KSA TIRE MARKET ANALYSIS

Ksa Tire Market Size and Trends

The KSA Tire Market is estimated to be valued at US$ 541.3 Mn in 2024 and is expected to reach US$ 745.6 Mn by 2031, exhibiting a compound annual growth rate (CAGR) of 4.7% from 2024 to 2031.

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There has been steady rise in vehicle fleet size in the country owing to rising disposable income levels and economic growth. This has driven the demand for replacement tires from both passenger and commercial vehicle segments. Additionally, stringent government regulations regarding fuel efficiency and performance standards for tires are further boosting the market. Developments in materials and manufacturing technologies have allowed tire manufacturers to introduce advanced tire designs offering high performance as well as lower rolling resistance. Continued investments by major brands to expand their production capacity in the country is another key factor expected to support the market growth in the coming years.

Increasing demand for premium and custom tires

The KSA tire market is witnessing rising demand for premium and customized tires in recent years. Driven by rising vehicle ownership and changing consumer behavior, people are showing more preference towards high quality tires that offer better performance, safety and aesthetics. In Saudi Arabia as well, there is a noticeable trend of motorists opting for tires from leading global brands rather than cheaper alternatives. This can be attributed to increasing vehicle usage for leisure and recreational activities, leading Saudis to pay more attention to automotive accessories and add-ons that enhance riding experience.

Premium tires from top manufacturers now come with advanced technologies such as customized tread patterns, enhanced grips, high puncture resistance, noise reduction features and prolonged mileage. Their designer looks with attractive rim designs are also appealing to style conscious motorists. Moreover, access to imported cars equipped with superior factory fitted tires has introduced Saudis to the advantages of high performance rubber. This exposure coupled with rising living standards is persuading an emerging affluent class to invest more in tires as part of luxurious driving. Brand consciousness and desire to flaunt premium logos further motivates discretionary spending on conspicuous consumption products like top-end tires.

The changing aftermarket itself is also responding to this premiumization trend. Leading retail chains are augmenting import and distribution of specialized tire models targeting a variety of vehicle categories from SUVs and crossovers to sports cars and luxury sedans. Online platforms additionally offer buyers extensive choices and doorstep service. With a bloated inventory of pricey imported vehicles on the roads, maintenance and repair industry players recognize the business potential in catering premium and custom tired tailored to exact specifications. This offers an important growth lever to capture the small but high spending elite customer base and expanding middle class keen on experience-oriented automotive products and services.

In view of such evolving preferences, tires manufacturers and distributors are keen on differentiating their offerings through style, technology and personalization. Increased localization of premium tire production also points to the commercial viability of addressing the premium slice of this market. If present demand drivers sustain, the niche high-end segment looks set to make larger contributions to the overall tire industry volumes and revenues in the kingdom in future.

Market Concentration and Competitive Landscape

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Opportunity: Rising Disposable Income

Discretionary spending on non-essential items tends to rise with the disposable incomes of individuals and households. This macroeconomic relationship directly influences the automotive accessory market in KSA as well. As personal affordability enhances due to strong GDP growth, falling unemployment and stable inflation environment in the country, motorists are left with more surplus funds to spend on their vehicles and related upkeep and enhancement products including tires.

Saudi Arabia's young demography with major working population in the 25-54 age group draws steady salaries. With livelihood essentials adequately taken care of due to government subsidies, this income segment is positioning itself for an improved lifestyle. Rising two-income nuclear families alongside women's higher participation in the workforce are further augmenting disposable earnings. Social security benefits like housing and healthcare allowances too leave more in hands for discretionary consumer spending.

Rising living standards naturally prompt aspiration for social mobility symbols like personal vehicles treated not just as means of commutation but expression of status and leisure objects. As ownership levels of cars, SUVs, vans, pick-ups and motorbikes increase in this status-conscious society, so does the propensity to spend on high quality tires seen as an investment into the owned assets. Even used vehicle market is presenting such opportunities to tire sellers as these change hands with some component modifications often including rubber upgrade.

Key Takeaways from Analyst:

The tire market in KSA presents solid opportunities for growth over the coming years. As vehicle ownership increases nationwide driven by an expanding economy and population, tire replacements and new vehicle fitments will drive consistent demand. Further, growing preference for larger vehicles such as SUVs and pickup trucks bodes well considering their higher tire count.

However, supply side constraints remain a challenge. Local manufacturing capacity has yet to match the rising needs, making KSA reliant on imports to meet 70% of needs. Continued imports restrict ability to cater to local specs and timely fulfillment. Rising raw material costs also put pressure on margins. If not passed on entirely, it threatens profitability for suppliers.

The western region dominates current demand owing to the presence of major industrial and population hubs. However, focus is now shifting to other emerging markets as well. Planned investments and FIFA World Cup hosting has spurred growth in Al Qassim, Al Madinah, and Tabuk regions opening new markets for tires.

While macro factors remain supportive, partnerships will be key to expand locally and timely meet evolving preferences. Tire makers need to actively work with local assemblers to understand upcoming models and designs well in advance.

Market Challenges: Fluctuating raw material prices

The KSA tire market has been facing significant challenges due to fluctuating raw material prices in the recent past. Tire manufacturing requires large amounts of raw materials such as natural rubber, nylon, carbon black, and petroleum-based chemicals. However, the prices of these raw materials tend to witness high volatility in line with global commodity price trends. For example, the prices of natural rubber increased sharply in 2021 due to reduced supply from top rubber producing countries. Similarly, crude oil prices witnessed a substantial rise during the same period thereby increasing input costs for vital petrochemicals. This made tire production expensive for manufacturers in KSA. The fluctuating prices create difficulties in business planning and impact the margins of tire companies. It also discourages investments towards capacity expansions plans. Unless effectively mitigated, unstable raw material costs can negatively impact the long-term growth prospects of the KSA tire industry.

Market Opportunities: Expansion of E-Commerce Platforms

The growth of e-commerce platforms in KSA presents significant opportunities for the tire market to expand its reach. Online shopping has gained tremendous popularity among the young population in recent times. Various international and local e-commerce companies such as Noon, Souq, and Danube are rapidly growing their market share in KSA. This has provided tire brands an alternative sales channel to boost sales volumes. Setting up an online store allows companies to market and sell tire products across KSA in a cost-effective manner. It also helps optimize inventory levels through advanced analytics of sales data. Further, e-commerce removes geographical barriers problem and allows smaller cities to be tapped. This would be instrumental in the tire companies' goals to increase sales from outside top cities. If leveraged properly, the widespread adoption of e-commerce can drive higher profitability and support distribution network expansion for KSA tire market players.

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Insights by Vehicle Type - Rising Demand for Personal Mobility Drives the Passenger Cars Segment

In terms of vehicle type, the passenger cars segment is expected to contribute 56.3% share of the market in 2024 owing to a number of factors. As personal disposable incomes rise across the country, more consumers are able to afford their own vehicle for transportation needs. The rising number of dual-income households also means greater need for personal mobility options beyond public transport. Additionally, with an increasing population especially in major urban centers, road infrastructure has improved considerably to accommodate more vehicles. This has made personal transport more accessible. At the same time, many cities still face congestion issues, prompting commuters to prefer private cars over buses or trains during rush hours. The increasing popularity of ride-hailing apps has further expanded the demand for passenger vehicles. With consumers moving up the economic ladder, factors like status, comfort and flexibility associated with owning a private vehicle hold strong appeal. As a result, the passenger cars segment holds the dominant share in the overall KSA tire market.

Insights by Tire Type: Radial Tires Drive Growth amidst the Expanding Automotive Industry in Saudi Arabia

In terms of tire type, the radial tires segment is expected to contribute 72.9% share of the market in 2024. The tire type segment in the Kingdom of Saudi Arabia (KSA) tire market is predominantly characterized by the widespread adoption of radial tires, which have emerged as the leading choice among consumers and manufacturers alike. Radial tires are favored for their superior durability, enhanced fuel efficiency, and improved handling capabilities compared to bias tires. These attributes make them particularly suitable for a variety of applications, including passenger vehicles, light commercial vehicles, and heavy-duty trucks.

The increasing demand for radial tires is primarily driven by the growing automotive industry in Saudi Arabia, which is witnessing a surge in vehicle ownership and usage. As consumers become more aware of the benefits associated with radial tires—such as longer tread life and better performance in diverse driving conditions—the market for these tires continues to expand. Additionally, the shift towards more fuel-efficient vehicles and stringent safety regulations further propels the preference for radial tire technology.

Manufacturers are responding to this trend by investing in research and development to innovate and enhance radial tire designs, focusing on aspects such as low rolling resistance and eco-friendly materials. This commitment to technological advancement not only meets the evolving needs of consumers but also aligns with global sustainability goals. As a result, the radial tire segment is expected to maintain its dominance in the KSA tire market, supported by robust growth projections and a favorable competitive landscape.

Insights by Sales Channel - Original Equipment Sales Still Dominate due to Replacement Cycle

In terms of sales channel, the OEM segment is estimated to account for 61.5% share of the KSA tire market in 2024 attributable to distinct features of the aftermarket. When consumers purchase a new vehicle from the manufacturer or dealership, tires are replaced as standard along with other parts. This regularizes OEM tire sales that are bundled with the vehicle. In contrast, replacement cycles for aftermarket tires are less consistent since consumers replace tires only when the current ones are worn out. As the average lifespan of tires ranges from 30,000-50,000 km depending on usage and road conditions, not all vehicles need new tires at the same time. This makes aftermarket demand more intermittent compared to OEM sales. Additionally, OEMs leverage bulk buys to procure large tire volumes at competitive prices from manufacturers. However, due to the factors explained, the OEM channel holds the leading share of the overall KSA tire industry currently.

Market Report Scope

Ksa Tire Industry News

• In March 2024, Kumho Tire, a leading South Korea-based tire manufacturer, entered into a technology licensing agreement with Blatco, a prominent Saudi Arabia-based tire company. Under the agreement, Kumho Tire will provide Blatco with technology support for producing passenger car tires for the Saudi Arabian and Middle Eastern markets over the next 20 years. This agreement builds on a memorandum of understanding signed in 2022 to create a joint tire venture and aligns with the Saudi government's Vision 2030 policy.
• In October 2023, The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, and Pirelli Tyre S.P.A., a renowned global tire manufacturer, announced a joint venture to establish a tire factory in Saudi Arabia. PIF will hold a 75% stake in the new venture, while Pirelli will own 25% and provide essential technological and commercial support. Scheduled to commence operations in 2026, the factory will produce high-quality tires under the Pirelli brand and introduce a new local brand targeting the domestic and regional markets.
• In July 2023, Reviva, a global leader in environmental management services, partnered with local firm Hama Holding and waste tire recycling specialist Enrestec to advance regional tire waste management. Reviva, affiliated with Saudi investment recycling company PIF (The Public Investment Fund), aims to enhance the recycling of waste tires through this collaboration.
• In February 2023, Hankook Tires, a leading global tire manufacturer, made its debut as the exclusive sponsor of Formula E in Diriyah, following its appointment as the Exclusive Technical Partner and Official Tire Supplier for the electric racing series starting in 2023. This partnership, aligned with the surge in global interest for electric vehicles, saw Hankook Tires introduce its new iON Race Tires, crafted from environmentally friendly materials and achieving over a 15% reduction in carbon dioxide emissions compared to conventional tires.

*Definition: The KSA Tire Market is comprised of manufacturers, distributors, wholesalers and retailers that specialize in automotive replacement and OEM tires for passenger cars, SUVs, trucks and commercial vehicles in the Kingdom of Saudi Arabia. As the largest economy in the Middle East, KSA has a growing vehicle population that drives demand for tires. The hot desert climate also contributes to faster tire wear that necessitates frequent replacements.

Market Segmentation

• Vehicle Type Insights (Revenue, US$ Mn, 2019 - 2031)
  • Passenger Cars
  • Light Commercial Vehicles (LCVs)
  • Heavy Commercial Vehicles (HCVs)
  • Two-Wheelers
•  Tire Type Insights (Revenue, US$ Mn, 2019 - 2031)
  • Radial Tires
  • Bias Tires
•  Sales Channel Insights (Revenue, US$ Mn, 2019 - 2031)
  • OEM (Original Equipment Manufacturers)
  • Aftermarket
• Key Players Insights
  • Apollo Tires Ltd.
  • Bridgestone Group
  • Continental AG
  • Cooper Tire & Rubber Company
  • Goodyear Tire and Rubber Company
  • Hankook Tire Company
  • Michelin Group
  • Pirelli & C. S.p.A.
  • Toyo Tire & Rubber Company Ltd.
  • Yokohama Rubber Company Ltd.