Saudi Arabia tyre sales to grow at 12% CAGR
The tyre market in Saudi Arabia is expected to grow at a CAGR of 12 per cent between 2013 and 2018. That’s according to research published 6 January by TechSci market analysts. According to the TechSci, the strong growth rate comes as a result of continuous growth in automotive sales coupled with the increasing demand for tyres in the replacement market. The report, “Saudi Arabia Automobile Tyre Market Forecast and opportunity, 2018”also says that the majority sales in the country’s tyre market are contributed by the passenger vehicle segment.
If the report’s conclusions are correct the market is set to witness a swift increase in the demand for commercial vehicle tyres as a result of increasing investments in oil and gas sector, travel and tourism sector along and the building and construction sector. The growth in these sectors is anticipated to significantly contribute to the demand for commercial vehicles such as buses, trucks, heavy duty trucks, etc. Various construction projects like King Abdullah Economic City (KAEC), Jazan Economic City (JEC), etc. are fuelling the demand for heavy duty trucks in the country.
Then are also structural reasons for the growth. The government of Saudi Arabia is taking various measures to develop the domestic tyre production capabilities. National Industrial Clusters Development Program (NICDP) is one of the key projects that is dedicated in developing the domestic production of automotive in the country. NICDP aims at developing all aspects of the automotive supply chain, which would also include production of carbon black and synthetic rubber (for tyres). It is expected that by 2020, Saudi Arabia would be producing approximately 10 million tyres per year for domestic market and for exports.
“Increasing demand of passenger and commercial vehicles is creating opportunities for foreign manufacturers to enter Saudi Arabia’s tyre market. The hot climatic conditions resulting in short replacement cycles will continue to account for high replacement demand. The increasing preference and usage of small cars by the young population in the country will also contribute to the growth of tyre market over the coming years,” said Karan Chechi, Research Director with TechSci Research, a research based global management consulting firm.