In-Depth Analysis Of The Covid-19 Impact On The Used Car Industry In Saudi Arabia: Ken Research

The global outbreak of Covid-19 virus has led to massive disruptions in all industries, especially with sectors such as automotive, travel, hospitality & more. The looming public health crisis has claimed over 760 thousand lives globally as of 14th August 2020 and apart from that, it continues to pose a threat to the lives, livelihoods, and businesses across the world.

Saudi Arabia is among the top 15 worst Covid-19 hit countries in the world. The economy was also impacted due to the lower demand for crude oil from China and other countries and falling crude oil prices since the beginning of 2020. Aside from the spread of Covid-19, the failed OPEC+ agreement and oil price dispute between Saudi Arabia and Russia also impacted the overall economic condition of the oil exports dependent economy. The Covid-19 pandemic also impacted tourism in the country as the annual Hajj to Mecca, which hasn’t been interrupted since Napoleon’s 1798 attack of Egypt was restricted to a limited number of pilgrims. The government of the Kingdom took to increasing the VAT and cutting down on the cost of living allowance for government employees to battle the financial crisis due to the drop in both oil and non-oil revenues.

Effect on Used Car Demand in the First Half of 2020: The imposed lockdown in the country and the social distancing norms have impacted the used as well as new car sales. Car showrooms witnessed an approximate 80% decline in footfall in the months from April-June. Job losses among ex-pats as well as restricted international & domestic traveled to a large number of used cars entering the market from car rental companies. Stay-at-home orders amidst the pandemic reduced outdoor activities and daily travel of individuals, thus leading to nose-dive in the demand for cars till May 2020. In June 2020, prior to the tripling of VAT to 15% with effect from July 1, 2020, used car sales picked up slightly as mobility restrictions were lifted. SyarahOnline, the e-commerce service launched by Syarah, sold ~420 used & new cars prior to the VAT increment.

Short Term Impact and Temporary Shifts in the Business Practices: Dealerships such as Abdul Latif Jameel are increasing their focus on online sales & maintenance services including receiving consultation, cash/financing offers & free home delivery for new cars. Similar initiatives are expected to be followed for boosting used car sales as well. Investing higher sums in digital marketing for online campaigning including advertising hygiene & sanitization procedures at showrooms and customer engagement initiatives such as online quizzes might be helpful in ensuring customer turn-around when normalcy returns. The overall used car sales are however expected to decline by ~25% in 2020 as compared to 2019. The demand is expected to remain low throughout the rest of the year due to low mobility as consumers continue to work from home. The demand for used cars is expected to recover slightly towards the end of 2020 due to the higher prices of new cars with the increase in VAT.

Long Term Impact on Used Car Sales: Steady recovery is expected in 2021 as people would prefer private cars instead of public transport as a spill-over of the Covid-19 pandemic. Used car sales between individuals are also expected to pick up as an effect of the VAT increase. Also, as a result of the Coronavirus pandemic, online buying is expected to witness growth due to the shift in the buying preferences of consumers. Studies indicate that post-COVID-19, 6 out of 10 individuals in the GCC are willing to purchase a vehicle online. Dealerships are also expected to jump on the digital bandwagon by increasing their online presence either by partnering with existing auto platforms or by investing in their own dedicated used car sales websites, as in the case of some brand-authorized dealerships. This is expected to be coupled with increased value-added services such as longer warranty, easily used car finance, and more. Online auto-classified platforms are anticipated to invest in better technologies such as Artificial Intelligence and Virtual Reality in order to enhance the consumer browsing experience and increase their user base. Basis all these factors, Saudi’s used car market is expected to grow at a CAGR of 4.5% on the basis of gross transaction value during the forecast period 2019-2025.

For More Information on the research report, refer to below link: -
https://www.kenresearch.com/automotive-transportation-and-warehousing/automotive-and-automotive-components/saudi-arabia-used-car-market-outlook-to-2025/356552-100.html

Key Segments Covered: -
Saudi Arabia Used Car Market (On the basis of GTV)
Saudi Arabia Used Car Market (On the basis of Sales Volume)
Saudi Arabia Used Car Market Segmentation (On the basis of Sales Volume)

By Market Structure
Organized
Unorganized

By Type of Cars
Sedans & Hatchbacks
SUVs & Crossovers
Pick-ups
Luxury

By Brand
Toyota
Hyundai
GMC & Chevrolet
Ford
Others

By Age of Vehicle
Less than 1 year
1-3 years
3-5 years
More than 5 years

By Kilometers Driven
Less than 50,000 Km
50,000-80,000 Km
80,000-120,000 Km
More than 120,000 Km

By Regions
Central
Western
Eastern
Southern
Northern

By Age Group of Buyers
18-30 Years
30-60 Years
More than 60 Years

By Type of Sourcing
Car-Rental/Leasing Companies (including Auctions)
Buy-Sell/Park-Sell
Imports
Trade-Ins

Organized Used Car Market
By Sales Channel
Multi-brand Outlets/Exhibitions
Authorized/Direct Dealership Outlets

Unorganized Used Car Market
By Sales Channel
Customer to Customer (C2C)
Local Dealerships

Dealerships Covered
Abdul Latif Jameel Motors
Aljomaih Automotive Company Ltd.
Al Jazirah Vehicles Agencies Co.
Universal Motors Agencies Ltd.
Mohamed Yousuf Naghi Motors Co.
United Motors Company
Gulf Advantage Automobiles LLC
Others

Online Auto-Classifieds/Platforms Covered
Haraj
Motory
Syarah
SaudiSale
Abi Sayara

Key Target Audience
Car Dealerships
Car Manufacturers
Car-Rental and Leasing Companies
Used Car Importing Companies
Online Auto Classified Companies
Industry Associations
Regulatory Bodies
Used Car Auction Companies

Time Period Captured in the Report
Historical Period: 2014-2019
Forecast Period: 2019-2025

Key Topics Covered in the Report: -
Overview and Genesis of Saudi Arabia Used Car Industry
Target Audience Demographics
Trends and Growth Drivers in the Industry and Challenges Faced
Saudi Arabia Used Car Market Size and Segmentations, 2014 - 2019
Ecosystem and Value Chain of Used Car Industry
Customer Decision Making Parameters & Brand Perception Mapping
Cross Comparisons between Major Authorized Dealerships and Online Auto-Classifieds/Platforms and Company Profiles
Future Market Size and Segmentations, 2019-2025F
Covid-19 Impact on the Industry, the Way Forward & Upcoming Online Business Models
Analysts’ Recommendations

Related Reports by Ken Research: -
https://www.kenresearch.com/automotive-transportation-and-warehousing/automotive-and-automotive-components/spain-used-car-market-outlook/295242-100.html

https://www.kenresearch.com/automotive-transportation-and-warehousing/automotive-and-automotive-components/france-used-car-market-outlook/284811-100.html

https://www.kenresearch.com/banking-financial-services-and-insurance/loans-and-advances/qatar-auto-finance-market-outlook-to-2023/274062-93.html

Contact Us: -
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

Ken Research Pvt. Ltd.,
Unit 14, Tower B3, Spaze I Tech Business Park, Sohna Road, sector 49 Gurgaon, Haryana - 122001, India

Ken Research is a Global aggregator and publisher of Market intelligence, equity and economy reports. We provides business intelligence and operational advisory in 300+ verticals underscoring disruptive technologies, emerging business models with precedent analysis and success case studies.

This release was published on openPR.