New Transportation market report from Business Monitor International: "Saudi Arabia Autos Report Q3 2013"
Boston, MA -- (SBWIRE) -- 09/10/2013 -- BMI maintains an upbeat view on the Saudi new car sales market at the mid-point of 2013. Early indications (from the first two months of the year) show that new vehicle sales are up by 14%, at 121,583 units. For 2013, BMI maintains its forecast for real GDP growth of 4.1%, rising to 4.6% in 2014 on the back of a slight rebound in oil exports. Business activity in the private sector remains supported by the government's loose fiscal policy stance, easy credit conditions and robust consumer confidence.
Looking forward, we expect the government's fiscal policy stance to remain broadly supportive of the economy over the coming quarters, with both current spending and capital expenditure continuing to see strong growth. Saudi Arabia's 2013 budget is the most ambitious in the country's history in nominal terms, planning for expenditure of SAR820bn (US$218.7bn); 18.8% higher than the amount outlined in the 2012 budget.
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Encouragingly for the autos sector, BMI expects private consumption to grow by 5% throughout 2013, with the retail sector having undergone a sustained boom since government spending began accelerating in 2011.
BMI believes that the outlook for the retail sector is set to remain bright over the medium term, with sales benefiting from rising disposable incomes, favourable demographics and increasing urbanisation. Consumer loans granted by Saudi commercial banks grew by 20.5% year-on-year (y-o-y) in 2012, with loans for the purchase of cars and equipment rising by 16.1% to reach SAR57.4bn.
Rounding out a broadly-supportive picture is the fact that inflation remains relatively subdued, averaging 4.5% y-o-y in 2012 and set to fall to 4.1% in 2013, paving the way for local interest rates to remain at 2%. This will help with those customers who need to take out loans for their car purchases.
Against this backdrop, BMI is targeting 15% growth in new passenger car sales over 2013, to reach 609,500 units, and 4.8% growth in new commercial vehicle sales over 2013, to reach 167,712 units. All told, the total new vehicle market should see growth of some 12.6%, to reach 777,212 units.
Recent news flow continues to bear out BMI's view that Saudi Arabia will become an ever more important regional autos hub over the coming years. In June 2013, Zawya reported that representatives from the Saudi Arabian auto industry are to attend a conference held by the US-Saudi Arabian Business Council to promote the country as an essential auto market in the Middle East and a gateway to North Africa. The forum was to open on June 26 2013 and aims to build stronger business relationships between the US and Saudi Arabia, and encourage investment from US businesses. Young people, with substantial disposable income, mean there is an increase in driving demand in Saudi Arabia.
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