In-Depth Analysis Of The Covid-19 Impact On The Used Car Industry In Saudi Arabia: Ken Research

The global outbreak of the Covid-19 virus has led to massive disruptions in all industries, especially with sectors such as automotive, travel, hospitality & more. The looming public health crisis has claimed over 760 thousand lives globally as of 14th August 2020 and apart from that, it continues to pose a threat to the lives, livelihoods, and businesses across the world.

Saudi Arabia is among the top 15 worst Covid-19 hit countries in the world. The economy was also impacted due to the lower demand for crude oil from China and other countries and falling crude oil prices since the beginning of 2020. Aside from the spread of Covid-19, the failed OPEC+ agreement and oil price dispute between Saudi Arabia and Russia also impacted the overall economic condition of the oil exports dependent economy. The Covid-19 pandemic also impacted tourism in the country as the annual Hajj to Mecca, which hasn’t been interrupted since Napoleon’s 1798 attack of Egypt was restricted to a limited number of pilgrims. The government of the Kingdom took to increasing the VAT and cutting down on the cost of living allowance for government employees to battle the financial crisis due to the drop in both oil and non-oil revenues.

Effect on Used Car Demand in the First Half of 2020The imposed lockdown in the country and the social distancing norms have impacted the used as well as new car sales. Car showrooms witnessed an approximate 80% decline in footfall in the months from April-June. Job losses among ex-pats as well as restricted international & domestic traveled to a large number of used cars entering the market from car rental companies. Stay-at-home orders amidst the pandemic reduced outdoor activities and daily travel of individuals, thus leading to nose-dive in the demand for cars till May 2020. In June 2020, prior to the tripling of VAT to 15% with effect from July 1, 2020, used car sales picked up slightly as mobility restrictions were lifted. SyarahOnline, the e-commerce service launched by Syarah, sold ~420 used & new cars prior to the VAT increment.        

Short Term Impact and Temporary Shifts in the Business Practices: Dealerships such as Abdul Latif Jameel are increasing their focus on online sales & maintenance services including receiving consultation, cash/financing offers & free home delivery for new cars. Similar initiatives are expected to be followed for boosting used car sales as well. Investing higher sums in digital marketing for online campaigning including advertising hygiene & sanitization procedures at showrooms and customer engagement initiatives such as online quizzes might be helpful in ensuring customer turn-around when normalcy returns. The overall used car sales are however expected to decline by ~25% in 2020 as compared to 2019. The demand is expected to remain low throughout the rest of the year due to low mobility as consumers continue to work from home.  The demand for used cars is expected to recover slightly towards the end of 2020 due to the higher prices of new cars with the increase in VAT.

Long Term Impact on Used Car Sales: Steady recovery is expected in 2021 as people would prefer private cars instead of public transport as a spill-over of the Covid-19 pandemic. Used car sales between individuals are also expected to pick up as an effect of the VAT increase. Also, as a result of the Coronavirus pandemic, online buying is expected to witness growth due to the shift in the buying preferences of consumers. Studies indicate that post-COVID-19, 6 out of 10 individuals in the GCC are willing to purchase a vehicle online. Dealerships are also expected to jump on the digital bandwagon by increasing their online presence either by partnering with existing auto platforms or by investing in their own dedicated used car sales websites, as in the case of some brand-authorized dealerships. This is expected to be coupled with increased value-added services such as longer warranty, easily used car finance, and more. Online auto-classified platforms are anticipated to invest in better technologies such as Artificial Intelligence and Virtual Reality in order to enhance the consumer browsing experience and increase their user base. Basis all these factors, Saudi’s used car market is expected to grow at a CAGR of 4.5% on the basis of gross transaction value during the forecast period 2019-2025.

Key Segments Covered: –

Saudi Arabia Used Car Market (On the basis of GTV)

Saudi Arabia Used Car Market (On the basis of Sales Volume)

Saudi Arabia Used Car Market Segmentation (On the basis of Sales Volume)

By Market Structure

Organized

Unorganized

By Type of Cars

Sedans & Hatchbacks

SUVs & Crossovers

 Pick-ups

 Luxury

By Brand

Toyota

Hyundai

GMC & Chevrolet

Ford

Others

By Age of Vehicle

Less than 1 year

1-3 years

3-5 years

More than 5 years

By Kilometers Driven

Less than 50,000 Km

50,000-80,000 Km

80,000-120,000 Km

More than 120,000 Km

By Regions

Central

Western

Eastern

Southern

Northern

By Age Group of Buyers

18-30 Years

30-60 Years

More than 60 Years

By Type of Sourcing

Car-Rental/Leasing Companies (including Auctions)

Buy-Sell/Park-Sell

Imports

Trade-Ins

Organized Used Car Market

By Sales Channel

Multi-brand Outlets/Exhibitions

Authorized/Direct Dealership Outlets

Unorganized Used Car Market

By Sales Channel

Customer to Customer (C2C)

Local Dealerships

Dealerships Covered

Abdul Latif Jameel Motors

Aljomaih Automotive Company Ltd.

Al Jazirah Vehicles Agencies Co.

Universal Motors Agencies Ltd.

Mohamed Yousuf Naghi Motors Co.

United Motors Company

Gulf Advantage Automobiles LLC

Others

Online Auto-Classifieds/Platforms Covered

Haraj

Motory

Syarah

SaudiSale

Abi Sayara

Key Target Audience

Car Dealerships

Car Manufacturers

Car-Rental and Leasing Companies

Used Car Importing Companies

Online Auto Classified Companies

Industry Associations

Regulatory Bodies

Used Car Auction Companies

Time Period Captured in the Report

Historical Period: 2014-2019

Forecast Period:  2019-2025

Key Topics Covered in the Report: –

Overview and Genesis of Saudi Arabia Used Car Industry

Target Audience Demographics

Trends and Growth Drivers in the Industry and Challenges Faced

Saudi Arabia Used Car Market Size and Segmentations, 2014 – 2019

Ecosystem and Value Chain of Used Car Industry

Customer Decision Making Parameters & Brand Perception Mapping

Cross Comparisons between Major Authorized Dealerships and Online Auto-Classifieds/Platforms and Company Profiles

Future Market Size and Segmentations, 2019-2025F

Covid-19 Impact on the Industry, the Way Forward & Upcoming Online Business Models

Analysts’ Recommendations

For More Information on the research report, refer to below link: –

Future of Saudi Arabia Used Car Market

Related Reports by Ken Research: –

Spain Used Car Market Outlook to 2023 – Growth within Car Rental Companies Coupled with Shared Vehicle Mobility Segment to drive Used Car Sales Volume in Spain

France Used Car Market Outlook to 2023 – Surge in Demand for Rental Cars Backed by Increased Online Used Car Sales

Qatar Auto Finance Market Outlook to 2023 –By Banks, Non Banking Financial Companies and Captives, By New and Used Vehicles Financed, By Type of Vehicle Financed (Motor Bikes, Cars and Light Commercial Vehicles) and By Loan Time Period

Contact Us: –
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

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