Saudi tire market forecast to grow 3.2 times by 2026

12/02/2017 08:04 AST

The tire market in Saudi Arabia is growing rapidly, owing to Increase in a number of per capita vehicle in the Kingdom. According to Persistence Market Research analysis, tire market is expected to grow 3.2 times by 2026 compared to that in 2016. Growth is primarily driven by the increasing demand coming from the four-wheeler vehicle tire segment. The company forecast the four-wheeler vehicle tire segment market would grow at a strong CAGR during the 10-year forecast period of 2016-2026.

Saudi tire market forecast to grow 3.2 times by 2026 Based on vehicle type, the four wheeler vehicle tire segment is estimated to account for more than 60% volume share of the overall Saudi market by 2016 end, which is expected to increase further by the end of 2026. The KSA tire market volume, by the four- wheeler vehicle tire type segment, is forecasted to grow at a double digit CAGR for the period of 2016 through 2026.

Among the four-wheeler tire segment, the Passenger car tire segment is projected to be the most prominent sub-segment over the forecast period as a result of growing light truck & passenger car demands in the Kingdom.

The Persistence Market Research analysis further indicated that the passenger car vehicle tire segment which accounts for more than half of KSA vehicle tire segment is anticipated to grow at a CAGR which is estimated to be over 2% higher than the CAGR of commercial car segment, during the forecast period. According to the study, a growth in the replacement demand for four-wheeler tire segment is observed, indicated by the growth in the import of light truck & passenger cars in the Kingdom at a CAGR of about 8% from 2011 through 2015.

Owing to the increasing size of the overall automobile industry across the KSA market, and a significant number of light motor vehicles on the road, as compared with the heavy vehicles, the passenger car segment is forecast to remain the dominating four- wheeler vehicle segment in terms of volume through 2026. The Saudi government’s favorable taxation policies also support the growth of tire demand through cheaper pricing of the vehicles. In comparison to the other countries in the world, KSA is the cheapest country to buy automobiles and its part with no luxury tax or VAT, the report noted. The country also offers the opportunity to buy automobiles with affordable financing plans. As a result, availability of four-wheeler vehicle segment is higher, which represents a higher market for four-wheeler tire.

The Saudi Industrial Development Fund said in its report earlier that Saudi Arabia has the largest automotive market among the Gulf Cooperation Council (GCC). In KSA, in the absence of any local manufacturing, all the demand for tires is covered by imports. There is a direct link between the demand for tires and the number of vehicles operating in country and the frequency of tire replacement, which itself depends on the climate, road conditions and per capita income.

Saudi Arabia has one of the highest number of per capita vehicles globally. Due to extreme weather conditions, replacement period for tires is relatively shorter, which is a major reason for increasing replacement tire sales in Kingdom. The future demand on the basis of an average annual growth rate of 8%.

There is no competition from domestic producers as there is no local production of tires presently in the Kingdom. Japanese manufacturers had a market share of over 20% during 2014. The major Japanese brands include Bridgestone, Yokohama, Toyo, Sumitomo, Ohtsu & Nitto. High quality & excellent services combine to sustain a dominant Japanese market share.

South Korean companies with an import share of 15% are at second number in the Saudi market. Major brands include Hankook & Kumho. The growing market share of the Korean companies is largely due to their competitive prices and the increasing sales volume of Hyundai, KIA and Daew

Saudi Gazette