"Dhaman": the automotive sector in Arab countries attracted 184 foreign projects with Capex exceeding $25 billion over 22 years

The Arab Investment & Export Credit Guarantee Corporation (Dhaman) revealed that the automotive sector in Arab countries attracted 184 foreign projects, with Capex of more than $25 billion, providing more than 102,000 jobs from January 2003 to October 2024.

In its fourth sectoral report for 2024 on the Arab automotive sector in Arab countries, issued at its headquarters in the State of Kuwait today, the Corporation said that 5 Arab countries: Saudi Arabia, Morocco, the UAE, Algeria and Egypt, drew 145 foreign projects with a share of 79% of the total, with Capex of more than $22 billion representing 89%. These projects created more than 91,000 jobs with a share of 89% of the total.

The report, which focuses on four key pillars: 1- Evolution and future of auto sales until 2028, 2- foreign trade in vehicles and their components for 2023, 3- foreign projects in the automotive sector, 4- assessment of investment and business risks in auto sales for 2024, showed that China ranked first as the most important investor in the Arab region with 27 projects between 2003 and 2024 with capex nearly $8 billion and creating roughly 20,000 jobs.

It indicated that the top 10 companies held around 41% of new projects implemented, 67% of the Capex and 58% of new jobs, and that Japan’s Nissan topped the list with 18 projects or roughly10% of the total. China’s Human Horizon came first as the largest investor in the estimated Capex with a value of $5.6 billion. The French Renault ranked first in terms of the number of new jobs with 15,000 jobs, making up 15% of the total.

As for risks and rewards for investment and business in auto sales activity in 16 Arab countries according to Fitch, monitored through two indicators of risks and rewards for 2024, the Gulf countries, led by the UAE, topped the Arab list as the best and most attractive destination for investment and business in auto sales activity for 2024, followed by Saudi Arabia, Qatar, Kuwait, Oman and Bahrain, respectively.

The report expected a hike of more than 5% in vehicle sales in the Arab region (16 countries) to exceed 2.3 million vehicles by the end of 2024, or 2.4% of the global total amid a likely hike to about 3 million vehicles by 2028. It also pointed out a large geographical concentration of sales in a limited number of countries, where 5 countries: Saudi Arabia, the UAE, Algeria, Morocco and Kuwait had around 75% of overall vehicle sales in the region by the end of 2024.

Concerning passenger car sales in the region (12 Arab countries), they are likely to exceed 1.8 million cars by the end of 2024, up 4.5% compared to 2023, with Saudi Arabia ranking first with a share of 45% amid a projected rise in sales in the region to exceed 2.2 million cars by 2028, according to Fitch.

Regarding the vehicle fleet index per 1,000 population, the report showed that the Arab average went up by 9 points to 307 vehicles per 1,000 population by the end of 2024, even though Libya and five Gulf countries exceeded this average. Yet, it is likely to keep rising to 353 vehicles per 1,000 population by 2028.

The report also indicated that Arab countries’ foreign trade in road vehicles and their components shot up by about 23% to over $126 billion in 2023, as a result of the hike in the value of exports by around 29% to $29 billion (supported by the growth in the re-export activity of vehicles, cars and their components, which accounted for $14 billion in the GCC countries alone in 2023), and imports by roughly 21% to $97 billion, with around 82% of the total trade concentrated in 5 Arab countries: the UAE, Saudi Arabia, Morocco, Iraq and Kuwait, with a total value of $103 billion.

It added that the top 9 exporting countries to the region during 2023 held roughly 75% of the total Arab imports of road vehicles and their components with a value of nearly $73 billion. Japan topped the list as the largest exporter to the region with a value of $17 billion (more than 17% of total). The region’s top 10 importing countries accounted for 80% of the total Arab exports of vehicles and their components with a value of more than $23 billion, led by Iraq as the region’s largest importer with a value of $10 billion or 34% of the total.

The report concluded that passenger vehicles came in the forefront of Arab imports of vehicles and their components during 2023, with a value of more than $63 billion representing more than 65% of overall imports, while vehicle parts and accessories came second with a value of $14 billion, making up 14% of the total.