LOCAL MOTORS

Saudi Arabia 2018-19 | TRANSPORT & AVIATION | B2B

Saudi Arabia's automotive industry is set for another leg up thanks to the lifting of the driving ban on women and the introduction of Chinese brands.

Maad E. Abdul Jawad
MAAD E. ABDUL JAWAD
Managing Director
Globe Group
Omar Hindi
OMAR HINDI
CEO
Taajeer Group

Can you give us an overview of the group and its major milestones?

MAAD E. ABDUL JAWAD Our group was established in 1976 by my late grandfather. Our main operations are in logistics and land transport, marine operations, port operations, airport management, warehousing, and plant management. We have other supporting businesses in retail and fashion and have around 25 stores in Saudi Arabia. We also have a motor company that sells light and heavy equipment. Our real estate operations are in hotels and the hospitality sector, both in Saudi Arabia and abroad. I am the third generation of my family handling operations for the group, and we are extremely optimistic about the market as a whole. This gives us the appetite to invest even more in our core business. The Saudi Arabian market is on the brink of a great expansion, and there is no shortage of opportunities for those interested in working hard. We are interested in investing in any opportunity that presents itself. Logistics and transport are still our major areas of operations, though we are expanding our role into other sectors, such as retail, because this is the perfect time to enter the market. There are challenges in terms of regulation compliance, as well as great opportunities.

OMAR HINDI When Taajeer Group was founded in 1997, car leasing did not exist in Saudi Arabia. We came in without any dealer preference and financed everyone and any car; we were truly the pioneer in Islamic leasing in Saudi's automotive sector. The gap in the market that we filled is apparent from our financial growth results. While Taajeer Group's capitalization was only SAR50 million when it was founded, it had grown to SAR100 million by the time I joined in 2006. Today, we have a capital of SAR1 billion (USD266.7 million) and manage over 15,000 cars. During the contracting boom, we expanded into heavy equipment and real estate since there was a huge demand for these business lines. We were experienced in managing a large amount of small tickets; however, this expansion meant managing large tickets. While an average car costs SAR300,000, real estate and heavy equipment often cost more than SAR10 million. Therefore, we decided in 2010 to stick to what we know best—cars. We broadened our services in the automotive sector to repairing, maintaining, and renting cars. Some other recent achievements include Motor Souq, a multi-brand showrooms, organizing three mega workshops covering the entire country, and opening a daily lease under the brand Primo. We cover close to 15 locations, including three airports. Notably, we have also done a major project on road safety awareness with the government.

Why is market sentiment currently positive?

MEAJ Consumer behavior reflects the general strength of the economy well. Vision 2030 is well on its way, and the government has been working hard to help the private sector. The market is more competitive and business-oriented than ever. People have to adapt to the new, liberal economy as it offers a great deal of opportunities.

How will the recent landmark decision allowing women to drive impact your operations and strategy?

OH We have been waiting for this moment for a long time; we expect at least a 15-20% increase in the market. It might also add certain costs on our side since we cannot just grow our sales by one-fifth without taking into account the different preferences that women might have in terms of options, models, and colors. However, this will certainly be positive for our business and the broader automotive sector.

What role can the transport and logistics sector play in Saudi Arabia's post-oil era?

MEAJ Generally, the transformation of the economy will be marked by a large development in the industrial sector. This sector requires a great deal of transport and logistics services, making our industry a vital partner of the new economy.

Could you tell us a little more about your partnerships with Chinese car producers?

OH We recently made headlines because of our introduction of MG to Saudi Arabia. It is originally a British car brand, though it is now a subsidiary of the Chinese-based SAIC Motor. We are also working closely with FAW Group, meaning we are partners with two of the “Big Four" in the Chinese automotive industry. Over the next five years, China will become a major global player in the industry.