Introduction
The present report aims at assessing Saudi Arabia’s bus industry based on the literature review. The report utilizes the traditional approaches to industry assessment, including the marketing mix (4Ps), SWOT, and PEST approaches. The report claims that, despite the pandemic, both internal and external environments are favorable for the rapid development of the industry due to the implemented policies and social trends towards environmental sustainability, which create an increased demand for buses.
Marketing Mix (4Ps)
Product
The product mix of the bus industry consists of different types of buses varying in their length, seating capacity, fuel type, and market application. There are four categories of buses by length: up to 8 meters, 8-10 meters, 10-12 meters, and above 12 meters (TechSciResearch, 2020). Based on the sitting capacity, the buses can be 15-30, 30-40, 40-50, and above 50 sitting places (TechSciResearch, 2020). There are transit buses, motor coaches, and school buses. As for the fuel type, the buses are subdivided into gasoline, diesel, compressed natural gas (CNG), and electric/hybrid types (TechSciResearch, 2020).
Currently, diesel buses have the widest use in the country; however, there is an increasing demand for more sustainable buses, such as CNG and electric/hybrid types (TechSciResearch, 2020). In summary, there is a wide variety of buses used in Saudi Arabia depending on the purpose, the market of application, and the level of sustainability.
Price
The prices of buses differ according to their types and sizes. The smallest commercial buses can be purchased for as low as SAR76,156 for Nissan’s Urvan (Nissan, 2021a). However, prices for larger buses start from SAR184,850 like Nissan’s Civilian (Nissan, 2021b). Sustainable bus choices are usually higher in price due to the increased cost of materials.
Placement
Since buses are commercial vehicles, they are not sold in traditional places like cars other vehicles. Buses are displayed online and in very few showrooms around the country. The bus choices can also be viewed on companies’ official websites and in catalogs. The sales are completed by signing contracts.
Promotion
As for promotion, the bus sales are directly promoted only on the specialized platforms online, offices, and official websites of the companies. However, the promotion of bus use is a country-level strategy for addressing the problem of environmental protection (Khan, 2014). Bus travels are promoted by the government and transport companies, such as SAPTCO, using all traditional media channels and outdoor advertisements.
SWOT Analysis
Strengths
The primary strength of the bus industry in Saudi Arabia is the support from the government. According to the Saudi Vision 2030, the government is planning to promote and enhance public transportation in the country (TechSciResearch, 2020). This is expected to positively influence the market, which is already growing at almost 10% every year (TechSciResearch, 2020). Moreover, the government pushes policies that force public bus operators to upgrade their fleets to become more economically and environmentally sustainable (TechSciResearch, 2020). Additionally, it is expected that the cost of batteries and worldwide trends in ecological decisions in transportation will grow, which will encourage the development of electric/hybrid type buses.
Weaknesses
The primary internal weakness is the insufficient demand for public transportation in Saudi Arabia. According to Alotaibi (2017), even though the demand for public transportation is growing, it is below the European level due to associated disadvantages. They include lack of comfort, time uncertainty, lack of control, and lack of flexibility (Alotaibi, 2017). Additionally, the growing oil prices are associated with the increased buying ability of the citizens of Saudi Arabia, which is negatively correlated to the use of public transportation. (Alotaibi, 2017). The Arabic culture is also a significant factor that negatively affects the promotion of public transportation, as women lack privacy, which is considered inappropriate for the Arabic culture.
Opportunities
The primary opportunity for the industry is to make traveling by bus more attractive to the customers. This can be achieved by making them more comfortable and reliable. Additionally, the producers of buses can make them cheaper by utilizing quality control over overproduction. Finally, there is a strong opportunity to promote building infrastructure for the development of sustainable transportation, such as stations for CNG and electric buses.
Threats
The COVID-19 pandemic is the primary concern for the bus industry in Saudi Arabia. Self-isolation and social distancing can negatively affect the demand for public transportation. Additionally, the world economy is experiencing a significant decline due to the pandemic, which may encourage the government of the Kingdom to reduce the cost of the development of public transportation.
PEST Analysis
Political
The political environment is favorable for the development of the bus industry in Saudi Arabia, as both the government of the Kingdom and international organizations, such as the United Nations (2015), promote sustainable development since the utilization of public transportation reduces the environmental impact of human activity. There are no significant threats to the industry from a political viewpoint.
Economic
The economic environment can have both positive and negative impacts. On the one hand, the growing price of oil and natural gas is expected to have a positive impact on the industry, as government profits will increase, which will allow it to invest money in public transportation (Yahoo Finance, 2021). On the other hand, the global market experiences a significant recession due to the pandemic, which may be unfavorable for the development of all the economic spheres.
Social
The social environment can also have both negative and positive effects on the industry. More than 67% of Saudi Arabia citizens stated that they would like to use public transportation to decrease the impact on the environment (Alotaibi, 2017). However, cultural peculiarities and overall economic prosperity make them prefer private cars due to their flexibility, availability, and privacy.
Technological
The technological environment is favorable for the industry, as the latest advancements in technology are expected to decrease the cost of batteries, which will positively affect the development of a sustainable bus fleet (TechSciResearch, 2020). These advancements will decrease the cost of production of electric buses, further increasing the growth of the industry.
Conclusion
The bus industry is a rapidly growing market despite the current unfavorable economic situation due to the COVID-19 pandemic. High diversification of bus types, the flexibility of price, and adequate promotion measures support the continuous growth of sales. Even though Saudi traditional culture and economic prosperity are major obstacles to its development, the industry will continue its rapid growth due to the favorable political and technological environment. Thus, it is recommended to invest in the industry, as it is expected to have high returns.
References
Alotaibi, O. M. (2017). Potential demand for public transport in Riyadh City, Saudi Arabia [PhD Thesis]. Cardiff University. Web.
Khan, S. (2014). Promoting public transport culture. Arab News. Web.
Nissan. (2021a). Urvan. Web.
Nissan. (2021b). Civilian. Web.
TechSciResearch. (2020). Saudi Arabia bus market report. Web.
United Nations. (2015). Transforming our world: the 2030 agenda for sustainable development. New York, NY: United Nations.
Yahoo Finance. (2021). Crude Oil Apr 21 (CL=F). Web.