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Several factors combine to make Saudi Arabia an attractive market for automotive spare
parts. With a population of 18 million, the Kingdom's total vehicle population is
estimated at 6.5 million, one of the highest figures in the Middle East. The last two
years have seen sales of new motor vehicles in Saudi Arabia declining, while sales of
second-hand cars have increased considerably. These older, used vehicles will require more
scheduled and regular maintenance in coming years than newer models. Harsh weather
conditions, a dependence on road transport, and a lack of routine preventive maintenance
also positively affect the demand for automotive spare parts in the Kingdom. The U.S.
Department of Commerce estimates that Saudi Arabia's total market size for spare parts at
$550 million for 1997, of which $515 will be imported.
The Saudi Consulting House (SCH) has identified investment opportunities in the spare
parts industry, divided into 14 groups: automotive pumps, radiators, engines, brakes,
suspension systems, electrical parts, front and rear lights, spark plugs, positive and
negative cables, air conditioners, exhaust systems, front and rear bumpers, windshields,
tires and tubes.
Automotive Pumps
Annual Production Capacity:
| Description |
Units |
| Fuel Pump |
150,000 |
| Oil pump |
150,000 |
| Water pump |
150,000 |
| Steering wheel oil pump |
150,000 |
Total Capital Costs:
| Description |
SR |
| Fixed capital |
20,340,000 |
| Depreciation |
6,751,000 |
| Total |
27,091,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
6,772,750 |
| Long Term Loans (50%) |
13,545,500 |
| Short Term Loans (25%) |
6,772,750 |
| Total |
27,091,000 |
Annual Operation Costs:
| Description |
SR |
| Fixed costs |
3,524,000 |
| Variable costs |
27,394,000 |
| Total |
30,918,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
36,000,000 |
| Total operation |
30,918,000 |
| Gross profit before Zakat & financial expenses |
5,082,000 |
| Financial expenses |
254,000 |
| Profit after financial expenses |
4,828,000 |
| Zakat |
289,000 |
| Net profit |
4,539,000 |
| Internal rate of return |
40.75% |
| Rate of return on equity |
61.8% |
| Simple rate of return on investment |
25.9% |
| Break-even point on full capacity |
43.9% |
| Pay-back period |
3 years, 10 months |
Radiators
Annual Production Capacity:
| Description |
Units |
| Radiator |
72,000 |
| Radiator fans |
180,000 |
| Radiator connections & hoses |
600,000 |
Total Capital Costs:
| Description |
SR |
| Fixed capital |
17,960,000 |
| Depreciation |
6,827,000 |
| Total |
24,787,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
6,196,750 |
| Long Term Loans (50%) |
12,393,500 |
| Short Term Loans (25%) |
6,196,750 |
| Total |
24,787,000 |
Annual Operation Costs:
| Description |
SR |
| Fixed costs |
3,297,000 |
| Variable costs |
27,734,000 |
| Total |
31,031,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
36,060,000 |
| Total operation cost |
31,031,000 |
| Gross profit before Zakat & financial expenses |
5,029,000 |
| Financial expenses |
232,000 |
| Profit after financial expenses |
4,797,000 |
| Zakat |
291,000 |
| Net profit |
4,506,000 |
| Internal rate of return |
43.9% |
| Rate of return on equity |
67.0% |
| Simple rate of return on investment |
27.3% |
| Break-even point on full capacity |
42.4% |
| Pay-back period |
3 years, 7 months |
Automotive Engines
Annual Production Capacity:
| Description |
Units |
| Engine Block |
120,000 |
| Cylinder head |
120,000 |
| Valves & Accessories (sets) |
195,000 |
| Steering wheel oil pumps (sets) |
160,000 |
Total Capital Costs:
| Description |
SR |
| Fixed capital |
440,400,000 |
| Depreciation |
49,833,000 |
| Total |
490,233,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
122,558,250 |
| Long Term Loans (50%) |
245,116,500 |
| Short Term Loans (25%) |
122,558,250 |
| Total |
490,233,000 |
Annual Operation Costs:
| Description |
SR |
| Fixed costs |
58,625,000 |
| Variable costs |
203,079,000 |
| Total |
261,704,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
351,100,000 |
| Total operation |
261,704,000 |
| Gross profit before Zakat & financial expenses |
89,396,000 |
| Financial expenses |
4,596,000 |
| Profit after financial expenses |
84,800,000 |
| Zakat |
3,366,000 |
| Net profit |
81,434,000 |
| Internal rate of return |
44.9% |
| Rate of return on equity |
60.4% |
| Simple rate of return on investment |
24.6% |
| Break-even point on full capacity |
42.7% |
| Pay-back period |
3 years,8 months |
Braking Group
Annual Production Capacity:
| Description |
Units |
| Master brake cylinder |
270,000 |
| Braking system connections |
300,000 |
Total Capital Costs:
| Description |
SR |
| Fixed capital |
42,923,000 |
| Depreciation |
10,745,000 |
| Total |
53,668,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
13,417,000 |
| Long Term Loans (50%) |
26,834,000 |
| Short Term Loans (25%) |
13,417,000 |
| Total |
53,668,000 |
Annual Production Costs:
| Description |
SR |
| Fixed costs |
7,090,000 |
| Variable costs |
43,390,000 |
| Total |
50,480,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
61,200,000 |
| Total operation |
50,480,000 |
| Gross profit before Zakat & financial expenses |
10,720,000 |
| Financial expenses |
503,000 |
| Profit after financial expenses |
10,217,000 |
| Zakat |
524,000 |
| Net profit |
9,693,000 |
| Internal rate of return |
45.1% |
| Rate of return on equity |
65.3% |
| Simple rate of return on investment |
26.4% |
| Break-even point on full capacity |
42.6% |
| Pay-back period |
3 years,7 months |
Suspension System
Annual Production Capacity:
| Description |
Units |
| Front and rear suspension axles |
90,000 |
| Tie rod end |
360,000 |
| Upper and lower suspension arms |
400,000 |
| Shock absorbers |
60,000 |
Total Capital Costs:
| Description |
SR |
| Fixed capital |
230,113,000 |
| Working Capital |
25,049,000 |
| Total |
255,162,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
63,790,500 |
| Long Term Loans (50%) |
127,581,000 |
| Short Term Loans (25%) |
63,790,000 |
| Total |
255,162,000 |
Annual Production Costs:
| Description |
SR |
| Fixed costs |
31,527,000 |
| Variable costs |
101,532,000 |
| Total |
133,059,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
183,400,000 |
| Total operation |
133,059,000 |
| Gross profit before Zakat & financial expenses |
50,341,000 |
| Financial expenses |
1,993,000 |
| Profit after financial expenses |
48,348,000 |
| Zakat |
1,835,000 |
| Net profit |
46,513,000 |
| Internal rate of return |
42.6% |
| Rate of return on equity |
61.5% |
| Simple rate of return on investment |
25% |
| Break-even point on full capacity |
40.9% |
| Pay-back period |
3 years,8 months |
Electrical Parts Group
Annual Production Capacity:
| Description |
Units |
| Switches |
480,000 |
| Distributors |
150,000 |
| Cutouts |
240,000 |
| Contact breakers |
2,000,000 |
| Condensers |
300,000 |
Total Capital Costs:
| Description |
SR |
| Fixed capital |
144,230,000 |
| Working Capital |
14,193,000 |
| Total |
158,423,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
39,605,750 |
| Long Term Loans (50%) |
79,211,500 |
| Short Term Loans (25%) |
39,605,750 |
| Total |
158,423,000 |
Annual Production Costs:
| Description |
SR |
| Fixed costs |
20,530,000 |
| Variable costs |
56,734,000 |
| Total |
77,264,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
112,300,000 |
| Total operation |
77,264,000 |
| Gross profit before Zakat & financial expenses |
35,036,000 |
| Financial expenses |
1,238,000 |
| Profit after financial expenses |
33,789,000 |
| Zakat |
1,200,000 |
| Net profit |
32,598,000 |
| Internal rate of return |
47.79% |
| Rate of return on equity |
69.5% |
| Simple rate of return on investment |
27% |
| Break-even point on full capacity |
39.2% |
| Pay-back period |
3 years, 5 months |
Front and Rear Lights
Annual Production Capacity: 480,000 units
Total Capital Costs:
| Description |
SR |
| Fixed capital |
28,532,000 |
| Working Capital |
8,259,000 |
| Total |
36,791,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
9,197,750 |
| Long Term Loans (50%) |
18,395,500 |
| Short Term Loans (25%) |
9,197,750 |
| Total |
36,791,000 |
Annual Operation Costs:
| Description |
SR |
| Fixed costs |
5,435,000 |
| Variable costs |
33,004,000 |
| Total |
38,439,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
48,000,000 |
| Total operation |
38,439,000 |
| Gross profit before Zakat & financial expenses |
9,561,000 |
| Financial expenses |
345,000 |
| Profit after financial expenses |
9,216,000 |
| Zakat |
437,000 |
| Net profit |
8,779,000 |
| Internal rate of return |
58.4% |
| Rate of return on equity |
86.7% |
| Simple rate of return on investment |
31.7% |
| Break-even point on full capacity |
38.5% |
| Pay-back period |
3 years |
Spark Plugs (1)
Annual Production Capacity: 3,000,000 units
Total Capital Costs:
| Description |
SR |
| Fixed capital |
13,099,000 |
| Working Capital |
1,467,000 |
| Total |
14,566,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
3,641,500 |
| Long Term Loans (50%) |
7,283,000 |
| Short Term Loans (25%) |
3,641,500 |
| Total |
14,566,000 |
Annual Operation Costs:
| Description |
SR |
| Fixed costs |
2,383,000 |
| Variable costs |
5,398,000 |
| Total |
7,781,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
10,500,000 |
| Total operation |
7,781,000 |
| Gross profit before Zakat & financial expenses |
2,719,000 |
| Financial expenses |
137,000 |
| Profit after financial expenses |
2,582,000 |
| Zakat |
101,000 |
| Net profit |
2,481,000 |
| Internal rate of return |
44.46% |
| Rate of return on equity |
62.2% |
| Simple rate of return on investment |
25.4% |
| Break-even point on full capacity |
49.4% |
| Pay-back period |
3 years, 7 months |
Production Capacity:
Spark Plugs -- 3,000,000 units
Total Investment Required: $4,000,000
Contact: Mr. Nasser Mohammed Al-Humaid, Spark Plugs Manufacturing, P.O. Box
41418, Riyadh 11521, Saudi Arabia Phone: 966-1-448-0275/448-0304 Fax:
966-1-448-0683
Source: Saudi Consulting House
| Description |
|
| Capacity |
7,000 units/year |
| Invested Capital |
SR 2.623 million |
| Capital Recovery Period |
4 years from production commencement date |
| Annual Sales |
SR 3,850,000 |
Source: Saudi Basic Industries
Corporation
Manufacturing Method: Circulatory Molding
| Description |
|
| Capacity |
4,830 covers |
| Invested Capital |
SR 7.4 million |
| Return on Invested Capital |
26.4% |
| Capital Recovery Period |
2.8 years from production commencement date |
| Annual Sales |
SR 4,830,000 |
Funding: 25 % self-funding
25 % commercial loans
50 % government loan
Source: Saudi Basic Industries
Corporation
Positive and Negative Cables
Annual Production Capacity: 240,000 units
Total Capital Costs:
| Description |
SR |
| Fixed capital |
2,600,000 |
| Working Capital |
693,000 |
| Total |
3,293,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
823,250 |
| Long Term Loans (50%) |
1,646,500 |
| Short Term Loans (25%) |
823,500 |
| Total |
3,293,000 |
Annual Operation Costs:
| Description |
SR |
| Fixed costs |
961,000 |
| Variable costs |
2,100,000 |
| Total |
3,061,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
3,600,000 |
| Total operation |
3,061,000 |
| Gross profit before Zakat & financial expenses |
539,000 |
| Financial expenses |
31,000 |
| Profit after financial expenses |
508,000 |
| Zakat |
30,000 |
| Net profit |
478,000 |
| Internal rate of return |
30% |
| Rate of return on equity |
49.3% |
| Simple rate of return on investment |
22.4% |
| Break-even point on full capacity |
66.1% |
| Pay-back period |
4 years, 1 month |
Car Air-Conditioners
Annual Production Capacity: 30,000 units
Total Capital Costs:
| Description |
SR |
| Fixed capital |
18,804,000 |
| Depreciation |
5,135,000 |
| Total |
23,939,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
5,984,750 |
| Long Term Loans (50%) |
11,969,500 |
| Short Term Loans (25%) |
5,984,750 |
| Total |
23,939,000 |
Annual Production Costs:
| Description |
SR |
| Fixed costs |
3,437,000 |
| Variable costs |
20,443,000 |
| Total |
23,880,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
28,500,000 |
| Total operation |
23,880,000 |
| Gross profit before Zakat & financial expenses |
4,620,000 |
| Financial expenses |
224,000 |
| Profit after financial expenses |
4,396,000 |
| Zakat |
238,000 |
| Net profit |
4,158,000 |
| Internal rate of return |
43.5% |
| Rate of return on equity |
63.2% |
| Simple rate of return on investment |
26% |
| Break-even point on full capacity |
45.4% |
| Pay-back period |
3 years, 8 months |
Exhaust System
Annual Production Capacity: 90,000 units
Total Capital Costs:
| Description |
SR |
| Fixed capital |
12,278,000 |
| Working Capital |
2,989,000 |
| Total |
15,267,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
3,816,750 |
| Long Term Loans (50%) |
7,633,500 |
| Short Term Loans (25%) |
3,816,750 |
| Total |
15,267,000 |
Annual Operation Costs:
| Description |
SR |
| Fixed costs |
2,285,000 |
| Variable costs |
10,976,000 |
| Total |
13,261,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
16,200,000 |
| Total operation |
13,261,000 |
| Gross profit before Zakat & financial expenses |
2,939,000 |
| Financial expenses |
143,000 |
| Profit after financial expenses |
2,796,000 |
| Zakat |
145,000 |
| Net profit |
2,651,000 |
| Internal rate of return |
43% |
| Rate of return on equity |
63.3% |
| Simple rate of return on investment |
26% |
| Break-even point on full capacity |
46.5% |
| Pay-back period |
3 years, 8 months |
Front and Rear Bumpers
Annual Production Capacity: 30,000 units
Total Capital Costs:
| Description |
SR |
| Fixed capital |
7,749,000 |
| Working Capital |
1,508,000 |
| Total |
9,257,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
2,314,250 |
| Long Term Loans (50%) |
4,628,500 |
| Short Term Loans (25%) |
2,314,250 |
| Total |
9,257,000 |
Annual Production Costs:
| Description |
SR |
| Fixed costs |
1,684,000 |
| Variable costs |
5,190,000 |
| Total |
6,874,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
8,400,000 |
| Total operation |
6,874,000 |
| Gross profit before Zakat & financial expenses |
1,526,000 |
| Financial expenses |
87,000 |
| Profit after financial expenses |
1,439,000 |
| Zakat |
74,000 |
| Net profit |
1,365,000 |
| Internal rate of return |
36% |
| Rate of return on equity |
53.8% |
| Simple rate of return on investment |
23.6% |
| Break-even point on full capacity |
55.2% |
| Pay-back period |
4 years, 1 month |
Production Capacity:
Tires -- 240,000 units
Total Investment Required: $6,200,000
Contact: Mr. Saleh T. Al-Raddani, Tire Producing Factory, P.O. Box 126, Tabuk
Saudi Arabia Phone: 966-4-422-5948 Fax: 966-4-422-0116
Source: Saudi Consulting House
Annual Production Capacity: 90,000 square meters
Total Capital Costs:
| Description |
SR |
| Fixed capital |
8,333,000 |
| Working Capital |
1,699,000 |
| Total |
10,032,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
2,508,000 |
| Long Term Loans (50%) |
5,016,000 |
| Short Term Loans (25%) |
2,508,000 |
| Total |
10,032,000 |
Annual Production Costs:
| Description |
SR |
| Fixed costs |
1,877,000 |
| Variable costs |
5,784,000 |
| Total |
7,661,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
9,056,000 |
| Total operation |
7,661,000 |
| Gross profit before Zakat & financial expenses |
1,395,000 |
| Financial expenses |
94,000 |
| Profit after financial expenses |
1,301,000 |
| Zakat |
75,000 |
| Net profit |
1,226,000 |
| Internal rate of return |
30.2% |
| Rate of return on equity |
44.4% |
| Simple rate of return on investment |
20.7% |
| Break-even point on full capacity |
60.2% |
| Pay-back period |
4 years, 8 months |
Tires and Tubes
Annual Production Capacity: 240,000 tires and 240,000 tubes
Total Capital Costs:
| Description |
SR |
| Fixed capital |
18,640,000 |
| Working Capital |
5,082,000 |
| Total |
23,722,000 |
Financing Sources:
| Description |
SR |
| Equity (25%) |
5,930,500 |
| Long Term Loans (50%) |
11,861,000 |
| Short Term Loans (25%) |
5,930,000 |
| Total |
23,722,000 |
Annual Production Costs:
| Description |
SR |
| Fixed costs |
3,435,000 |
| Variable costs |
20,244,000 |
| Total |
23,679,000 |
Financial and Economic Indices:
| Description |
SR |
| Annual Revenues |
28,320,000 |
| Total operation |
23,679,000 |
| Gross profit before Zakat & financial expenses |
4,641,000 |
| Financial expenses |
222,000 |
| Profit after financial expenses |
4,419,000 |
| Zakat |
238,000 |
| Net profit |
4,181,000 |
| Internal rate of return |
42.8% |
| Rate of return on equity |
64.1% |
| Simple rate of return on investment |
26.4% |
| Break-even point on full capacity |
45.3% |
| Pay-back period |
3 years, 8 months |
Exchange Rate: US$1 = SR3.75
For more information about these opportunities, contact Saudi-Business-Center@The-Saudi.Net
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