Automotive Parts

ates can obviously affect U.S. automakers’ andsuppliers’ price competitiveness. Suppliers to Japaneseand Korean vehicles have the greatest potential forvolume sales, as these vehicles are estimated toaccount for almost 70 percent of the existing car sales.Additional competitive pressure in Saudi’s automotivemarket is the rise in sales of vehicles from China, whichare lower in price and are perceived to be lessexpensive to maintain.Most used parts are banned from being imported intoSaudi Arabia, including tires, but reconditioned engineand transmission parts are exempt if they comply withcertified standards. There is also a ban on the importof auto parts over five years old as well as autos andlight trucks (under five tons) over five years old.Intellectual property protection has steadily increasedin the Kingdom and anti-counterfeiting laws exist. Inaddition, the Saudi government has made efforts tostop counterfeit products from entering into thecounty. However, the continued availability ofcounterfeit aftermarket parts remains a concern forU.S. automotive companies.Opportunities for U.S. CompaniesThere are relatively few barriers to exportingautomotive products to Saudi Arabia beyond theconformity requirements mentioned above. Sincethere is currently negligible automotive-relatedproduction in Saudi Arabia, auto-specific protectivebarriers do not exist. In addition, ongoing auto salesgrowth, favorable demographics and disposableincome levels, and low import tariffs and fuel prices,contribute to good export potential for aftermarketparts to Saudi Arabia. The tariff for radiators and filtersis 12 percent, and for all other spare parts is fivepercent. There are no other VAT or other taxes addedto the sales price. It is unknown whether barriers willarise as Saudi’s planned automotive industry isdeveloped, or if there will be future opportunities forU.S. original equipment parts exports.Saudi Arabia currently is the fourth largest destinationfor U.S. exports of new passenger cars and the seventhlargest destination for used vehicles, which presents anopportunity for increased exports of U.S. aftermarketparts for those vehicles. U.S. exports to Saudi Arabia ofnew passenger vehicles and light trucks totaled104,083 units with a value of $3.2 billion in 2014. Inaddition, 18,687 used vehicles were exported from theUnited States to Saudi Arabia in 2014.U.S. vehicle exports to Saudi Arabia are supported bySaudi’s acceptance of vehicles produced to U.S.standards. Relatively few homologations are neededprior to export. U.S. automotive companies exhibitingat the annual Automotive Aftermarket Products Expo(AAPEX), the Specialty Equipment Market Association’sSEMA Show, and Automechanika Middle East have anopportunity to meet a number of Saudi buyers whoattend these shows. In addition, the SpecialtyEquipment Market Association (SEMA) has a MarketDevelopment Cooperator Program award with ITA tohelp U.S. specialty parts companies increase theirexports to Saudi Arabia and other Gulf CooperationCouncil markets. Each spring, SEMA organizes an eventin the UAE where U.S. specialty parts companies meetpotential buyers from the region.Aftermarket parts for off-road vehicles and SUV’s haveexcellent potential in Saudi Arabia. SUV’s and 4x4 carsare especially popular in Saudi Arabia and there is ahigh level of interest in off road and desert driving.Germany research firm, GfK, estimates that 19 percentof Saudi’s vehicles are 4x4 vehicles and 11 percent ofits vehicles are light trucks. Larger vehicles are alsopopular in order to accommodate large families, andthe Detroit Three excel in this segment, particularly thelarger SUV market.Given Saudi’s high disposable income levels and aninterest in modified/luxury vehicles, there is greatdemand for specialty performance and appearanceproducts. U.S. companies command a leading positionin the supply of transmissions, tuning and highperformance parts and kits, steering, suspension, andbrake components and parts.2015 ITA Automotive Parts Top Markets Report 33