Toyota snub dents Saudi Arabia’s manufacturing drive

      Published on Thursday, 20 June , 2019      277 Views     
Toyota snub dents Saudi Arabia’s manufacturing drive

  • Business

Saudi Arabia began courting Toyota two years ago to build a large car plant as part of Crown Prince Mohammed bin Salman’s grand plan to wean the kingdom off oil revenues and create jobs for young Saudis.



But the Japanese carmaker has rebuffed Riyadh’s overtures following talks that dragged on without tangible results because high labour costs, a small domestic market and a lack of local supplies gave Toyota pause for thought, four sources said.

Securing a deal with a major automaker by 2020 for a car plant is a key target in the Gulf state’s national industrial strategy, part of a broader agenda to diversify the economy of the world’s largest oil exporter.

Failure to do so would be a setback for Prince Mohammed, coming after the listing of oil giant Saudi Aramco was shelved and the killing of journalist Jamal Khashoggi tarnished the kingdom’s image.

“Nobody would say ‘No, full stop’ … but they politely conveyed they’re not interested,” said an industry source familiar with the Toyota talks.

Toyota said it could not comment on the current internal discussions and communication with the Saudi government.

Saudi Arabia’s ministry of energy, industry and mineral resources and the government media office did not respond to requests for comment.

As part of measures designed to create 1.6 million manufacturing and logistics jobs by 2030, Prince Mohammed wants to localise half the production of imported vehicles and weapons – which are expected to account for up to $100 billion in spending by Saudi government entities and consumers by 2030.

Under the deal Toyota signed in March 2017, the Japanese company agreed to conduct a feasibility study for an industrial project to make vehicles and car parts in the kingdom.

Two sources familiar with the matter said Toyota concluded after the study and negotiations that Saudi Arabia would need to provide huge subsidies for the project to be viable.

“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,” said one source with knowledge of the negotiations.

Keywords:
Category Business | 2019/06/20 latest update at 1:00 PM
Source : Reuters | Photocredit : Google
278 Views
Comments Add comment



Gulf Media

Related Articles

The editorial staff of Saudi Arabia Today would like to give all of its readers from Gulf and Saudi Arabia and the whole world the opportunity to participate actively in the development of the website! If you have something interesting, fun, scandalous - just something worth to be seen from more people. Capture it and share it in the Saudi Arabia Today with a short text.

Do you have information you want to reach our readers?

Send article/s

You can subscribe to our Facebook, Twitter and Google pages or use our RSS feed channel to always read the most important news about Saudi Arabia, the Gulf and the world.


Sponsored Publications



Custodian of the Two Holy Mosques Receives Princes, Scholars and Citizens King

Custodian of the Two Holy Mosques Receives Princes, Scholars and Citizens

The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud received at Al-Salam Palace here…

Saudi Arabia: King Salman’s elder brother Prince Bandar dies at 96 King

Saudi Arabia: King Salman’s elder brother Prince Bandar dies at 96

In Saudi Arabia, King Salman’s elder half-brother, who was the tenth son of the country’s founding monarch, has…

Saudi Arabia urges action to deter maritime disruptions King

Saudi Arabia urges action to deter maritime disruptions

The Council of Ministers, presided over by Custodian of the Holy Mosques King Salman, here in the Tabuk…

Saudi Cabinet decides to allow pilgrims free movement King

Saudi Cabinet decides to allow pilgrims free movement

The Council of Ministers, presided over by the Custodian of the Two Holy Mosques King Salman at Al-Salam…

GULF TV

Popular in GULF TV

PIRELLI “DREAMING” – THE CAL 2019 making of Full Version | Fashion Channel

2370 Views

A photographic tale of the aspirations of four women and their determination to achieve their goals, each one…

Latest videos in GULF TV

Events

Lifestyle

Culture

Sport

Science & Technology

Government