48 billion riyals are expected gains from localizing the bus industry in Saudi Arabia

The Local Content and Government Procurement Authority revealed a strategic opportunity to localize the industry and transfer the knowledge of buses of all kinds in Saudi Arabia, by giving investors the feature of listing in the compulsory list of national products.
This ambitious initiative aims to essentially develop and enhance the strength of supply chains in the auto parts sector, in addition to the effective contribution to achieving the ambitious national strategies of Saudi Arabia, creating new and advanced industries, and providing promising job opportunities in the vital transportation and logistical services.

Targeted buses

The types of targets in this various opportunity include public transport buses that serve cities, buses between cities that link regions, employment buses that support economic sectors, and finally educational transport buses that serve the education sector.
It is noteworthy that the authority has already made an important step towards achieving this goal by signing an agreement with the joint venture project for the bus industry on March 30 of 2022.
This agreement aimed to localize the bus industry and transfer the necessary knowledge to manufacture it inside Saudi Arabia.

Industry localization

This step comes within the framework of the authority’s efforts to activate the contract of contracting to localize the industry and transfer knowledge, which is one of the new and effective methods in the new government competition and purchasing system.
Through this agreement and subsequent opportunities, the authority seeks to settle the manufacture of a variety of types of buses to meet the increasing needs of the Ministry of Education from safe and reliable school transport buses.

The latest technology

The initiative aims to provide buses based on the latest technologies in the field of motors, including environmentally friendly hydrogen and electrical buses, as well as highly efficient internal combustion buses with gasoline and diesel.
The authority emphasized that the agreement to localize the bus industry is closely in line with the goals of the ambitious Saudi Vision 2030, which seeks to reduce dependence on oil as a main source of income and diversify the economic base of the Kingdom.
These efforts aim to support the government trend towards developing the auto industry and transferring the expertise and manufacturing knowledge of buses to the Kingdom, in addition to meeting the increasing demand for the Ministry of Education from high -quality buses, and raising the percentage of local content in the gross domestic product.

Reduce imports

The Local Content and Government Procurement Authority expected that this agreement and the accompanying opportunities will contribute to achieving great savings and reducing the cash flow abroad, and it is expected to reduce imports by more than 30%.
Statistics indicate that the total spending on the import of buses has reached 2.2 billion riyals in 2018, which shows the available opportunity for resettlement.
On the production level, the total production capacity of local factories is expected to reach about 3000 buses annually, which will contribute to meeting a large part of the local demand.

Functional opportunities

This initiative bears great importance in developing new and sustainable job opportunities for Saudi citizens, as the authority aims to reach a localization rate of 80% in this promising sector.
In the broader economic term, it is expected to return to the gross domestic product, approximately 8 billion riyals directly during the period of the agreement, in addition to an indirect impact estimated at more than 40 billion riyals as a result of localizing the bus industry and developing industries and related services.