On the occasion of International Women’s Day—March 8, 2018—it’s worth looking back on a major step towards gender equality that occurred in the Middle East in late 2017: Saudi Arabia’s royal decree allowing women to drive in the Kingdom by June of this year.
Not only was the reform a big move towards gender equality in Saudi society, it also projects to have a noticeable impact on the Kingdom’s economy, with 20% of women projected to take to the roads by 2020.
A report from PwC Middle East says the influx of female drivers in Saudi Arabia presents a great number of opportunities in the automotive market. It will create new jobs for Saudi nationals, in part by necessitating the establishment of women-only driving schools and other services, while also increasing insurance revenues and leading to incremental capital investment towards building new road infrastructure, among other things.
The total number of female drivers in Saudi Arabia (population 32 million) is projected to reach 3 million in 2020, according to PwC, affecting everything from car sales to motor insurance, car leasing and driving schools—and ultimately the economy. With a new segment of potential customers entering the market, car sales and car leasing are expected to pick up substantially, with an estimated annual growth rate of 9% and 4% until 2025, respectively.
Meanwhile, the highly competitive motor insurance market should benefit from the new drivers, who will need its products and services. The motor insurance market is expected to grow by 9% annually between 2017 and 2020, reaching $8 billion.
The arrival of new female motorists will also require the creation of additional infrastructure and jobs in the automotive sector. “When considering the scale of the market, our analysis tells us that there’s an opportunity to increase the number of driving institutions in the kingdom by over 50%, an increase that will be translated into job opportunities for our females,” says Hala Kudwah, PwC Saudi Arabia's financial services and consulting leader.
On the flip side, allowing women to drive could potentially hurt some companies, such as ride-sharing services Careem and Uber (which Saudi’s sovereign wealth fund has a stake in). Until now, these companies have benefitted from a large population of tech-savvy women unable to drive themselves in Saudi Arabia—days that will soon be in the rearview mirror.