Special Report: Saudi Arabia - Creating a domestic car manufacturing industry

28 September 2010

It makes perfect sense that Saudi Arabia should want to develop its own automotive industry

The automotive industry is one of the largest consumers of petrochemicals and the kingdom is one of the world’s largest producers of petrochemicals.

The government has long supported the idea and has keenly pushed investment in car component manufacturing in its various industrial cities. The $11.6bn acquisition in 2007 of GE Plastics by state-owned Saudi Basic Industries Corporation gave the idea a further boost, providing access to expertise in engineering plastics, widely used to make car parts.

When engineers at King Saud University unveiled their prototype ‘Ghazal-1’ luxury sports utility vehicle in June, the dream came a further step closer to reality. In a country with such abundant wealth, it seems almost certain a sponsor will come forward to take the vehicle on to mass production.

The biggest obstacle to Saudi Arabia successfully developing its own car industry will be finding sufficient customers. The GCC is a major market for the world’s luxury vehicles and consumers are loyal to brands that have been built up over many decades.

To tempt this potential customer base to buy a locally made, unproven product will require the vehicle to have a unique selling point that captures the heart of the nation. Time will tell whether the ‘Made in Saudi Arabia’ stamp will be sufficient.

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