KSA Tire Market is Estimated to Witness High Growth Owing to Increasing Automobile Production along with growing road infrastructure in KSA.
The KSA Tire Market is estimated to be valued at US$ 541.3 Mn in 2024 and exhibit a CAGR of 4.7% over the forecast period 2024-2031. Furthermore, the growing demand for replacement tires owing to expanding vehicle parc has been driving the growth of the KSA tire market.
Market Dynamics:
The KSA tire market is primarily driven by two key factors - increasing automobile production in the country and expanding road infrastructure development projects undertaken by the government. KSA has been witnessing significant growth in automobile production over the past few years. Domestic production of passenger and commercial vehicles has increased at a CAGR of over 7% during 2018-2021. This has positively impacted the demand for OEM tires. Additionally, the government's ambitious plans to develop road connectivity and expand the length of the national road network under the Vision 2030 program will necessitate high usage of construction vehicles, spurring replacement tire demand.
Growing Passenger Vehicle Industry is Driving Increased Demand for Tires in KSA
Saudi Arabia has seen rapid growth in its passenger vehicle industry over the past decade as standards of living have risen. Car ownership rates have ballooned as more Saudis are able to afford personal transportation. This growing vehicle parc is directly driving increased demand for replacement tires in the country. With more vehicles on the road, tires need to be replaced more frequently due to regular wear and tear. Tire manufacturers are benefiting from this consistent consumption of tires as the underlying driver of vehicle growth continues unabated. As long as economic conditions remain stable and incomes keep rising in KSA, the passenger vehicle industry will serve as a steady source of tire replacement volume going forward.
Increased Focus on Public Transportation is Also Boosting Tire Sales
In parallel with the surge in private car ownership, the Saudi government has made major investments in expanding the country's public transportation infrastructure. Billions have been poured into developing metro systems in major cities like Riyadh and Jeddah along with improving bus networks. This expansion of mass transit options has resulted in larger fleets of buses and train cars that require regular tire replacements. Whether it's for buses, trains or support vehicles, the growth of public transportation presents a growing institutional tire market that manufacturers are keen to capitalize on. As long as infrastructure spending remains a government priority, this sector will be an important driver of demand.
Rise of Imported Tire Brands is Intensifying Competition
Traditionally, the KSA tire market has been dominated by a handful of regional players. However, surge in demand has attracted many multinational tire brands to enter the market and establish local production facilities. Major brands like Michelin, Goodyear, and Bridgestone now have a significant presence and are aggressively promoting their products. This rise of global competition has intensified price pressure on domestic tire makers. With imported brands now accounting for over 30% market share, local producers face a persistent restraint from low-cost international rivals undercutting on price. Defending market share against well-capitalized multinationals will remain a challenge.
Raw Material Price Volatility Pose Risk to Manufacturing Margins
All tire manufacturers have to grapple with the volatility of key raw material prices like natural rubber and various types of oil-based chemicals. When input costs spike due to factors outside their control, it puts pressure on profit margins if increases cannot be passed fully on to customers. The KSA market has seen bouts of high raw material inflation in recent years due to global supply disruptions and geopolitical instability. Any unexpected price jumps pose a risk to local producers heavily reliant on imports for materials. While hedging and long-term contracts provide some insulation, raw material price swings remain a restraint on the overall competitiveness of domestic tire manufacturing.
Shift to Specialized Premium and Off-Road Tire Segments Presents New Opportunities
Traditionally, the KSA tire market has been dominated by basic passenger and light truck tires for on-road use. However, changes in demand present new opportunities in specialized segments. Rising sales of luxury and performance vehicles are creating scope to introduce higher-margin premium tires targeting wealthier drivers. Meanwhile, increasing commercial utilization of off-road vehicles in construction and energy industries means new types of off-road/ATV tires are viable. These less price-sensitive niche segments allow manufacturers room for premium pricing and better margins relative to commodity tires. They also present an avenue to boost sales without direct competition from low-cost imports.
Government Focus on Localizing Supply Chain Offers Chance for Component Makers
A core goal of Saudi Vision 2030 is to boost domestic manufacturing and reduce reliance on imports. As part of this, the government is actively working to help localize more of the auto industry supply chain within KSA borders. This presents local component makers opportunities to establish themselves as reliable suppliers to the growing tire industry. Areas like rubber compounding, wire and fabric production have potential for investment. Winning business from tire plants looking to source materials locally could help offset intensifying price competition from imported finished tires. The industrial development drive thus creates chances for savvy suppliers as rules gradually mandate greater tire component localization.
Link: https://www.coherentmarketinsights.com/market-insight/ksa-tire-market-4694
Key Developments:
- In March 2024, Kumho Tire, a major South Korean tire manufacturer, signed a technology licensing agreement with Blatco, a leading Saudi Arabian tire company. As part of the agreement, Kumho Tire will offer technological support to Blatco for the production of passenger car tires intended for the Saudi Arabian and Middle Eastern markets over the next 20 years. This agreement builds on a 2022 memorandum of understanding aimed at establishing a joint tire venture and supports the Saudi government's Vision 2030 initiative.
- In October 2023, The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, and Pirelli Tyre S.P.A., a leading global tire manufacturer, announced a joint venture to build a tire factory in Saudi Arabia. PIF will own a 75% share of the new venture, with Pirelli holding the remaining 25% and supplying crucial technological and commercial expertise. Set to begin operations in 2026, the factory will manufacture high-quality tires under the Pirelli brand and launch a new local brand aimed at the domestic and regional markets.
- In July 2023, Reviva, a global leader in environmental management services, joined forces with local firm Hama Holding and waste tire recycling expert Enrestec to improve tire waste management in the region. Reviva, which is connected with Saudi investment recycling company PIF (The Public Investment Fund), seeks to advance waste tire recycling through this partnership.
- In February 2023, Hankook Tires, a prominent global tire manufacturer, became the exclusive sponsor of Formula E in Diriyah, following its designation as the Exclusive Technical Partner and Official Tire Supplier for the electric racing series beginning in 2023. This partnership, reflecting the growing global interest in electric vehicles, featured the launch of Hankook’s new iON Race Tires, which are made from eco-friendly materials and offer a more than 15% reduction in carbon dioxide emissions compared to standard tires.
Key Player:
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., and Yokohama Rubber Company Ltd.
