Market Trends of Saudi Arabia Used Car Industry
Sports Utility Vehicles (SUVs) Segmented to Gain Momentum
Over the long term, factors such as rising consumer inclination toward comfort and automatic safety features, higher ground clearance, commanding driver seating position, robustness, and off-road driving capabilities are projected to drive the sports utility vehicles (SUVs) segment of the used car market in Saudi Arabia.
The demand for mid-size SUVs is high as they come with multiple engine variants with internal combustion engines and electric options for better fuel economy. Additionally, these vehicles are provided with various transmission options, creating a positive impact on the market.
Other factors, such as the growing adoption of electric SUVs and rapid developments in the market, are expected to drive market growth.
Saudi Arabia has witnessed an exponential rise in SUV ownership, resulting in a larger customer base. Considering this scenario, OEM companies are also focusing on capacity expansions in Saudi Arabia to manufacture SUVs, which may create new opportunities for used cars in the future, as more people will sell their used SUVs for further upgrades and more options will be available to the buyers for used cars. For example, in October 2023, Hyundai and PIF entered a joint venture to establish a vehicle manufacturing plant in Saudi Arabia.
The rising urbanization, the growing tourism sector, and other upcoming projects, coupled with a high demand for SUVs with modern features, are driving the segment’s growth.
The country is seeing an exponential rise in vehicle leasing ownership. Many companies in the country have updated their product portfolios of next-generation SUVs with a wide range of compact SUVs and luxury SUVs powered by various propulsion types.
For example, Yalla Motor and CarSwitch upgraded their used car portfolios with budget and luxury cars. They are also providing various digital services and adopting strategic moves to expand and stay competitive.
Online Sales Channel to Play a Key Role in the Market
The rising number of internet users with increasing smartphone penetration, coupled with the convenience of availing digital services for used car platforms, serves as significant determinants for the growth of this market segment.
Consumers increasingly prefer the online channel as they can avoid the hassle of visiting physical locations and comparing prices, car makes, and models from different platforms through browsing.
These online channels also offer doorstep delivery within the promised time and a wide collection of cars from different makes and models.
There are various online marketplaces that have direct sale-to-consumer models and virtual showrooms, thus increasing the competition. Due to this shift in the method, online services do not need a real store, as these services can be managed with a good customer assistance team and personalized operations. Considering the intense competition, various companies are also developing advanced features to cater to the demand.
- In October 2023, CAFU expanded its services into the car acquisition space by launching its platform with CAFU Cars, its latest venture into the online used car marketplace for buying and selling used cars. It has additional features like spot fueling and pressure wash.
Such developments are expected to boost the market’s growth in the coming years.
