Over at MidEastPosts.com (which often republishes stories from Crossroads Arabia), Rob Wagner takes a look at Saudi potential to enter the automobile manufacturing market. To do so would serve to both diversify the Saudi economy and to provide jobs for Saudis. It’s doable, he finds, but perhaps not very quickly. There’re a lot of hurdles to be surmounted, starting with government/private industry cooperation.

I agree. While Saudi Arabia lacks many of the necessary elements at present, those lacks are not necessarily permanent. Saudis are certainly smart enough to handle any aspect of car design and manufacture. They just have not put the skills and the money together in the right way yet. Sure, much of the material used in car manufacture would need to be imported, but that’s the case everywhere with nearly everything. It’s hard to find any consumer good whose every part was found in the country of manufacture, whether it’s platinum for emission controls, the computer chips that now populate cars, or the tires they roll on.

As the article notes, producing for the domestic market first probably makes sense. I don’t see a Saudi company successfully competing in the high-end market against marks like Mercedes or even Lexus. The Isuzu light truck assembly plant already in business in Dammam is a good model I think. Filling domestic needs for light trucks and personal autos could be a worthy and achievable goal.

‘This Car Is Made With Pride in Riyadh’:
At Last, Saudi’s ‘Magic Export Product’?
Rob L. Wagner

Two years ago, the Saudi Arabian government announced with great fanfare – and was met with some skepticism – plans to manufacture automobile parts by 2013 and assemble cars by 2021. King Saud University engineering students, who designed an economical sport utility vehicle called the Ghazel, bolstered those plans with a tangible vehicle ready for production.

Saudi economic analysts are optimistic that automobile manufacturing in the kingdom will help reduce the economy’s reliance on oil exports. Yet roadblocks persist. Already the goal to manufacture car parts next year is in jeopardy as infrastructure and a trained labor pool are not in place. It begs the question of whether Saudi Arabia can pull off a massive undertaking within its stated timetable or even come close to it.

“It’s not realistic,” Asaad Jawhar, an economics analyst and professor at Jeddah’s King Abdulaziz University, told The Media Line. Jawhar says manufacturing automobile parts is more likely to get underway within five years.

Saudis love their cars, purchasing an estimated 800,000 in 2011 with an expected one million cars to be bought annually by 2020. The Petroleum and Minerals Ministry and the Commerce and Industry Ministry are investing in research and development, design, vehicle assembly and infrastructure to create enough exports to help the kingdom wean itself from oil revenues.
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