Last September’s Royal Decree in Saudi Arabia that allowed women to drive by June this, will provide significant economic benefits not only to car manufacturers, but also for strategic investors, motor insurance companies, car leasing companies, and others, according to the findings by the PwC Middle East.
The move opens up a whole new segment of customers – something that becomes all the more significant when one considers that women make up 43 per cent of the Saudi population. And, according to figures by Euromonitor, more than 67 per cent of them are aged between 15 to 64 years.
Additionally, Saudi Arabia ranks the highest in terms of consumer expenditure on automobiles in the Middle East, with an estimated expenditure of $19.8 billion in 2016. Also, it ranks second only to Bahrain in terms of expenditure on automobiles per household.
The report published by PwC Middle East on the occasion of International Women’s Day entitled “Women driving the transformation of KSA automotive market”, looked into key opportunities for the automotive market in Saudi Arabia.
“This is an exciting time,” notes the report,” as Saudi Arabia has taken concrete steps to advance the gender equality agenda which in turn will boost the automotive market in the Kingdom of Saudi Arabia and present an array of opportunities for government, strategic investors (local and foreign), motor insurance companies, car leasing companies, pension funds, private investors, etc. are looking at providing innovative solutions to serve the rapidly expanding automotive sector in Saudi Arabia.”
The report identified 4 key areas: The first is creating new job opportunities for Saudi nationals, second, incremental capital investment to build new road infrastructure, third an increase in insurance revenue as insurance premiums will be recalculated, and finally establishing new women – only driving schools.
Car industry impact
The total number of female drivers in Saudi Arabia is projected to reach 3.0m in 2020. In comparison, male drivers are set to increase from 9m in 2017 to 9.5m in 2020, the report estimates.
Car sales and car leasing are expected to pick up substantially, with an expected annual growth rate of 9% and 4% until 2025 respectively, according to PWC.
“The highly competitive motor insurance market will benefit from the new women drivers as it creates opportunities for new motor insurance providers, products and services, in addition to reshaping the motor insurance landscape,” said PWC.
“The motor insurance is expected to grow by 9% annually between 2017 – 2020 to reach $8.1bn.”
According to the report, 20% of Saudi women or 3 million will drive by 2020.
Said Hala Kudwah, PwC Saudi Arabia financial services and consulting leader: “Our analysis tells us that there’s an opportunity to increase the number of driving institutions in the kingdom by over 50%, an increase that will be translated into job opportunities for our females.”
Brighter economic outlook
In the longer term, the overall increase in cars on the road will have a significant impact on Saudi Arabia’s traffic, PwC report notes.
The Government will need to accelerate the upgrade and expansion of the road infrastructure to accommodate the influx of additional drivers.
Future investments should also be considered for the development and maintenance of car parking areas.
This article first appeared in GMR’s sister publication, AMEInfo.