KSA Connected Car Market Outlook to 2030

KSA Connected Car Market Overview

• The KSA Connected Car Market size was valued atUSD 3.23 billionin 2023. The markets expansion is driven primarily by the increasing consumer demand for advanced safety features, the integration of IoT in vehicles, and the growing interest in autonomous driving technologies.
• The market is dominated by several key players, including Toyota, General Motors, Ford, Nissan, and BMW. These companies are leading the market by continuously innovating and integrating advanced connected technologies in their vehicles.
• In 2024, Saudi Arabia's Communications, Space & Technology Commission (CST) approved connected vehicle services for Abdul Latif Jameel's Toyota and Lexus vehicles. This move enables real-time vehicle monitoring and control via IoT technology, supporting the Kingdom's Vision 2030 by advancing digital transformation and innovation in the automotive sector.
• The central region of Saudi Arabia, particularly Riyadh, dominates the market, by the regions advanced infrastructure, high concentration of wealth, and the government's focus on developing Riyadh into a smart city under Vision 2030. The citys well-developed 5G network and high rate of vehicle ownership has made it a hotspot for the adoption of connected car technologies.

KSA Connected Car Market Segmentation

The market is segmented into various factors like product, connectivity type, and region.

By Product: The market is segmented by product into telematics, infotainment, and ADAS (Advanced Driver-Assistance Systems). In 2023, telematics held the largest market share, due to the growing demand for real-time vehicle tracking, fleet management solutions, and usage-based insurance (UBI) services. The increasing adoption of telematics by commercial fleet operators.

By Connectivity Type: The market is segmented by connectivity type into embedded, tethered, and integrated systems. In 2023, embedded systems held the largest market share, due to their reliability, seamless integration with vehicle hardware, and the growing preference for factory-fitted solutions among consumers.

By Region: The market is segmented by region into North, South, East, and West. In 2023, the North region, dominated the market by the city of Riyadh, which serves as the epicenter of Saudi Arabia's economic and political activities. The ongoing smart city initiatives and the expansion of the 5G network in Riyadh have further strengthened the North regions leading position in the market.

KSA Connected Car Market Competitive Landscape

• BMW: BMW has been at the forefront of innovation in the market. In 2023, the company launched its new iDrive 8 system, which features advanced AI-driven voice recognition and personalized in-car experiences. The new system allows drivers to control various vehicle functions through natural language commands, enhancing the overall driving experience. BMWs commitment to innovation has positioned it as a key player in the market, with plans to introduce more AI-driven features in future models.
• General Motors: In 2024, Cruise, backed by General Motors, is set to integrate its self-driving cars into Uber's ride-hailing platform starting next year. This partnership aims to enhance urban mobility by offering passengers the option to choose Cruise autonomous vehicles for their rides, expanding the availability of driverless technology in urban areas.

KSA Connected Car Market Analysis

Market Growth Drivers

• Expansion of 5G Network Infrastructure: Zain KSA's USD 427 million investment to expand its 5G network across 122 cities will enhance connectivity for over 66% of the population. This expansion supports advanced features like vehicle-to-everything (V2X) communication, driving growth in the connected car market and facilitating digital transformation in Saudi Arabia.
• Increasing Vehicle Ownership in Urban Areas: The Saudi automotive industry is experiencing significant growth, driven by a young population, increased female drivers, and a substantial influx of expatriates, leading to over 600,000 new car sales annually.The Kingdom's strategic geographical location and ambitious plans to become a manufacturing hub further enhance its potential as a regional automotive hub.
• Government's Vision 2030 Initiative: The Saudi government's Vision 2030 initiative, which emphasizes digital transformation and smart city development, has significantly propelled the growth of the connected car market. In 2024, the government support smart city projects, with a substantial portion dedicated to enhancing transportation infrastructure. The initiative also includes the development of smart highways equipped with sensors and communication systems, further boosting the market's growth.

Market Challenges

• High Costs of Connected Car Technologies: The high cost associated with connected car technologies has been a significant barrier to their widespread adoption, particularly among middle-income consumers. In 2024, the average cost of a connected car in Saudi Arabia was making it out of reach for many potential buyers. This has led to slower adoption rates in less affluent regions of the country. Automakers are under pressure to develop more cost-effective solutions to make connected vehicles accessible to a broader audience.
• Limited Consumer Awareness: Despite the growing market, consumer awareness of connected car benefits remains limited, particularly in rural areas. In a 2024 survey conducted across Saudi Arabia, few of respondents were aware of the full range of features offered by connected vehicles. This lack of awareness has slowed the adoption of connected car technologies, as many consumers are unaware of the safety, convenience, and cost-saving benefits these vehicles offer.

Government Initiatives

• National Smart Transportation Strategy: In 2023, the Saudi government launched the National Smart Transportation Strategy, aiming to integrate advanced technologies into the countrys transportation infrastructure. By the end of 2024, over 50,000 smart traffic sensors and cameras were installed across the kingdom, connected to a centralized system for real-time monitoring and management. This initiative is expected to enhance road safety and reduce traffic congestion, thereby driving the adoption of connected vehicles.
• Subsidies for Electric and Connected Vehicles: In 2024, the Saudi government introduced subsidies for the purchase of electric and connected vehicles as part of its broader push towards sustainable transportation. Consumers purchasing connected vehicles received subsidies, making these technologies more accessible to a wider audience. The government also provided incentives for automakers to produce and sell connected vehicles in the local market.

KSA Connected Car Market Analysis

The future trends of KSA connected car industry include widespread adoption of autonomous vehicles, integration of AI in connected car ecosystems, expansion of 5G-enabled services, and the rise of electric and connected vehicle fleets.

Market Future Trends

• Integration of AI in Connected Car Ecosystems: AI will play an increasingly important role in the market in Saudi Arabia over the next five years. By 2028, it is expected that 1 million vehicles in the kingdom will be equipped with AI-driven features such as predictive maintenance, real-time traffic management, and personalized in-car experiences. These AI capabilities will enhance the overall driving experience, reduce the likelihood of accidents, and improve vehicle efficiency.
• Rise of Electric and Connected Vehicle Fleets: The shift towards electric vehicles (EVs) will be closely linked with the growth of the connected car market in Saudi Arabia. By 2028, it is projected that 500,000 electric vehicles will be connected to smart grids and other connected car ecosystems. The Saudi governments push for sustainable transportation, along with incentives for EV adoption, will drive this trend.