Two recent developments underline the kingdom's ambitions to ramp up the commercial vehicle sector. On 11 November, leading Jeddah-based automotive dealer Haji Husein Alireza (HHA) announced it would begin assembly of Germany's MAN trucks at a new facility in Jeddah, aiming to reach annual production capacity of 6,000 units with an investment of SR 150 million. Barely one week later, a joint venture comprising the local Zahid Tractor and the Swedish/US giant Volvo rolled out the first locally made trucks from a 1,000-unit-a-year plant in Jeddah.

These are not the first locally assembled commercial vehicles to be launched on to the market. The Saudi Arabia-owned National Automobile Company (NAC) has operated a Mercedes truck assembly plant in Jeddah for nearly 30 years with capacity of up to 8,000 vehicles a year. General Motors Company of the US has also enjoyed a production presence, while the local Al-Jomaih Company operates a bus assembly line. Japan's Nissan has at various stages considered investing in local production facilities.

But the new developments represent a potentially exciting trend, suggesting that the Western Province may be about to achieve the kind of critical mass that is needed for a fully fledged automative industry.

It is not just the massive growth in the Saudi economy and the ensuing pull on road haulage that is catalysing investment in domestic production, says HHA director and general manager Ali Alireza. 'In terms of the market we are going to serve, it's not just Saudi Arabia but the other GCC markets, as well as Africa. We will serve the immediate region in co-operation with MAN, which will arrange to take some of the production from the assembly plant for its own needs and its own dealers in the region,' he says.

The first Saudi-made MAN trucks will hit the road by October 2007, initially looking to capture a slice of the booming road haulage volumes in the kingdom. 'Saudi Arabia is the biggest market in the region for trucks right now,' says Alireza. 'Of course, the customs union in the GCC means we could have put it anywhere in the Gulf, but Saudi Arabia and Jeddah in particular seemed the best location.'

The biggest driver for the investment is the trucking sector's healthy growth prospects. 'The continued strength of the Saudi economy and growth in transportation needs are big factors here, and if you look at Saudi Arabia and the rest of the Gulf, we don't have a well developed rail infrastructure or waterways. Land transport is really crucial. We obviously expect the growth in demand for trucks to continue that's the main reason we now have that assembly here,' says Alireza.

There is also a cost advantage to assembling locally, against importing trucks. 'There is a benefit as there is a 12 per cent import duty on completely built-up trucks, but there is no duty on any component you import to assemble trucks. So straight off the back of this you have a 12 per cent cost advantage,' says Alireza.

A Saudi presence offers other advantages, such as shortening the lead time to delivery to the customer, rather than having to order from Germany, where in many cases there might be a production backlog. 'Here we can manage our throughput easier and quicker,' says Alireza. 'A lot of the time it's easier to bring components in and completely built-up units when we have a tight delivery schedule to meet.'

Saudi Arabia remains one of the region's biggest vehicle markets, contributing to recorded sales of 497,849 vehicles in 2005. The slide in the Saudi stock market in the first half of the year has dampened demand growth on the passenger end of the market although the