JEDDAH, Saudi Arabia (Reuters) - Recession fears may be gripping much of the global economy, but in the world’s largest oil exporter Saudi Arabia car manufacturers are betting on more big spending.
Traders at a luxury car exhibition in the Red Sea city of Jeddah said sales are holding up and are expected to increase in a country of 25 million, whose economy has boomed in recent years as the oil price soared to record levels.
“The luxury car market in Saudi Arabia is the biggest one in the Gulf region, so for the BMW group it is the potential market focus,” said Reiner Braun, sales director at Mohamed Yousuf Naghi Motors which imports BMW and other cars.
“The global crisis will certainly have an impact on all markets worldwide but ... the Middle East will probably be the most stable (market).”
The price of oil dipped below $70 a barrel this month, 50 percent down from record levels earlier this year, raising concerns about reduced Saudi revenues. But the government is still forecasting growth for this year and 2009.
“Most of our customers in the region are not influenced by such trends,” said Christian von Koenigsegg, head of Sweden’s Koenigsegg Automotive, who was in Jeddah to display a car with a 1.5 million euro ($1.87 million) price tag.
“I think the market will stabilize in the next few months and this segment is hopefully kept untouched by the situation,” von Koenigsegg said.
While ordinary Saudis have suffered over the past year as inflation soared to 30-year highs, the kingdom’s elite have continued to prosper.
In Jeddah, Saudi Arabia’s second biggest and most liberal city, the rich live fast and consumption is conspicuous.
Exhibition organizers say that Mercedes and BMW are among the most popular cars in the super-expensive range. Rolls-Royce cars were also on display in the exhibition, where colors extended to orange and lurid green.
An increasing number of young Saudis are driving brands like Lexus and Porsche. Harley Davidson motorbikes have also taken off, with clubs for afficionados in Riyadh and Jeddah.
Mamdouh Khayyat, managing director of Fast Auto Technic Co. which imports Ferrari and Maserati sports cars, said he was expecting luxury sales to hold up.
This year, the firm sold 118 Maseratis, costing at least 700,000 riyals ($186,700) each, and expects to sell 120 in 2009, he said.
Organiser Abdullah Al-Shamasi said the Saudi market will remain strong even if oil hits $40 a barrel.
“The current global crisis has an effect on exhibitions of luxury cars in Europe or the U.S. but has not affected the Gulf yet, and that’s because the income level in the Gulf remains high,” said Shamasi, head of conference organiser EXCS.
Writing by Andrew Hammond; Editing by Dominic Evans and Catherine Bosley