Based on the Saudi Arabia Market Export and Investment Guide jointly released by the China Association of Automobile Manufacturers and the China Automotive Technology and Research Center in December 2024, the following forward-looking predictions are made regarding China's automotive exports to Middle Eastern countries/regions by 2026:

It is anticipated that by 2026, China's automotive exports to the Middle East will achieve simultaneous growth in both volume and quality. New Energy Vehicles (NEVs) are expected to become the core growth driver, while localized production will emerge as a key strategy for consolidating and expanding market share.

I. Overall Market Trends and Fundamentals

1. Sustained Growth Momentum: Although the global export growth rate may moderate from the estimated high of 23.8% in 2024, China's automotive exports have entered a phase of rapid expansion, having scaled from 1 million to 6 million units with a compound annual growth rate of 43.3%. The Middle East region served as the second-largest destination for China's automotive exports in 2024, accounting for 33.8% of the total.
   
2. Solidified Market Position: In 2024, the United Arab Emirates (UAE) and Saudi Arabia ranked as the third and fifth largest markets for China's complete vehicle exports, respectively. Their combined export volume exceeded 600,000 units. Exports to the UAE grew particularly rapidly, with a year-on-year increase of 107.4% in 2024.
   
3. Favorable Policy Environment: Economic restructuring and the implementation of long-term strategies like 'Vision 2030' across Middle Eastern countries are creating significant opportunities for the automotive market. Saudi Arabia's real GDP growth is projected to reach approximately 4.4% in 2024, with future growth expected to be sustained by non-oil sectors. Furthermore, economic and trade relations between China and Saudi Arabia have deepened steadily since diplomatic ties were established in 1990, with enhanced cooperation under aligned development frameworks.
   

II. New Energy Vehicles as the Core Growth Segment

Benefiting from China's leading position in the global NEV industry and supportive policies in the Middle East, the penetration rate and sales volume of Chinese NEVs in the regional market are forecast to rise substantially by 2026.

1. Clear Government Targets:
   
2. Diverse Consumer Incentives:
   
3. Competitive Advantages of Chinese Brands: Chinese NEV exports increased by 77.6% year-on-year in 2023, with Chinese brands holding a prominent position in the global EV market. Recognized for their cost-effectiveness and appealing design, Chinese EVs have gained favor in the Middle East. For instance, BYD has established a presence in markets including the UAE, Saudi Arabia, Jordan, Qatar, and Israel.
   
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III. Shift Towards Localized Production and Trade Models

By 2026, reliance solely on complete built-up (CBU) exports is expected to face challenges. Localized assembly (via CKD/SKD kits) or the establishment of joint ventures will become more prevalent models.

1. Localization as an Imperative: In Egypt, for example, high import tariffs on complete vehicles (up to 135% for engines over 1.6L) make localized assembly economically attractive, as importing components for local assembly can reduce tariffs to around 7%-9%. This makes localized production a clear trend.
   
2. Localization Projects Taking Shape:
   

IV. Evolving Market Competition and Product Strategies

1. Growing Influence of Chinese Brands: In the Saudi market, Chinese brands have captured over 15% market share. Brands like Changan, SAIC's MG, and Geely are experiencing rapid growth. This success stems from brand localization and product adaptation. For instance, Changan has made improvements to address extreme heat conditions and enhance tire durability, tailored to Saudi user scenarios and habits.
   
2. Move Towards Premium Offerings: The Chinese automotive industry is transitioning from competing primarily on price to competing on technology and content. Examples include the Hongqi EV successfully being adopted by Dubai police forces and receiving recognition from local government and royal family members.