Saudi Arabia has unveiled a cluster of automotive businesses with a target of SAR92 billion ($24.5 billion), aimed at boosting GDP and further transforming the Kingdom’s motoring industry by 2035.
His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister, has officially named the initiative the “King Salman Automotive Cluster.” This cluster is designated for automotive manufacturing activities and is strategically located within King Abdullah Economic City (KAEC).
The cluster is designed to create optimal investment opportunities for the private sector to nurture promising sectors within Saudi Arabia. Moreover, the cluster is expected to generate numerous direct and indirect employment opportunities, support the local manufacturing landscape, and boost Saudi exports to both regional and global markets, thereby positively influencing the national balance of payments.
Economic diversification through the automotive sector
This hub will play a pivotal role in Saudi Arabia’s economic diversification efforts and will act as a catalyst for the automotive industry and sustainable transportation. It aims to enhance non-oil GDP and increase exports. The cluster will boost the automotive sector in Saudi Arabia by accelerating the development of local manufacturing capabilities and sector-related research and development, while also streamlining supply chains to better serve regional and international markets.
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King Salman Automotive Cluster as a major center for automotive activities
The King Salman Automotive Cluster is set to become a central hub for the automotive industry, featuring headquarters and production facilities for both local and international companies. Among the notable participants are Ceer, the first Saudi electric car brand, and Lucid Motors, which inaugurated its first international factory in KAEC in 2023. The cluster will also encompass several joint projects with global manufacturers facilitated by the Public Investment Fund (PIF), including a highly automated factory for vehicle production in collaboration with Hyundai Motor and a partnership with Pirelli to establish a local tire manufacturing facility.
Supportive environment and investment incentives
The King Salman Automotive Cluster will capitalize on the advantageous environment and investment incentives provided by KAEC, which includes robust logistical infrastructure and proximity to a well-developed port critical for global trade. These elements will create opportunities for local private sector involvement and international companies to collaborate as partners, suppliers, and investors in the automotive sector and its ancillary services.
Contribution to Saudi Vision 2030
The new King Salman Automotive Cluster will significantly contribute to achieving Saudi Vision 2030, which aims to diversify the economy and promote sustainable growth. Additionally, the cluster will play a key role in fulfilling the goals outlined in the National Industrial Development and Logistics Program. This program aspires to position Saudi Arabia as a leading industrial nation and a global logistics hub by developing high-growth sectors domestically and attracting foreign investment. Moreover, it supports the objectives of national strategies concerning industry, transport, and logistics.
Strategic investments in automotive and mobility
Automotive and mobility stand out as one of the strategic investment sectors for PIF, underscored by collaborations with the private sector. PIF’s portfolio includes several investments aimed at enhancing the infrastructure of the industry and developing the local supply chain capacity. Additionally, PIF is actively working to promote local expertise and technological advancement through joint ventures with major international manufacturers.
