Two Asian car makers together make up more than half of the vehicle market in Saudi Arabia, which is ending a ban on women driving next year.
Japan’s Toyota Motor accounted for 32 per cent of the 676,000 vehicles sold in Saudi Arabia last year, while South Korean car maker Hyundai ranked second with 24 per cent, said Jeff Schuster, senior vice president of forecasting with LMC Automotive. The country ranks 21st out of 198 tracked by the researcher in vehicles sold annually, he said.
The kingdom's move ends its status as the only country in the world to ban half the population from getting behind the wheel.
It is the most dramatic move so far in the government’s bid to open up Saudi society, a counterpart to an ambitious programme to modernise the economy that may soon see the country holding the world’s biggest IPO when the behemoth oil major Aramco offers a stake for sale.
Women will be entitled to driving licences starting in June next year, the official Saudi Press Agency reported, citing a royal decree.
The decision has the potential to transform transportation in the country, from the types of vehicles sold to how they are driven.
The market will probably see an uptick in sales of smaller models, now that spouses will have more flexibility getting around.
“This is very exciting,” said Rebecca Lindland, an analyst with the car-shopping website Kelley Blue Book who worked in Saudi Arabia for more than two years. “It’s not going to be without obstacles, but it’s a huge step forward in terms of Saudi Arabia recognising the contributions that women can make to the economy.”
The royal decree by King Salman Bin Abdulaziz is the most dramatic move yet by his government, which is seeking to modernise the kingdom and render the nation’s economy less dependent on oil.
There were 676,000 vehicles sold in Saudi Arabia last year.
Risks to road safety will be a concern because lifting the ban will add new, inexperienced drivers to Saudi Arabia’s streets, Ms Lindland said. This could blunt the impact on ride-sharing services like Uber, at least at first, although the firm also could benefit from a new pool of potential drivers later. The government also has a vested interest in seeing the company succeed - Saudi Arabia’s sovereign wealth fund is a major investor.
“We’re proud to have been able to provide extraordinary mobility for women in Saudi, and are excited by the economic opportunities this change could represent for them in the future,” Uber said. About 80 per cent of the company’s rides in Saudi Arabia are for women.
One group that will see less demand are the thousands of drivers who work directly for families, many of whom are from Bangladesh or the Philippines, Ms Lindland said. The policy change could shift the immigration patterns of the country if people no longer need the service, she said.
Saudi Arabia said agencies have been instructed to expand licensing facilities and driver-education programmes to accommodate millions of new drivers. The challenges for some will be profound.
“You don’t really learn your way around because you don’t drive,” Ms Lindland said, speaking from her own experience in the country. “You don’t pay attention because you’re in the back, or you’re in a shuttle bus. If you don’t drive, you don’t absorb.”