Saudi PIF Leads Integrated Effort to Build National Car Sector

Saudi PIF launched Saudi Arabia’s first electric car brand, “CEER,” in November 2022. (PIF)
Saudi PIF launched Saudi Arabia’s first electric car brand, “CEER,” in November 2022. (PIF)
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Saudi PIF Leads Integrated Effort to Build National Car Sector

Saudi PIF launched Saudi Arabia’s first electric car brand, “CEER,” in November 2022. (PIF)
Saudi PIF launched Saudi Arabia’s first electric car brand, “CEER,” in November 2022. (PIF)

Saudi Arabia’s Public Investment Fund (PIF) is making big moves to kickstart the Kingdom’s own car industry.

It launched Saudi Arabia’s first electric car brand, “CEER,” in November 2022 and is backing the National Automotive and Mobility Academy (NAFAM) while investing heavily in the car and mobility sector.

In one of its reports, PIF emphasized how this sector can create jobs, boost the economy beyond oil, and fill skill gaps regionally. The fund also aims to create opportunities for private businesses and push forward research and development.

Following Saudi Arabia’s national transformation plan, Vision 2030, the Kingdom’s investments are driving economic growth and diversification.

PIF’s investment in the US electric vehicle company, Lucid, is a prime example. Lucid opened its first electric car factory in Saudi Arabia in September 2023, coinciding with CEER’s launch.

CEER recently announced a major deal worth about $1.3 billion for a new industrial complex.

According to CEER CEO Jim DeLuca the complex will set new industry standards both locally and globally. It will feature top-notch technologies, equipment, and staff, backed by partnerships with leading industry players like Durr, Schuler, and Siemens.

Mohammed Al-Shiha, who heads the Automotive and Mobility Sector at the Middle East and North Africa division of the fund, underscores their focus on future-ready tech. For cars, this means prioritizing electric and hydrogen vehicles for a greener future.

He noted that Saudi Arabia has laid a strong foundation for its car industry and is now shifting towards building its own suppliers. Examples include partnering with global giant Pirelli for top-notch tires and teaming up with Hyundai Motor to set up an advanced car plant.

Alongside global brands, the fund is launching a joint venture with the Saudi Electricity Company to establish “Electric Vehicle Infrastructure Company.” Their aim is to provide fast charging services across the Kingdom by 2030.



Japan's Demand-Led Inflation Slows, Clouds BOJ Rate Hike Path

 People visit Ameya-Yokocho shopping street in the Ueno area of Tokyo on June 19, 2024. (AFP)
People visit Ameya-Yokocho shopping street in the Ueno area of Tokyo on June 19, 2024. (AFP)
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Japan's Demand-Led Inflation Slows, Clouds BOJ Rate Hike Path

 People visit Ameya-Yokocho shopping street in the Ueno area of Tokyo on June 19, 2024. (AFP)
People visit Ameya-Yokocho shopping street in the Ueno area of Tokyo on June 19, 2024. (AFP)

Japan's core inflation accelerated in May due to energy levies but an index that strips away the effect of fuel slowed for the ninth straight month, data showed on Friday, complicating the central bank's decision on how soon to raise interest rates.

The slowdown in so-called "core core" inflation, which is closely watched by the Bank of Japan as a key gauge of demand-driven price moves, casts doubt on the bank's view that rising wages will underpin consumption and keep inflation on track to durably hit its 2% target.

The core consumer price index (CPI), which excludes volatile fresh food, rose 2.5% in May from a year earlier, government data showed, accelerating from the previous month's 2.2% gain due largely to a hike in the renewable energy levy. It was roughly in line with a median market forecast for a 2.6% gain.

But inflation as measured by an index stripping away both fresh food and fuel slowed to 2.1% in May from 2.4% in April, marking the lowest year-on-year increase since September 2022.

Private-sector service inflation slowed to 2.2% in May from 2.4% in the previous month, suggesting companies remained cautious about passing on labor costs.

"The Bank of Japan has been arguing that the strong pay hikes agreed upon in this year's spring wage negotiations will eventually provide a boost to services inflation, but so far there's little evidence of that happening," said Marcel Thieliant, head of Asia-Pacific at Capital Economics.

A renewed rise in crude oil prices and the boost to import costs from a weak yen muddle the outlook for inflation.

Analysts expect core CPI to accelerate near 3% later this month due to rising raw material costs. But such pressure could hurt consumption and discourage firms from hiking prices, hampering the BOJ's efforts to keep underlying, demand-driven inflation durably around its 2% target.

"Real wage growth remains weak in Japan and there's no data confirming that demand-driven inflation is accelerating," said Takeshi Minami, chief economist at Norinchukin Research.

"The BOJ probably won't raise rates again at least until October-December this year," he said.

The BOJ exited negative rates and bond yield control in March in a landmark shift away from a decade-long, radical stimulus program.

With inflation exceeding its 2% target for two years, it has also dropped hints that it will raise short-term rates to levels that neither cool nor overheat the economy - seen by analysts as somewhere between 1-2%.

Many economists expect the BOJ to raise interest rates to 0.25% this year, though they are divided on whether it will come in July or later in the year.

BOJ Governor Kazuo Ueda has said the central bank will raise rates if it becomes more convinced that inflation will durably hit 2% backed by robust domestic demand and higher wages.

Recent weak signs in consumption remain a concern. Japan's economy contracted in the first quarter due in part to a 0.7% drop in consumption as rising living costs discourage households from boosting spending.