Saudi Arabia Tire Market Anticipating Strong Growth Prospects: Likely to Grow at a CAGR of 7.4% by 2027
Published | 09 November 2021
Saudi Arabia tire market is blossoming as the country has been witnessing rapid growth in the investments earmarked for automobile manufacturing, directly impacting the growth of the market. In addition to this, the rising number of electric vehicles is driving the demand for EVs and passenger vehicles in Saudi Arabia, offering higher prospects for the market in the coming years…
A recent study, conducted by the strategic consulting and market research firm BlueWeave Consulting, revealed that the Saudi Arabia tire market was worth USD 3753.0 million in the year 2020. The data generated by the study reveals that the market is estimated to grow at a CAGR of 7.4%, earning revenue of around USD 5984.0 million by the end of 2027. Saudi Arabia tire market is rising due to a rapidly growing consumer base and favorable economic conditions. The market is also booming due to a fast-expanding consumer base and rising per capita expenditure on luxury vehicle components, both of which are contributing to market expansion. Another important issue is the increasing presence of multinational tire brands in Saudi Arabia, which provides superior quality assurance and longer product life than domestic competitors. Additionally, the implementation programs such as National Industrial Development and Logistics Program (NIDLP) supporting the Saudi Vision 2030 is anticipated to propel the growth of the Saudi Arabia tire market.
Rising demand from the automotive sector and EVs is driving the growth of the Saudi Arabia tire market
The growing concerns toward climate change, declining production of fossil fuels, and favorable government subsidies for enhancing the demand for hybrid and electric passenger vehicles are contributing to the growth of the Saudi Arabia tire market. According to one estimate from the Global EV Outlook Report 2021, EVs enjoyed their best year in 2020, recording a 43% rise in stocks, as opposed to the 2019 statistic showing an increase in sales at about 10 million units. Saudi Arabia's government announced that at least 30% of the total number of cars it will be driving on the roads by 2025 will be electric-powered with the support of the growing number of EV initiatives underway in the country. As EV and hybrid passenger tires showcase some differences in torque and higher load-bearing capabilities, the demand for such tires may also witness a rise in the coming years, positively impacting the growth of the Saudi Arabia tire market.
Increasing Investment Toward Automobile Production Activities Favoring Market Growth
The economy of gulf countries is largely dependent on the production and export of oil & petroleum, which is pushing the growth of the other sectors. The royal commission of Saudi Arabia is anticipating an investment of USD 10.6 billion in the coming years and seeking to develop the first Saudi-made car by the end of 2022, which has led to a spike in the demand for automobiles in the market, positively impacting the growth of the Saudi Arabia tire market. In addition to this, the National Industrial Development Center is looking forward to generating production possibilities of over 300,000 vehicles between 2020-2030, initiating a major shift in the production capacities in Saudi Arabia, which is propelling the growth of the Saudi Arabia tire market.
Saudi Arabia Tire Market - By Type
Based on types, the Saudi Arabia tire market is grouped into radial and bias. The radial tire segment acquired the larger share in the Saudi Arabia tire market in 2020. The factors contributing to the growth of the segment in the Saudi Arabia tire market comprise exceptional benefits, such as better strength and enhanced flexibility as compared to regular tires. The radial tires easily absorb the bumps and socks while providing a comfortable ride to the driver and passenger in the vehicle. It also reduces the ground compaction and minimizes the chances of damage caused to the vehicles. All these factors make it more suitable for the end-users, thus accelerating the demand for radial tires in the Saudi Arabia tire market.
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Saudi Arabia Tire Market - By End-Use
Based on end-use, the Saudi Arabia tire market is segmented into OEM and replacement. The replacement segment of the market has garnered a higher share between in 2020. Replacement tires are ones that you buy to replace your original equipment tires. Off-road driving, topographical travel are some of the limitations of original equipment (OE) tires that can be easily circumvented with aftermarket tires. Replacement tires are known for providing a greater driving experience over worn-out OE tires in terms of comfort, high-terrain driving, and lengthy drives, as well as improved puncture resistance, longer driving life before natural wear out, and more decisive rubber than worn-out OE tires. Additionally, a large presence of the suppliers and distributors of replaced tires across Saudi Arabia is another factor driving the growth of the Saudi Arabia tire market.
Saudi Arabia Tire Market – Distribution Channel
Based on the distribution channels, the Saudi Arabia tire market is grouped into online and offline channels. The offline segment accounted for the larger share in the market. Direct sales, distributors, wholesale, and retailers are all part of the offline distribution channel. A strong distribution network of companies greatly impacts the distribution of the products to markets all over the world. Direct sales are done when interested parties contact the manufacturers directly without the involvement of any third party. Several tire manufacturing companies are setting up their respective showrooms across Saudi Arabia to provide quality service and products to the consumer. These factors are bolstering the growth of the offline segment in the Saudi Arabia tire market. However, the online segment is likely to gain significant traction during the forecast period, especially after the COVID-19 pandemic with the emergence of various online platforms for vehicle parts.
Impact of COVID-19 on Saudi Arabia Tire Market
The sudden breakout of the COVID-19 pandemic led to a negative influence on the Saudi Arabia tire market. The COVID-19 pandemic resulted in the higher prices of raw materials for tire manufacturing, which has hindered the market's growth. The high price of tires is one of the major restricting factors for the Saudi Arabia tire market. The exorbitant cost of tires compels many car owners to choose low-cost tires that prove dangerous in the long run. Tire production fell by 30% in the first half of FY21, according to the Automotive Tyre Manufacturers' Association (ATMA), due to a lockdown and mobility restrictions in the first quarter, which severely impacted production. Demand from both the replacement and OE segments had also decreased.
However, the growing vaccination rates are anticipated to enhance the offline sale/purchase of the tires. In addition to this, the online distribution channel has been on the rise amid the pandemic, demonstrating strong potential for the future growth of the Saudi Arabia tire market.
Saudi Arabia Tire Market - Competitive Landscape
The leading players in the Saudi Arabia tire market are Apollo Tyres Ltd., Michelin, Bridgestone Corporation, Continental Aktiengesellschaft, Sumitomo Rubber Industries, Ltd., Pirelli Tyre S.p.A., Yokohama Tire Corporation, Hankook Tire & Technology Co., Ltd., Toyo Tire Corporation, The Good Year Tire & Rubber Company, and other prominent players.
The Saudi Arabia tire market is moderately consolidated, with a handful of players capturing more than half of the entire market. It is making it difficult for the newer entrants and local players to establish their presence in the Saudi Arabia tire market. Additionally, the rapid investment in the research and development by key players amid growing adoption of the hybrid or EVs is also cropping the shares of the smaller players in the Saudi Arabia tire market.
In September 2021, Bridgestone Americas (Bridgestone) announced that Sumeru Equity Partners, Danlaw, Inc., and other shareholders had finalized the acquisition of Azuga Holdings, Inc. (Azuga) and the Azuga fleet management platform. The USD 391 million acquisition accelerates Bridgestone's goal of developing and deploying a complete fleet management system as a vital component of the company's advanced mobility strategy.
The in-depth analysis of the report provides information about growth potential, upcoming trends, and statistics of the Saudi Arabia tire market. It also highlights the factors driving forecasts of total market size. The report promises to provide recent technology trends of the Saudi Arabia tire market and industry insights to help decision-makers make sound strategic decisions. Furthermore, the report also analyses the growth drivers, challenges, and competitive dynamics of the market.
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