Women set to drive significant automotive and economic growth

Three sectors – insurance, automotive sales, and service industries – are expected to enjoy significant growth as women in Saudi Arabia take to the roads in ever-increasing numbers.

As part of the bold reforms sweeping through Saudi Arabia as it works to achieve the ambitions of its Vision 2030 plan – including increasing women’s participation in the workforce from 22% to 30%[1] – the country issued its first driving licenses to women in June 2018[2].

The decision is one of the most high-profile reforms to be implemented over the past few years and promises to deliver enormous change to individual freedoms, household logistics, business operations and the domestic economy.

Abdul Latif Jameel Motors, as official distributors of Toyota and Lexus vehicles throughout Saudi Arabia, is at the center of this ongoing revolution, deploying almost 100 female front-line staff to showrooms across the country with the aim of providing advice and support to women looking to purchase their first vehicle.

Women can also enjoy convenient and affordable access to driving schools across the country after Abdul Latif Jameel Motors ‘Together from the Start’ initiative supplied over 500 Toyota vehicles to driving schools at Princess Noura Bint Abdulrahman University in Riyadh, King Abdulaziz University in Jeddah, Imam Abdulrahman bin Faisal University in Dammam and Tabuk University.

Hassan Jameel, Deputy President and Vice Chairman of Abdul Latif Jameel, said: “Allowing women to drive is a significant milestone for Saudi Arabia and our society as a whole, and we are delighted to be playing a part in this process.”

Early analysis has already highlighted the scale of the potential impact: in Riyadh alone, almost 750,000 female drivers are expected to be on the road by 2020[3]. A further 800,000 will join them in Makkah province, with the total number of female drivers in Saudi Arabia set to reach three million by 2020 – representing up to 20% of the country’s adult female population[4].

Such a significant increase in the number of road users is set to have key economic benefits for the country, with businesses in a range of fields expected to enjoy exponential growth.  Car leasing alone is expected to enjoy an annual growth rate of 4% between 2017 and 2025, for example, while women-only driving schools with female driving instructors is another sector where high growth rates are anticipated.

The impact is expected to be even bigger for automotive sellers and motor insurance providers.  According to PwC’s projections, automotive sales are set to increase by 9% per year until 2025, which will in turn facilitate “significant opportunities for market entry in the used cars segment in the short to medium term[5]”.

Motor insurance has not traditionally penetrated the Saudi Arabian market to the same degree as some other countries.  But that, too, could be about to change.

Following an announcement from the Transport Ministry in mid-August that women will also be able to register as taxi drivers, for example, ride-hailing app Uber has announced a partnership with underwriter AXA to provide coverage for its drivers in Saudi Arabia, including newly hired women[6].  

These commercial developments, alongside the expected surge in female car ownership, are key contributory factors in PwC’s expectations that the Saudi Arabian motor insurance industry will grow 9% per annum until 2020 to reach a total value of US$ 8 billion – a near three-fold increase on the US$ 2.9 billion in premiums collected in 2017[7].

Women driving will ultimately give them more mobility in every sense – logistically, socially and economically – while at the same time have a positive impact on the country’s development in the long term, which is a key pillar of Saudi Vision 2030,” said Hassan Jameel.

[1] Saudi Arabia job growth likely as woman driver ban ends, BBC, 22 June 2018
[2] Saudi Arabia issues first driving licences to women, BBC, 5 June 2018
[3] Women driving the transformation of the KSA automotive market, PwC, March 2018
[4] Women driving the transformation of the KSA automotive market, PwC, March 2018
[5] Women driving the transformation of the KSA automotive market, PwC, March 2018
[6] Saudi women driving auto insurance growth, Oxford Business Group, 26 October 2018
[7] Saudi women driving auto insurance growth, Oxford Business Group, 26 October 2018

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