Saudi Arabia is hitting the gas pedal on its automotive industry, aiming to become a regional hub for car manufacturing, according to a senior official. Aftab Ahmed, a National Center for Industrial Development (NCID) advisor specializing in the automotive sector, highlighted the government's commitment to this goal during a recent Saudi-American Business Council seminar.
This focus on domestic production aligns with Saudi Arabia's ambitious Vision 2030 plan, a wide-ranging economic and social reform program. The initiative aims to diversify the kingdom's economy beyond its reliance on oil and create new jobs for its growing population. The automotive sector has been identified as a key area for growth, with the potential to attract significant investment and create a robust domestic supply chain.
Ahmed emphasized the rapid progress being made towards this objective. He pointed to a growing trend of car parts and passenger vehicles being manufactured within Saudi Arabia. This shift is being driven by a number of factors, including government incentives and initiatives. The National Industrial Strategy, launched in 2022, provides a roadmap for developing the domestic automotive industry. It outlines specific targets for localization, as well as measures to attract foreign investment and expertise.
Financial backing is another crucial element in this strategy. The Saudi Venture Capital Company (SVC), established in 2018, has played a significant role in supporting the growth of startups in various sectors, including automotive. According to Ahmed, funding for Saudi startups has seen a remarkable rise, increasing a staggering 21 times from 2018 to 2023. This surge in investment has helped to nurture innovation and entrepreneurship within the domestic automotive industry.
There's also a focus on electric vehicles (EVs) as part of this localization push. Saudi Arabia has set an ambitious target of transitioning 30% of all vehicles in its capital, Riyadh, to electric by 2030. This aligns with the country's broader goal of achieving carbon neutrality by 2060. This large-scale shift towards EVs presents a significant opportunity for domestic car manufacturers and parts suppliers.
The long-term vision for Saudi Arabia's automotive industry is to not only cater to domestic demand but also to become an exporter of cars and parts to the wider region. This ambition is fueled by the kingdom's strategic location and its growing economic clout. A thriving domestic automotive industry would not only create jobs and diversify the economy but also position Saudi Arabia as a key player in the global automotive market.
