The first car manufacturing plant in Saudi Arabia is to be set up with a capital of SR375 million in Dammam, a local paper reported.
In the first phase, the factory will have a capacity of 15,000 cars, according to the Khaleej Times. When the plant is shifted to its new 3m sq m facility in Sudair, capacity will grow to 300,000 units.
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An agreement for the purpose has been signed by the Saudi Authority for Industrial Cities and Technological Regions (SACTR) with the Gulf Automobile Manufacturing Company (GAMC), the paper said.
SACTR director-general Toufique Al Rabeea told the paper there were good prospects for car manufacturing factories in the kingdom which currently imports vehicles worth more than SR22bn annually. Car sales in 2008 are expected to rise by 27% compared to last year.
GAMC chairman Nasser Al Hajri told the Khaleej Times the authority has offered incentives to establish the factory and added that he was talking with four Saudi investors about establishing the plant in Dammam. He hoped that manufacturing could start within a year.
Al Hajri reportedly said he had been considering the idea since 1988 when he was an engineering student in the United Kingdom.
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By GlobalData“At that time I was thinking of manufacturing cars suitable for the people of the Gulf and other Arab countries,” he said.
“We selected the Kingdom for our expansion plan considering the availability of young and talented Saudi technicians in the field.We’ll provide Saudis with intensive training,” said Al Hajri whose company has a plant in Abu Dhabi manufacturing light trucks.
His company currently employs 300 workers including technicians. The number will reach 50,000 in the coming 10 years, the report said.
Al Hajri said his company was receiving technical support from manufacturers in different countries.
“We import parts from well known international companies. This year we want to produce 3,000 cars at our Abu Dhabi plant,” he added.
He expected the opening of several car manufacturing companies in the Kingdom within the next 10 years to meet requirements of the country’s fast growing population. Stressing the authority’s plan to promote strategic industries in the Kingdom, he said investment in the car industry was no longer a dream in the light of modern economic trends.
“We’ll remove all obstacles facing serious industrialists or investors who want to establish value-added industries in the country,” he said. He said that industries play a big role in boosting the Kingdom’s economy and supporting its diversification drive, thus reducing dependence on oil resources. They will help create more job opportunities for young Saudis.
According to the paper, he said many essential parts required by the automobile industry are now available in the kingdom.
These include light systems, brakes, windscreens, batteries, engine oils and exhaust pipes, the Khaleej Times noted.
[Editor’s note: Middle East car production includes a number of low-volume kit assembly operations in Egypt but the majority of vehicles are shipped in built-up. Export suppliers include Toyota, whose imports (left-hand drive) include Camry sedans from Australia. General Motors brings in cars from global sources, including the US and Australia.Japanese and US brands dominiate in the six Gulf Cooperation Council (GCC) states which, according to the BBC’s website is “a loose political and economic alliance… which aims to boost economic cooperation between members”. The member states are Saudi Arabia, Kuwait, the United Arab Emirates, Oman, Qatar and Bahrain which all share similar political systems and a common social and cultural outlook.
They are also autocratic monarchies or sheikhdoms, with limited or non-existent political participation, the BBC says, and collectively, possess almost half of the world’s oil reserves. Saudi Arabia is the most powerful member of the alliance.
The BBC added that GCC aims to create a common market by 2008 and to adopt a single currency in 2010. A customs union was set up in 2003, although it has yet to be fully implemented. Talks on free trade agreements with China and Turkey are reportedly “in the offing”.]
