Saudi Arabia Used Car Market Outlook to 2029

The report titled “Saudi Arabia Used Car Market Outlook to 2029 - By Market Structure, By Manufacturers, By Types of KMs Driven, by age of Vehicles, By Age of Consumers and By Region.” provides a comprehensive analysis of the used car market in Saudi Arabia. The report also covers overview and genesis of the industry, overall market size in terms of revenue, market segmentation; trends and developments, regulatory landscape, customer level profiling, issues and challenges and comparative landscape including competition scenario, cross comparison, opportunities and bottlenecks and company profiling of major players in the Used Car Market. The report concludes with future market projections based on sales revenue, by market, product types, region, cause and effect relationship and success case studies highlighting the major opportunities and cautions.

Saudi Arabia Used Car Market Overview and Size

The Saudi Arabia used car market reached a valuation of USD 8.5 Billion in 2023, driven by the increasing demand for affordable vehicles, growing population, and changing consumer preferences towards more cost-effective transportation solutions. Amongst the brand authorized dealerships, the top 6 players including Abdul Latif Jameel Motors, Aljomaih Automotive Company, Al Jazirah Vehicles, Universal Motors & Gulf Advantage are analyzed to account for almost half of the used car sales through the authorized dealerships. These companies are recognized for their extensive distribution networks, diverse vehicle offerings, and customer-focused services.

In 2023, YallaMotor launched a new online platform to enhance customer experience and streamline the purchase process for used cars. This initiative aims to tap into the growing digital market in Saudi Arabia and provide a more convenient car-buying experience. Riyadh and Jeddah are key markets due to their high population density and robust automotive infrastructure.

Market Size for Saudi Arabia Used Car Industry on the Basis of Volume Sales in Units, 2018-2023

Source: TraceData Research Analysis

What Factors are leading to the Growth of Saudi Arabia Used Car Market: 

• Economic Factors: The economic downturn and the high prices of new cars have significantly shifted consumer preference towards used cars. In 2023, used cars accounted for approximately 60% of total car sales in Saudi Arabia, as they offer cost savings of up to 40% compared to new vehicles. This trend is particularly pronounced among budget-conscious buyers who are looking to minimize expenses.
• Growing Middle Class: The expanding middle class, with limited disposable income, is increasingly opting for used cars as a viable alternative to new vehicles. In recent years, the middle-income population in Saudi Arabia has grown by 15%, and this demographic shift has driven demand for affordable and reliable transportation solutions. Used cars provide an accessible entry point to car ownership for many in this income bracket.
• Digitalization: The rise of online marketplaces has revolutionized the way consumers purchase used cars, enhancing transparency and convenience. In 2023, around 35% of used car transactions in Saudi Arabia were conducted online, reflecting a growing trend towards digital channels. These platforms offer comprehensive vehicle listings, price comparisons, and customer reviews, which have significantly boosted market growth by making the buying process more accessible and user-friendly.

Which Industry Challenges Have Impacted the Growth for Saudi Arabia Used Car Market

• Quality and Trust Issues: Concerns about the quality and condition of used cars remain significant challenges. According to a recent industry survey, approximately 47% of consumers are hesitant to purchase used cars due to fears of hidden defects and a lack of transparent vehicle histories. This issue has led to a lower trust level among buyers, potentially deterring up to 20% of prospective purchasers.
• Regulatory Hurdles: Stringent regulations concerning vehicle inspections and emissions standards can limit the availability of certain older or high mileage used cars. In 2023, it was reported that around 18% of used cars offered in the market failed to pass the mandatory inspection standards. These regulations can impose significant costs, particularly on smaller dealerships and private sellers, making it challenging for them to comply.
• Financing and Credit Access: Limited access to financing and credit options is a critical barrier in the used car market, particularly affecting lower-income consumers. Data indicates that approximately 35% of potential buyers face difficulties in securing financing for used car purchases. This limitation not only restricts market access for a significant segment of the population but also constrains overall market growth.

What are the Regulations and Initiatives which have governed the market:

• Vehicle Inspection Regulations: The Saudi government mandates regular vehicle inspections to ensure that used cars meet specific safety and environmental standards. These inspections are required annually and focus on critical aspects such as brakes, lights, and emissions. In 2022, approximately 70% of used cars passed the inspection on their first attempt, indicating a significant compliance level among vehicles in the market.
• Import Restrictions on Used Cars: The government enforces strict regulations on the importation of used cars, including a maximum age limit of 5 years for most vehicles. Additionally, all imported vehicles must comply with the Gulf Cooperation Council (GCC) standards, which include safety and emissions criteria. In 2023, imports of used cars dropped by 10% due to stricter enforcement of these regulations.
• Government Incentives for Electric Vehicles: To promote the adoption of electric vehicles (EVs), the Saudi government has introduced various incentives, including reduced import duties, tax exemptions, and subsidies. These incentives are particularly aimed at encouraging the entry of used electric cars into the market. In 2023, EVs represented about 2% of the total used car sales, a number expected to grow as these incentives take effect.

Saudi Arabia Used Car Market Segmentation

By Market Structure: The industry in Saudi Arabia is largely unorganized due to the preference of consumers towards peer-to-peer sales, largely facilitated by online auto-classified platforms. The organized market comprises large, authorized brand dealerships as well as multi-brand outlets and exhibitions.

By Sales Channel: The unorganized sector contributed to most of the sales of used cars in the country. This higher preference for the Unorganized sector was because used cars are cheaper on this platform and customers save 15% on VAT charged by Organized players. Over time preference for organized is increasing due to more convenient buying experience and value-added services (warranty, certification).

By Type of Cars: Sedans and hatchbacks were observed to dominate the used car market based on sales volume as they are economical and suitable for almost all kinds of buyers. SUVs & crossovers were found to be the second most preferred types of cars in the country and pick-ups & luxury cars contributed to the remaining sales.

By Car Brands: Toyota continues to dominate the used car market in Saudi Arabia due to the higher preference of the consumers towards the brand for its reliability and low maintenance. Also, the easy availability of spare parts and the higher residual value of Toyota cars contribute to higher sales. Hyundai contributed to the second-highest sales volume in 2023

By Age of Vehicle: Three to five-year-old used cars were observed to dominate the used car sales in the country in 2023. As the instalment period for cars purchased on finance is around 3-5 years after which people usually prefer to sell off their cars. 1-3-year-old vehicles contributed to the second-highest sales volume as many of these cars found their way to the used car market when car rental companies’ de-fleet their existing fleet.

By Kilometers Driven: A large proportion of the used cars sold in 2023 belonged to the category of 80,000-150,000 kilometers. Cars with a mileage of 50,000-80,000 kilometres were also largely preferred by the consumers due to their nearly new look and feel and are also economical.

By Regions: The central region including the capital of Riyadh accounted for the highest number of used car sales in the country in 2023 due to the concentration of the young working population in the region. The western region contributed the second-highest used car sales. Most of the major authorized dealers have multiple showrooms in these regions.

By Age Group of Buyers: Most of the buyers in the used car market were observed to be in the age group 30-60 years. Many young working professionals, expatriates, and families owning multiple cars belong to this age group. The demand for used cars among the age group of 18-30 years is also increasing with increasing disposable income and job opportunities.

Competitive Landscape in Saudi Arabia Used Car Market

The Saudi Arabia used car market is relatively concentrated, with a few major players dominating the space. However, the entrance of new firms and the expansion of online platforms Such as Autoworld, Carnab, Carswitch, Expact, Expatriates, Halta2ee, Haraj, Motory, Mourjan, OLX, Opensooq, Saudisale, Sellanycar, Syarah, Yallamotors have diversified the market, offering consumers more choices and services.

Some of the recent competitor trends and key information about competitors include:

• Abdul Latif Jameel: The company has recently enhanced its digital sales platform, aiming to capture a larger share of the online market. Their certified pre-owned program includes rigorous inspections and warranties, attracting quality-conscious buyers. They reported an increase in online sales by 20% in 2023.
• Al Jazirah Vehicles: Known for its specialization in Ford vehicles, Al Jazirah Vehicles has been expanding its inventory of certified pre-owned vehicles, which include extended warranties and comprehensive vehicle checks. The company has seen a 15% increase in certified pre-owned sales in 2023.
• YallaMotor: As an online marketplace, YallaMotor has capitalized on the digital shift, providing extensive vehicle data and comparison tools. The platform has expanded its reach in Saudi Arabia, becoming a go-to resource for car buyers and sellers, with a user base growing by 25% year-on-year.
• Syarah: Syarah's focus on user experience and service transparency has strengthened its position in the market. The platform's integration of financing options has made it easier for consumers to purchase vehicles, contributing to a 30% increase in transactions in 2023.
• Universal Motors Agencies: By focusing on quality and customer service, Universal Motors Agencies has maintained a strong market presence, particularly in the high-end used car segment. The company's certified pre-owned program continues to attract a loyal customer base.

What Lies Ahead for Saudi Arabia Used Car Market?

The Saudi Arabia used car market is projected to grow steadily by 2029, exhibiting a respectable CAGR during the forecast period. This growth is expected to be fueled by economic factors, increasing urbanization, and rising consumer confidence in the used car market.

• Shift Towards Electric Vehicles: As the Saudi government continues to promote green energy initiatives, there is anticipated to be a gradual increase in both the availability and demand for electric used cars. This trend is supported by government incentives and a growing consumer awareness of environmental sustainability.

• Integration of Technology: The integration of advanced technologies such as AI and big data analytics in vehicle assessment and pricing processes is expected to provide consumers with more accurate and transparent information. This technological advancement will enhance market transparency, boost consumer trust, and streamline the buying process, making it more efficient and user-friendly.

• Growth of Certified Pre-Owned (CPO) Programs: The market is seeing a growing trend towards certified pre-owned programs, where used cars undergo rigorous inspections and come with extended warranties. This trend is particularly strong among premium and luxury car segments, catering to consumers who seek assurance and quality in their purchases. The increasing availability of CPO vehicles is expected to attract more buyers who prioritize reliability and post-purchase support.

• Focus on Sustainable Practices: There is a rising trend towards sustainable practices within the used car market. This includes initiatives such as eco-friendly dealerships, the use of recycled materials in vehicle refurbishments, and efforts to offset carbon emissions associated with vehicle sales and usage. These practices are becoming more important to environmentally conscious consumers and are expected to influence buying decisions.

Future Outlook and Projections for Saudi Arabia Used Car Market on the Basis of Volume Sales in Units, 2024-2029

Source: TraceData Research Analysis

Saudi Arabia Used Car Market Segmentation

By Market Structure:

• Auction Companies

• C2C, Local Dealers

• Multi-Brand Non-Franchise Dealerships

• OEM Certified Dealers

• Organized Sector

• Unorganized Sector 

• Commercial Vehicles

By Manufacturer:

• Chevrolet 

• Ford

• GMC

• Hyundai

• Kia

• Nissan

• Toyota

By Type of Kms Driven:

• <50,000

• >150,000

• 50,000-80,000

• 80,000-150,000

By Age of Vehicle:

• 5 years
• 1-2 years
• 3-5 years

By Age of Consumer:

• 18-34
• 35-54
• 55

By Region: 

• Northern
• Southern
• Central
• Western
• Eastern

Players Mentioned in the Report

• Autoworld

• Carnab

• Carswitch

• Expact

• Expatriates

• Halta2ee

• Haraj

• Motory

• Mourjan

• OLX

• Opensooq

• Saudisale

• Sellanycar

• Syarah

• Yallamotors 

• Abdul Latif Jameel

• Al Jazirah Vehicles

• Bakhashab Brothers Holding

• United Motors Company

• Aljomaih Automotive

• Haji Husein Alireza & Co. Ltd

• Universal Motors Agencies

Key Target Audience

• Used Car Dealers

• Online Car Marketplaces

• Automotive Financing Companies

• Regulatory Bodies (e.g., Ministry of Commerce)

• Research and Development Institutions

Time Period

• Historical Period: 2018-2023

• Base Year: 2024

• Forecast Period: 2024-2029