Tuesday 23 October 2018

Saudi new car market set to get a solid boost

DUBAI, October 3, 2017

Even if 50 per cent of women receiving the driving licence in Saudi Arabia will opt for owning a car, it would provide a solid boost to the new car market either directly or through used car purchases, said a new study.

As more women will be directly responsible for purchasing vehicles, dealers will have to realign their marketing strategies to make women more comfortable from the very beginning of their customer journey, according to the analysis from growth partnership company Frost & Sullivan.

It is a global challenge for most OEMs and their dealership networks need to start learning to properly capture the demand generated by women, and Saudi dealers will have to learn a lot in a very short time. Redesigning waiting areas, hiring female consultants, making test drives more women-friendly are just a few beginnings of a new learning curve for OEMs and dealers.

Surprisingly, this local change has the potential to have a longstanding impact on how OEMs and dealers sell cars to women globally, simply because so many dealers will have to face a significant jump in demand from one specific group of customers.

Aftersales is another area of opportunity for local dealers. Although many regular maintenance services are still likely to be done by male family members, the number of female customers engaging in the aftersales side of vehicle ownership will increase.

Socio-economic Impact

Every year, roughly 7,500 people die in road accidents (230 deaths per 1 million people), which puts Saudi Arabia significantly higher over the global average (180 deaths per 1 million people), the study said.
However, allowing women to drive is expected to improve the level of road safety by initially replacing taxi drivers and later sharing driving responsibilities with other family members. Statistics show that women tend to be safer drivers.

Although there are now more women holding driving licenses in the US, men accounted for over 70 per cent of fatal crashes involving driver’s death in 2015. What’s more, the severity of accidents caused by men is usually higher than those caused by women. With more women on the road replacing taxi drivers, road safety is expected to improve.

Will the new car market get the long-needed lift from new customers?

So, how many women could apply for driving license in the Saudi Arabia? In the neighbouring country Bahrain, women obtain up to 25 per cent of all driving licenses, according to General Directorate of Traffic Services (2014), and if expats are excluded, the number increases to 40 per cent. The latter number will give a better indication since the Saudi Arabia has lesser number of expats (33 per cent) than Bahrain (52 per cent), as per the National statistic resources, 2014-2015.

Accordingly, up to 90,000-150,000 women would get driving licenses in the Saudi Arabia annually (currently, around 350,000-400,000 driving licenses are issued to men in the Kingdom every year Saudi Arabia (Source: Open data portal, data for 2008-2012). Initially, these numbers can be even higher as many women would rush to pass the driving test. About 4.5 million women in the Saudi Arabia are between 20 to 34 years old (including Saudi and non-Saudi) and about 1.5 million women are employed. These women are likely to be the most active in applying for driving license.

Implications for taxi drivers

The most obvious short-term impact of this decision will be on the number of taxi drivers in the country. There are over 100,000 official taxi cars in the Saudi Arabia including many more private drivers employed by families and most are driven by expats. Although it’s been some time since conventional taxi drivers started losing female customers to Uber and Careem drivers, both categories of drivers will face tougher times as effective demand is likely to drop, starting next year.

Despite a lot of families in the Kingdom still preferring taxi services as a more comfortable mode of transport, as many as tens of thousands of taxi drivers could struggle next year to keep their businesses afloat.


There is no doubt that Saudi women have been influencing car purchasing decisions, especially when it comes to family cars. However, now a whole new segment will open up for automotive dealers: cars bought and driven by Saudi women. The automotive dealers will need to realign their customer engagement journey with the unmet needs of female buyers.

Increasing mobility of Saudi women and their higher degree of integration into country’s economy is expected to have a strong positive impact on the country’s economy including achieving higher levels of Saudisation of the labour force. – TradeArabia News Service

Tags: Saudi |

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