Saudi Arabia 2019. Mazda shines in a market but over half a million

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Saudi Arabia Auto Market
Mazda-MX-5_30th_Anniversary-2019

Saudi Arabia Auto Market in 2019 reported a strong growth, following the lowest sales level in the decade hit last year. Indeed, the Full-year sales have been 542.538, up 29%. While the leader Toyota kept losing market share – ending below 30% – Mazda grew up in third place with an amazing escalade.

Economic Environment

The economy logged its first contraction in nearly two years in the third quarter. The drop reflected oil production cuts in compliance with the OPEC+ deal and a terrorist attack on the Kingdom’s oil facilities in September, which effectively shut down more than half of the country’s oil production. Conversely, the non-oil sector continued to expand vigorously due to strong credit growth and policy support.

Looking to Q4, despite a moderation in December, the non-oil sector remained strong in the period. The 2020 budget approved in mid-December suggests that fiscal stimulus could moderate this year as the fiscal plan focuses on financial stability and includes a cut in government spending, mostly in capital expenditure.

Moreover, the government projects a deficit of 6.4% of GDP for 2020, wider than the 4.7% shortfall the government estimated for this year. 

VAT Introduction

Back in June 2016, all six Gulf Cooperation Council (GCC) member states signed the Common VAT Agreement. It was agreed that each GCC Member State would introduce a VAT system at a rate of 5%.

On January 2018 a Value Added Tax (VAT) has been introduced in Saudi Arabia and the United Arab Emirates for the first time, breaking a milestone, if considering Gulf states have long attracted foreign workers and capitals with the promise of tax-free living.

But governments want to increase revenue in the face of lower oil prices and a 5% levy is being applied to the majority of goods and services. For “technical reasons” other members of the Gulf Cooperation Council – Bahrain, Kuwait, Oman, and Qatar -, also committed to introducing VAT,  have delayed plans.

Vehicles Market Trend

Saudi Arabia vehicles market is enveloped in the deepest crisis ever.

In the period 2010-2015 the market had been one of the fastest growing in the World, almost doubling volume from 449.280 units in the 2010 to a record of 844.437 in the 2015. Unfortunately, the fall of oil price in the international market and the measures taken by the government trying to sustain the budget, have reduced the consumers spending, hurting the industry.

New vehicles sales started to decline and in the 2018 the annual volume was lower than in the 2010, with 420.701 sales. In the 2018, the oil price was still almost low and the introduction of VAT created a general price increase, reducing the purchase power and constraining the new consumer goods demand, including vehicles.

However, in 2019 the market has started a new positive cycle, over half a million sales level. Indeed, the Full-year sales have been 542.538, up 29%.

The absolute dominion of Toyota is progressively declining as several new manufacturers have approached the market. Toyota held over 40% market share in the 2010 while each year this position has been eroded, with 2019 at 27.3%, the lowest level in the history of this market.

The over ten points lost in this decade by Toyota has been taken by several competitors. However, while the second place taken by Hyundai with a share in the last 7 years between 17.3% and 23.6% (in 2016) was not a surprise, the third place actually taken by Mazda was really a great news. Mazda share exceeded the 2% for the first time in the 2015, hitting a record in 2019 with 6.7% of share.

Behind, Nissan, Chevrolet, Isuzu, Kia, Mitsubishi Ford and other 50 players.

Tables with sales figures

In the tables below we report sales for all Brands, top 10 Manufacturers Group and top 10 Models

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