Recent Study: Saudi Arabia Autos Report Q4 2014

New car sales have seen impressive growth in Saudi Arabia year-to-date, rising by a reported 12% over H114, to 408,073 units. June was a particularly strong month, with sales rising by 19% year-on-year (y-o-y). BMI believes this performance was bolstered in part by seasonal promotions.

On current trends, full-year sales would be just above the 815,000 unit mark. As such, BMI retains its forecast of 5.4% growth in new car sales this quarter. The country's macroeconomic backdrop remains broadly favourable, with BMI's Country Risk team forecasting real GDP growth of 4.3% in 2014 and having now revised up its growth forecast for 2015 to 3.6% (from 3.3%) on the back of an increasingly positive outlook for construction activity. Indeed, we see Saudi Arabia's economic performance remaining strong heading into 2015, owing to elevated domestic demand and accelerating progress on the country's substantial pipeline of infrastructure projects.

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Turning to private consumption - a key indicator of likely demand for new vehicles - BMI retains a bullish view this quarter, forecasting growth of 5% for both 2014 and 2015. Strong levels of private consumption should also lend support to demand for new cars. Auto financing should also remain fairly affordable, with monetary policy conditions set to remain supportive. Saudi consumer price inflation (CPI) averaged 2.8% year-on-year (y-o-y) in Q114, down from 3.9% in Q113. BMI has now revised down its expectations for 2014 average CPI to 3.4%, from 4% previously. As such, we expect no change to the Saudi Arabian Monetary Agency's key policy rates over the coming quarters, with the repo and reverse repo set to stay at their current levels of 2.0% and 0.25% respectively. This will help any Saudi residents who require financing in order to purchase a new vehicle.

Overall, we believe that confidence in the Saudi auto sector remains strong - with both a growing passenger car market, partially helped by a growth in benefits from the...

The Saudi Arabia Autos Report features the latest data and forecasts covering production, sales, imports and exports.

Business Monitor International (BMI)'s Saudi Arabia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the automotives market in Saudi Arabia.

Key Benefits

* Benchmark BMI's independent automotives industry forecasts on Saudi Arabia to test other views - a key input for successful budgetary and planning in the Saudi automotives market.
* Target business opportunities and risks in the Saudi automotives sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Saudi Arabia.

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