Turns out if you prevent half your population from driving you also restrict your car market. Yesterday we reported that as of next June, the Kingdom of Saudi Arabia will lift its ban on female drivers. Today, a report from Reuters indicates the move could bolster a lagging car market in the oil-rich country.
Saudi Arabia has not allowed women to drive since it was founded in 1932, but that changes in June of 2018 thanks to an order from the country’s leader, Salman bin Abdulaziz Al Saud. The change isn’t likely based on a new view of equality, though. It’s more likely economic.
As Reuters notes, low oil prices have hurt the country’s automotive market. Sales have fallen by about 25 percent, from a high of 858,000 light vehicles in 2015 to a projected 644,000 this year. According to Merril-Lynch, the change adds 9 million potential new drivers, including 2.7 million resident non-Saudi women.
The country has about 1.3 million chauffeurs who are largely employed to drive women where they need to go. The Reuters report also says the typical middle- to upper-class family has two vehicles, one for the husband and one for the wife and children to be driven in by a full-time chauffeur. Over time, as women get their licenses, the chauffeurs will have to find other employment.
Forecasting company LMC Automotive expects the move to increase automotive sales 15-20 percent annually as Saudi Arabia’s car density rises from 220 vehicles per 1,000 adults to about 300 in 2025.
“The move to allow women to drive is set to benefit the entire market,” LMC analyst David Oakley said. “But we might expect to see a disproportionately positive impact on super-premium brands.”
Vehicles that could benefit most include ultra-luxury SUVs like the Bentley Bentayga and forthcoming SUVs from Lamborghini and Aston Martin.
Currently, the Saudi Arabian market is dominated by mainstream brands as Hyundai-Kia, Nissan, and Toyota combine to claim 71 percent of the market.