KSA New Car Market Outlook to 2029

KSA New Car Market Overview

• The KSA New Car Market is valued at approximately USD 56 billion, based on a five-year historical analysis. This growth is primarily driven by increasing consumer demand, rapid urbanization, and government initiatives such as Vision 2030 aimed at economic diversification and automotive sector expansion. Rising disposable income, a growing population, and increasing participation of women drivers have also contributed notably to the market's expansion.
• Key cities such as Riyadh, Jeddah, and Dammam dominate the Saudi Arabian automotive market due to their large populations and strong economic activities. Riyadh, as the capital, functions as the central hub for vehicle sales and services, while Jeddah’s strategic port location enhances its role in imports and distribution. Dammam and the Eastern Province also contribute significantly to market demand due to their industrial and economic significance.
• In 2024, the Saudi government introduced regulations requiring all new vehicles sold in the country to comply with updated emissions standards, mandating Euro 4 for gasoline vehicles and Euro 5 for diesel vehicles. These measures aim to reduce carbon emissions and promote electric vehicle adoption, aligned with Vision 2030’s sustainability objectives. The government has also announced investments in charging infrastructure and incentives to support EV uptake.

KSA New Car Market Segmentation

By Body Type: The vehicle body type segmentation includes SUVs, Sedans, Pickup Trucks, Hatchbacks, Luxury Cars, Electric Vehicles, and Others. Each of these subsegments addresses distinct consumer preferences and mobility needs, reflecting the evolving automotive landscape in Saudi Arabia. SUVs are increasingly favored for their versatility and suitability for family and off-road use, while sedans remain popular for urban commuting. Electric vehicles, though still a small segment, are growing rapidly due to government incentives and infrastructure investments.

By End-User: The end-user segmentation includes Individual Consumers, Corporate Fleets, Government Agencies, and Rental Services. Individual consumers represent the largest segment, driven by rising middle-class purchasing power, increased vehicle financing options, and a growing preference for personal mobility. Corporate fleets and rental services are also expanding, supported by business growth and tourism sector development.

KSA New Car Market Competitive Landscape

The KSA New Car Market is characterized by a dynamic mix of regional and international players. Leading participants such as Toyota (Abdul Latif Jameel Motors), Hyundai (Wallan Trading Company), Nissan (Petromin Nissan), Ford (Al Jazirah Vehicles Agencies Co.), and Chevrolet (Aljomaih Automotive Company) contribute to innovation, geographic expansion, and service delivery in this space.

KSA New Car Market Industry Analysis

Growth Drivers

• Increasing Disposable Income: The average disposable income in Saudi Arabia is projected to grow steadily, with recent figures indicating an annual per capita disposable income of around SAR 38,000. This rise in income enables consumers to allocate more funds towards purchasing new vehicles. As the economy diversifies beyond oil, increased employment opportunities in sectors like tourism and entertainment further bolster consumer spending power, driving demand for new cars significantly.
• Government Initiatives for Local Manufacturing: The Saudi government aims to produce over 400,000 vehicles annually by 2030, backed by investments exceeding SAR 12 billion. Programs like NIDLP support domestic production, reducing import reliance, creating jobs, and boosting the economy. These efforts encourage consumers to buy locally made vehicles and align with Vision 2030 goals.
• Rising Urbanization and Population Growth: Saudi Arabia's urban population is expected to reach around 32 million, accounting for approximately 85% of the total population. This rapid urbanization drives demand for personal vehicles as residents seek convenient transportation options. Additionally, the population is projected to grow to about 37 million, further increasing the number of potential car buyers. Urban infrastructure development, including new roads and public transport systems, also supports this growth in vehicle ownership.

Market Challenges

• High Competition Among Automotive Brands: The Saudi new car market is highly competitive, with many brands vying for market share. This leads to aggressive pricing and marketing strategies, making it challenging for new entrants. Established brands must continuously innovate to retain their position amid shifting consumer preferences and strong rivalry.
• Fluctuating Oil Prices Affecting Consumer Spending: Oil prices, a key economic driver in Saudi Arabia, are projected to fluctuate between approximately $65 and $80 per barrel soon. This volatility impacts consumer confidence and spending power, particularly where disposable income is linked to oil revenues. As prices rise, consumers may prioritize essential expenses over new vehicle purchases, creating uncertainty in the automotive market.

KSA New Car Market Future Outlook

The KSA new car market is poised for significant transformation driven by technological advancements and changing consumer preferences. The shift towards electric vehicles is expected to accelerate, supported by government incentives and a growing charging infrastructure. Additionally, the rise of online car sales platforms will reshape the purchasing process, making it more accessible. As urbanization continues, the demand for smart transportation solutions will also increase, fostering innovation and enhancing the overall customer experience in the automotive sector.

Market Opportunities

• Growth in Electric Vehicle Adoption: Saudi Arabia targets 30% of new vehicle sales to be electric by 2030, supported by incentives such as tax exemptions and subsidies. Significant investments are driving the rapid expansion of charging infrastructure, attracting consumers and manufacturers alike. This commitment fosters a robust ecosystem for electric vehicles, aligned with Vision 2030 sustainability goals.
• Expansion of Online Car Sales Platforms: The online car sales market in Saudi Arabia is projected to grow significantly, with a compound annual growth rate of around 9% driven by increasing internet penetration and evolving consumer behaviors. This trend presents a notable opportunity for dealerships to reach a broader audience, streamline the purchasing process, and enhance customer engagement through digital platforms, ultimately boosting sales.