ACCESSORIES

Saudi Arabia 2017 | INDUSTRY & MINING | B2B

Manufacturers face a difficult choice between meeting quality and quantity demands as hundreds of thousands of new drivers enter the Saudi market each year.

Majid Owaid Al Otaaibi
MAJID OWAID AL OTAAIBI
CEO
Takwa Group
Mohammed Saud Al Zamil
MOHAMMED SAUD AL ZAMIL
Group GM
Alwafa Global Manufacturing Company Ltd. (AGMC)

What does the growth of the Saudi market mean for your firm?

MAJID OWAID AL OTAAIBI There are at least 350,000 new drivers entering the market every year. Demand is rapidly growing; hence, we will look more into used cars and help extend the life of cars. More drivers mean people will start to target the affordable segment, and smaller cars will be the next automotive trend. In our opinion the market will double in 10 years and reach 15 million cars. What Saudi Arabia needs is linkages between the government and the spare parts sector. Giving certificates that ascertain the quality of mechanics in every workshop center will help us excel and know what parts need to be changed. This is important so that cars are better maintained, remain in the country, and are safer for drivers. The future of the auto industry will be strong. The youth in Saudi Arabia is important for the market to grow and develop as well. We seek to enter a franchising style and to complete the circle by adding Toyota to our portfolio, which is the last brand we do not have. We use this to reorganize the company to focus more on the IT sector and reduce our employees to the minimum required.

MOHAMMED SAUD AL ZAMIL We consider the plastic industry a converging one, which is still at a nascent stage in Saudi Arabia, although we have made great leaps and bounds. We are still at the beginning when it comes to converting plastics into engineering products. Our factory produces basic products, such as bumpers, coolant fans, mud flaps, and many other products at the prototype stage that we have not run in commercial lines. In 2007, the ecosystem was not ready to produce OEM parts or develop such a product; however, today the ecosystem has developed. We need someone to support us in our prototype as well as in R&D by selecting the right materials for automotive applications. We need a factory that will procure the materials for us. SABIC has developed a center to which we will dedicate certain funds to develop our products through it. Currently, we focus more on fast-moving products for Asian brands, which in Saudi Arabia are mainly Korean and Japanese brands. We produce products for Toyota, Hyundai, and Nissan and have one product for Chevrolet.

What role do foreign markets play in your business strategy?

MOAO We are now a member of the Nexus Group, a purchasing group in Europe that is working with assets worth EUR9 billion. It comprises many customers, buyers, manufacturers, and sellers. The idea is that we can make arrangements between buyers that will allow us to exchange stock and data. Every company that has joined Nexus is well established; therefore, it has helped us understand what we need to sell and where. For example, in Africa we need to look at selling car items not being sold there. Getting this from Saudi Arabia is difficult because we need licenses and invoice reports, and too many regulations can often damage the business. Looking to the future, we will continue to target these regions, as this is where the automotive sector will continue to boom. Part of the company supplies insurance companies with spare parts, and in return we get all their obsolete cars. From there, we sell them to scrap yards where they are cut for spare parts.

What opportunities do you see for your sector with Vision 2030?

MSAZ Aside from R&D, the biggest problem that every factory in Saudi Arabia has is identifying order-winning criteria, and not setting the price or quality without understanding the customer. By doing this, we will increase the competitiveness of our factories. If the order-winning criteria is the price, companies will not care about the quality in order to compete with low-quality Chinese markets. If the order-winning criteria is quality, companies will focus more on R&D and collaborate with SABIC, and so on and so forth. The great thing about Vision 2030 is that everyone talks about the private sector and wants it to take the lead, which we believe can happen. There is also a focus on enforcing the laws, which is extremely helpful for local businesses as well as in terms of attracting foreign investors. This is a major initiative that will greatly assist us and provide certain competitiveness over other countries around the region.