Saudi Arabia, one of the Middle East’s biggest car markets, may suffer its first drop in car imports in 10 years as a crisis hits the oil-based economy, according to analysts and traders.
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Car importers, whose 2008 sales accounted for about 3% of the countrry’s gross domestic product (GDP), are cutting costs by freezing new recruitment while banks are making access to financing harder, industry experts said.
Carmakers had been hoping that Arab Gulf countries would hold up in the global downturn and, while the Saudi government has boosted spending to counter the effects of the crisis, the private sector is widely expected to suffer, mainly from greater caution by banks towards lending.
The state-run National Commercial Bank (NCB) said in a research note that worries on the 2009 direction of the Saudi economy “have started weighing on the weakening Saudi auto market”.
John Sfakianakis, chief economist at HSBC’s Saudi affiliate, told Reuters that maintaining sales at 2008 levels would not be easy.
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By GlobalDataImporter Haji Husein Alireza and Co, which sells vehicles made by Mazda , Ford, Aston Martin and MAN trucks, told the news agency that Saudi imports of new cars could fall 22% to 350,000 units in 2009.
NCB estimated at 42bn riyals (US$11.2bn) the total value of some 620,000 new cars sold by major agents in 2008.
