Showing posts with label Used Car Sales in the Saudi Arabia. Show all posts
Showing posts with label Used Car Sales in the Saudi Arabia. Show all posts

Tuesday, July 11, 2017

Saudi Arabia Car Finance Market Future Outlook to 2021: Ken Research

How Car Finance Market is positioned in Saudi Arabia?
Middle East is the one of the most lucrative regions for automotive industry. Saudi Arabia is the largest importer of automotive parts in Middle East and is the largest automotive market for both new and used cars in GCC. In the recent past, the Kingdom’s automotive market have developed at a robust pace owing to the strength of the Saudi Arabian economy, favorable financing options, low gasoline prices, high private consumption levels and growing population.
Though the use of cars has a great significance in the Kingdom, dependence on a financing option to fund the purchase of the car had gained less attraction among the public. Moreover, the financial institutions have given less stress on the car financing products. The Saudis always preferred buying a through self-financing instead of depending on an external financing option.
Which Car Is Financed The Most? New or Used Car?
Banks and private financing sector in Saudi Arabia finances both new and used passenger and commercial cars. The major difference is in the interest rate and the minimum salary requirement based on which the customer avails the car loan. Used car finance bears a higher interest rate compared to the new car finance. The market is dominated by new car finance with a share of ~% as of 2016 on the basis of credit disbursed. The past five years’ trend displays that, though the market is dominated by new car finance, used car finance market has also observed a significant rise in the share every year during the review period, 2011-2016. Major factors that influences the credit disbursed are the average ticket size of the car and the number of cars sold, along with the financial system of the country. Financing options are availed by the mid-income group of people among Saudis and expatriates who buy it for private use. Ideally, the price of a new car is always higher than a used car. Hence, the amount of credit disbursed for new car finance remains higher. As of 2016, the average price of a new car ranges between SAR ~ and SAR ~ whereas the average price of a used car ranges between SAR ~ and SAR ~.
What Are The Major Trends And Issues In Saudi Arabia Car Finance Market?
  1. The prices for used cars in Saudi Arabia have witnessed a decline in 2016 which is expected to continue further in the coming years. Falling used car prices can be attributed to an increase in the supply wherein the demand is low.
  2. During 2016, the new car sales have showcased a sharp decline in the Kingdom. There were several factors that affected the consistent fall in the sale of new cars during this year. In the same year, the transport ministry of the Kingdom has halted the transport permit for new taxis in Riyadh and Jeddah due to the increased number of taxis operating in these two cities.
  3. The Saudi Arabian economy is currently facing the aftermath of the severe oil shock. Crude oil that was sold over USD 100 per barrel in 2014 was sold for only USD 26 per barrel in February 2016. As a specialized exporter of oil, Saudi Arabia is particularly vulnerable to a price decline.
  4. Increasing retail gasoline and diesel prices is regarded as a strategy to deal with the declining oil revenues by the Saudi government. The government is in plans to either link local fuel prices to benchmark oil prices or charge an average of gasoline and diesel fuel prices on the international market. In both the cases it would lead to an increase in the prices.
  5. The banks and the private finance companies in the country are reducing the profit rates as to attract more number of customers. Since the penetration of car finance in the Kingdom is less than ~%, the major players in the market are all set to introduce new product offerings, lowering the profit rates and such other upgrades in the car finance products.
What Is the Future Outlook for Saudi Arabia Car Finance Market?
The car finance market in Saudi Arabia is expected to recover from the fall experienced towards the end of the review period and grow at a CAGR of ~% during the forecast period 2017-2021. The growth is expected to emerge on the grounds of new schemes and loan programs being introduced by the banks with minimal terms and conditions. However, the growth rate expected to display during this period is moderate, which is anticipated to fluctuate depending on the Kingdom’s economic and political circumstances. The fuel price hikes and falling crude prices are expected to continue the trend.
Furthermore, the introduction of VAT by the government in 2018 is expected to adversely impact the automotive industry. The new car sales are expected to fall due to the increase in the cost to be incurred for the purchase of a car. Owing to the lowering prices for used cars the demand for used cars is expected to rise, thereby raising the demand for used car finance. The SAMA’s reform of lowering interest rates to enhance liquidity is expected to positively impact the growth in the market.
Key Topics Covered in the Report:
Car Loans Riyadh Bank Share
Applying Car Loan in Saudi Arabia
New Car Sales in Saudi Arabia
Used Car Sales in the Saudi Arabia
Financing a Used Car in Saudi Arabia
Used Car Sales in Saudi Arabia
Vehicle Financing in Saudi Arabia
Used Car Financing in Saudi Arabia
Car Financing Option in Saudi Arabia
Interest Rate Car Loan in Saudi Arabia
Passenger and Commercial Vehicles Sales in Saudi Arabia
For further information, kindly visit:
Related Reports by Ken Research
Contact:
Ken Research
Ankur Gupta, Head Marketing & Communications
+91-124-4230204

Friday, July 7, 2017

Rising Used Car Demand and Increasing Focus of Banks on Consumer Finance to Stabilize the KSA Car Finance Market Growth: Ken Research

Amidst the price hikes in the new cars, the used car prices are falling thereby raising the demand for used and used car finance
Introduction of VAT in 2018 is expected to adversely impact the demand for cars leading to a fall in the demand for car finance
Increased focus of banks on consumer finance is expected to increase car finance penetration rate
Saudi Arabia car finance market is expected to recover during the forecast period 2017-2021, from the fall experienced towards the end of the review period in terms of credit disbursed for car finance. The falling prices of used cars are expected to augment the demand for used car in the market. Following the rise in the demand for used cars, the demand for used car finance is also expected to rise. Moreover, the banks are expected to increase their focus on consumer finance products at a significant rate in the coming years. This step from the banks is anticipated to raise the car finance penetration rate in the country. Moreover, the increasing urbanization in the country is expected to augment the demand for cars and car finance in Kingdom. The urbanization rate in the country has increased from 83.1% in 2015 to 83.4% in 2016 and is anticipated to rise further in the coming years. The government is supporting growth in the non-oil private sector as to reduce the dependence of oil sector amidst the oil price slump. This is expected to raise the employment opportunities in the country raising the disposable income of the households. Rising disposable income is anticipated to raise the demand for cars and car financing.

Increasing population with a notable increase in the number of expatriates shall augment the demand for car financing options. The increased awareness for the use of electric cars in the Kingdom is expected to raise the replacement demand for cars in the coming years. The banks and private finance companies can regard this as an opportunity to introduce financing options specific to the purchase of electric cars and attain an improved rate of growth in the market.
Ken Research in its latest study, Saudi Arabia Car Finance Market Outlook to 2021, observed that the digitalization of car finance in the Kingdom and establishment of tie-ups between financial institutions and dealers and car rental companies would augment the market growth. The new car sales are expected to fall due to the consistent increase in its prices. Amid competition in the market, several players are in plans to introduce new and innovative product and service offerings in the car finance segment as to induce demand among the public.
The Saudi Arabia car finance market is estimated to register a positive CAGR during 2017-2021. Increased focus of banks on consumer finance, rising expatriate population, increased rate of used car financing and other related factors are expected to be key drivers for a growth in the demand for car finance in the country.
The report provides information on the number of new cars financed, new and used car finance penetration, tenure of new and used car loan and the regions dominating the market in terms of credit disbursed and number of cars financed. It also covers the major players in the market such as Al Rajhi Bank, National Commercial Bank, Alinma Bank, Riyad Bank, Arab National Bank, Al Amthal Financing Company, Al Yusr Financing Company, Morabaha Marina Financing Company and Saudi Finance Company.
Key Topics Covered in the Report:
Auto Finance Opportunities in Saudi Arabia
Growth Trend Car Loan Saudi Arabia
New Car Sales in Saudi Arabia
Used Car Sales in the Saudi Arabia
Saudi Arabia Auto Loan Disbursal
Riyadh Average Loan Rate
Saudi Arabia Auto Loan Market
Auto Loans Market in Saudi Arabia
Financing a Used Car in Saudi Arabia
Competition Saudi Arabia Car Loan
Market Share Car Finance Saudi Arabia
Financing Schemes Car Loans Saudi Arabia
Auto Loans Terms and Conditions in Saudi Arabia
For further information, kindly visit:
Related Reports by Ken Research
Contact:
Ken Research
Ankur Gupta, Head Marketing & Communications
+91-124-4230204