The tire market in Kingdom of Saudi Arabia (KSA) plays a pivotal role in automotive industry owing to rising demand for passenger cars and commercial vehicles in the country. Tires are crucial automotive components that require periodic replacement due to wear and tear. Different types of tires such as radial, bias and run-flat tires are available in the market to meet the diverse needs of vehicles. The demand for high-quality tires is increasing among consumers looking for improved safety, comfort, longevity and low rolling resistance.
The global KSA Tire Market is estimated to be valued at US$ 4288.49 Mn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Rising Miles Driven Per Vehicle
With rapid economic development and improving living standards, the miles driven per vehicle in KSA has increased substantially over the past few years. As tires wear out faster with higher usage, this has led to more frequent replacement of tires. According to industry experts, tires require replacement after covering 20,000 to 40,000 miles depending on driving conditions and care taken. The growing vehicle miles traveled present a significant opportunity for tire manufacturers to increase sales volumes in the replacement market.
Market Opportunity: Rising Miles Driven Per Vehicle
The rising miles driven per vehicle in KSA is a major opportunity for players in the tire market. As vehicles clock higher annual mileage, the replacement cycles for tires reduce. This allows tire manufacturers to enjoy more frequent sales in the replacement market. With economic growth accelerating vehicle usage, miles traveled by the average passenger car and commercial vehicle is expected to increase exponentially over the next few years. Tire makers can capitalize on this trend by expanding their distribution network across major cities and highways to improve product access and consumer experience. A strong focus on various tire segments including passenger vehicle radials and light truck tires will help maximize revenue potential from the growing replacement demand.
Porter's Analysis
Threat of new entrants: The threat of new entrants is moderate as high capital requirements act as a barrier. However, increasing demand is attracting new players.
Bargaining power of buyers: Bargaining power of buyers is high given the presence of many established tire brands. Buyers can negotiate on price and demand value-added services.
Bargaining power of suppliers: Bargaining power of suppliers is moderate as raw material suppliers dominate the market. However, product differentiation limits suppliers' influence over buyers.
Threat of new substitutes: Threat of new substitutes is low as there are no close substitutes for tires in the automotive industry.
Competitive rivalry: Competitive rivalry is high owing to the presence of many domestic and international brands vying for market share. Price competition is intensifying.
SWOT Analysis
Strengths: Strong domestic demand from a growing automotive sector. Established distribution networks of major brands.
Weaknesses: High dependency on crude oil price volatility for raw material costs. Quality certifications and signaling higher costs.
Opportunities: Increasing use of specialty tires such as radial and run-flat tires. Growth in replacement market driven by rising vehicle parc.
Threats: Strict emission norms increasing preference for electric vehicles. Stiff competition from cheap Chinese imports.
Key Takeaways
Global KSA Tire Market Size is expected to witness high growth driven by rising vehicle sales and use. The growing middle class is increasing private car ownership which is boosting the replacement market. Infrastructure developments such as expanding road networks are also supporting market growth. The global KSA Tire Market is estimated to be valued at US$ 4288.49 Mn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030.
Regional analysis indicates that Western regions such as Makkah and Madinah will remain the major revenue generators owing to higher vehicle ownership. Eastern regions are emerging rapidly supported by industrial zones in Dammam and Jubail.
Key players operating in the KSA tire market are F. Hoffmann-La Roche AG, Novartis International AG, and Pfizer, Inc. Rising vehicles per capita is creating opportunities for international players to increase market share in collaboration with local tire makers. However, regional tire makers enjoy cost advantages.
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