market, majorly by organized segment. Entities operating in the automotive industry of KSA ae able to understand the usage & optimization capabilities of streamlined & efficient operating systems & continue to use different softwares & solutions in addition with customized modules to enhance their operations & customer relationship management efforts. The integration is majorly done via international & local technology partners who compete on integration, cost effeciency duration of the project & more factors, & provide either single software utilization or in some cases, a mix of various vertical & standalone ERP solutions.