Saudi Arabia's Automotive Division of its National Industrial Clusters Development Programme (NICDP), says today's (11 December) letter of intent (LOI) inking with Jaguar Land Rover (JLR) has raised speculation around 4,500 jobs could be created should production start.

New employment opportunties are of high importance in Saudi Arabia, whose demographic challenges include a population expected to grow from today's 27m to a figure of 33m by 2020.

Discussions are still at a preliminary stage and include local aluminium parts production with which JLR is familiar - with manufacture of a Landrover-badged model expected to potenially be the first off the line if the LOI moves towards a more concrete basis.

The world's largest integrated aluminium complex, a joint venture between Saudi Arabian Mining Company and Alcoa of the US, is also due to begin production in 2014 at the Ras Al Khair facility - creating potential opportunities for the automotive sector.

"There are a number of synergies - the GCC [Gulf Cooperation Council - UAE, Bahrain, Saudia Arabia, Oman, Qatar and Kuwait] is certainly a major luxury car market," NICDP vice president Automotive Cluster, Didier Vigouroux, told just-auto from Riyadh where he attended today's signing ceremony.

"We have probably been involved for two and a half years now with JLR. Premium OEMs like them are constantly trying to reduce the weight of their vehicles and one way is to replace steel with aluminium. Most of their future cars will follow that trend."

Vigouroux's background with major OEMs and suppliers - he has worked at Magneti Marelli Powertrain and Delphi as well as General Motors in the US and France - means the importance of today's announcement in terms of employment does not go unnoticed.

Beyond that...from our stand, from the Kingdom's, to diversify the overall Saudi industry away from oil and gas, by doing that [we are] not only diversifying the export portfolio, but creating significant number [s] of jobs for Saudis coming out of Universities," he said.

"There is a significant demographic change for Saudi [Arabia]. We are talking about a potential vehicle assembly plant, but there is no vehicle plant without its ecosystem of suppliers. The overall programme, they are mentioning 4,500 [jobs], it is significant."

Vigouroux confirmed the JLR model under discussion would have a Landrover badge, although final details are still being worked out in a feasibility study between the two groups with the potential to expand markets beyond the GCC.

"The next stage will take a few more months," said Vigouroux. "The final decision - black or white - would have to take place before this summer."

JLR sales in emerging markets are rising - global sales rose 32% year on year to 324,184 vehicles in the 11 months to 30 November. Middle East and North Africa volume was up around 9% to 11,418 units.

Saudi Arabia is a major consumer of cars and trucks, all currently imported, with Saudis expected to buy up to 1m cars per year by 2020. There is strong demand for trucks, buoyed in part by the country's booming construction sector.

Against this background, the Government's Ministry of Petroleum & Minerals and Ministry of Commerce and Industry (MOCI) is developing a Saudi Arabian automotive cluster, encompassing: car; truck and bus; R&D; design; components; sub-systems and sub-assemblies; full vehicle assembly and logistics.