Saudi Arabia has had a plan conducted by Crown Prince Mohammed bin Salman to develop their industries and businesses. This was specially seen for the automotive industry where he decided to make a grand plan shifting the oil dependency on the other industry. One of the deals that Saudi Arabia has been conducting for years is the Toyota deal to start producing their cars directly in the region through the largest plant for cars.
However, recent news show that Toyota has been ignoring this call and rejecting it for too long as the area is not ready nor flexible for the production of the cars. This is seen through the labor cost, low resources and weak talent in the area, making it almost impossible to generate revenue from this move.
A few experts in the field commented on the issue saying, “Nobody would say ‘No, full stop’ … but they politely conveyed they’re not interested. They found that production costs will be similar to other countries only if there is a 50% government incentive. But even then, they aren’t sure it will be profitable. We do not comment on assumptions about the current and future situations. If I have to open a manufacturing process in Saudi and then import every single component from abroad, I do not have any economical plus. The problem is not really setting up a plant, but having the entire value chain. Saudi Arabia and (Gulf) countries have been persistently disappointing in terms of sales in recent years, so it’s not as if OEMs would be entering a booming market.”