King Salman Automotive Cluster Established In KAEC To Boost Saudi Arabia's Automotive Sector

His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister, has named the automotive manufacturing hub in King Abdullah Economic City (KAEC) as the "King Salman Automotive Cluster." This initiative is a significant move towards diversifying Saudi Arabia's economy by boosting the automotive sector and promoting sustainable transportation. It aims to increase non-oil GDP and enhance exports.

The cluster is set to become a pivotal centre for automotive activities, hosting headquarters and factories for both local and international companies. Among these are Ceer, Saudi Arabia's first electric car brand, and Lucid Motors, which inaugurated its first international factory in KAEC in 2023. The cluster will also house several Public Investment Fund (PIF) joint projects with global manufacturers.

The King Salman Automotive Cluster is designed to create optimal investment opportunities for the private sector, fostering the development of promising industries within Saudi Arabia. By 2035, it is projected that companies operating within the cluster will contribute approximately SAR 92 billion to the cumulative GDP. This initiative will also generate numerous direct and indirect jobs, bolster local manufacturing, and enhance Saudi exports globally.

Hyundai Motor plans to establish a highly automated car manufacturing facility in Saudi Arabia as part of this cluster. Additionally, a joint venture with Pirelli aims to set up a local tire factory. These collaborations are expected to streamline supply chains for regional and international markets.

The strategic location of KAEC offers a supportive environment with investment incentives, including advanced logistical infrastructure. Its proximity to a well-developed port enhances its position as a vital hub for global trade. These advantages provide opportunities for local private sectors and international firms to participate as partners, suppliers, or investors in the automotive industry.

The cluster aligns with Saudi Vision 2030's goals of economic diversification and sustainable growth. It supports the National Industrial Development and Logistics Program's objectives by positioning Saudi Arabia as a leading industrial nation and global logistics centre through high-growth sectors' development and foreign investment attraction.

PIF’s Role in Automotive Sector Development

PIF plays a crucial role in advancing the automotive sector through strategic investments aimed at enhancing infrastructure and developing local supply chain capacity. Partnerships with private sector entities are central to PIF’s strategy in this domain. Joint ventures with major international manufacturers further aim to boost local expertise and technology within the industry.

The King Salman Automotive Cluster will significantly contribute to national strategies focused on industry, transport, and logistics. By leveraging these initiatives, it seeks to position Saudi Arabia prominently on the global stage as an industrial leader while supporting sustainable economic growth.

With inputs from SPA