The new China?

Daimler poised to win big as Saudi women take the wheel

Saudi Women Driving
"The Mercedes is parked just over there." Source: AP

Falling oil prices and an economic slowdown have dented auto sales in the wealthy Gulf states. But carmakers are expecting business to boom after June 24, when women in Saudi Arabia will be allowed to drive. Dieter Zetsche, the boss of Germany’s Daimler, producer of Mercedes-Benz vehicles, told an investor conference that “women are the next China,” citing the huge potential that carmakers have tapped among the country’s burgeoning middle class.

Of all the German carmakers, Daimler stands to benefit most from changes in the Saudi law. New research by YouGov, a British polling company, shows that Mercedes-Benz is second only to Japan’s Toyota as women’s favorite auto brand in the kingdom. In the survey, YouGov measured consumer perceptions of a brand’s quality, value, reputation, satisfaction and whether it is likely to be recommended to others. BMW and Lexus stand behind Mercedes in this ranking, and Audi doesn’t even make the top 10.

Until now, Saudi Arabia was the only country in the world to ban women drivers. The amended law falls under the “Vision 2030” reform spearheaded by King Salman and Crown Prince Mohammed bin Salman, who aim to prepare the country for the end of the oil era by diversifying the economy and boosting the workforce.

If even a fraction of Saudi Arabia's 6 million driving-aged women decides to buy cars, the most popular brands will benefit.

A recent survey showed that 77 percent of Saudi women want to learn to drive. Others have already passed driving tests in the United Arab Emirates and other neighboring countries, and some women have swapped their foreign licenses for Saudi ones. The first Saudi women picked up their driving licenses on Monday, and some 2,000 are expected to be in possession of one by next week.

Women-only car dealerships have started to open. Statistics indicate that there are close to 6 million Saudi women aged between 20 and 65. If even a fraction of them decides to buy cars, the most popular brands will certainly benefit.

YouGov attributed Mercedes-Benz’s success in part to “She’s Mercedes,” a marketing campaign it launched in 2015 to appeal to female customers. Mercedes has also been wooing women by organizing targeted exhibitions at recent auto shows in Riyadh and Jeddah.

Still, Daimler’s hopes of flourishing sales come against the backdrop of cooling ties between Saudi Arabia and Germany, which has led to German companies being shut out from public contracts in recent months.

Saudi men inspect the new Mercedes SLK-c
No longer a boys' club. Source: Getty

Last November Sigmar Gabriel, then German foreign minister, irked the kingdom’s rulers by referring to the spread of “political adventurism” in the Middle East, a remark many thought was aimed at Saudi Arabia. At the time, there was widespread speculation that Lebanese Prime Minister Saad Hariri was being held against his will in Riyadh and being pressured by the Saudi government to step down.

A fresh controversy is brewing over the driving license issue. The Saudi authorities recently arrested some of the female activists who had staunchly opposed the ban, alongside a number of clerics and other critics of the government. Activism is banned in the kingdom, and the authorities were reportedly afraid that the female activists would claim the lifting of the ban as a personal victory.

Mathias Brüggmann is an international correspondent for Handelsblatt, focusing on Russia, Iran and the Arab world. David Crossland adapted this story into English for Handelsblatt Global. To contact the author: brueggmann@handelsblattgroup.com
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