The Saudi Arabia car rental and leasing market was valued at around USD 1,655. 19 million in 2021. It is likely to reach USD 2864. 32 million by 2027, anticipating a CAGR of 9. 21% during the forecast period (2022-2027).
New York, May 04, 2022 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Saudi Arabia Car Rental and Leasing Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)" - https://www.reportlinker.com/p06030504/?utm_source=GNW
The COVID-19 pandemic negatively impacted the market as initial lockdowns and travel restrictions resulted in low demand creating chaos in the market as several car rental service providers found themselves in a challenging position amid suppressed demand. However, post-pandemic, as restrictions eased, demand is expected to restore back during the forecast period.
The primary factor driving the growth of the market is tourism, as the country is a hub of holy sites, like Mecca and Medina, that witness a vast influx of tourists during Eid Al-Fitr and Eid Al-Adha festivals. Further, With growing online platforms, the car rental costs have come down significantly, which is encouraging customers to rent a car rather than utilizing taxis or public transport for their trips.
However, high leasing costs and key local players still facing losses incurred due to the impact of the pandemic and with several other alternate affordable transportation services, such as public transportation and personal vehicles, may pose a challenge for players operating in the market.
Online tourist vehicle bookings are increasing in the country due to the increased penetration of technology in various regions and growth in the number of users aged between 25 and 34 years that prefer booking vehicle rentals through online channels. For instance,
There were 33.58 million internet users in Saudi Arabia in January 2021. While the number of internet users in Saudi Arabia increased by 1.3 million (+4.2%) between 2020 and 2021, with Internet penetration in Saudi Arabia standing at 95.7% in January 2021.
Key Market Trends
Car Rental Dominating the market
Car rental services are being used not only by the tourists but also by the local people for daily commuting, with the increase in number of companies setting up businesses in Saudi Arabia, the population of office goers is increasing and the demand for car rental services is also increasing at a higher rate.
Shifting consumers’ preferences toward a modernized lifestyle from the traditional one and their preferences in the usage of technologically advanced personal vehicles backed by the increase in disposable income are the major factors propelling the growth of the car rental services in the country.
While Some players in the market are expanding their fleet size with the latest models, entering new partnerships, and raising funds through investors to capture the growing market, others are focusing on collaborations and acquisitions to increase their service offerings in the country. For instance,
In January 2022, ekar, the Middle East’s largest personal mobility company, has activated car subscription within its Self-drive Super App across Saudi Arabia in partnership with some of the largest car rental companies in the country.
In June 2021, Aljomaih Auto Rental (Ajar), which is a franchisee of the Enterprise Holdings rental brands in Saudi Arabia, announced that it started to purchase new vehicles to cater to the growing demand. The company’s fleet in Saudi Arabia grew 27% Y-o-Y to 5,700 vehicles.
Increasing Demand for Sports Utility Vehicles
The SUV segment has been growing at a phenomenal pace, increasing its share as most tourists prefer to rent an SUV in case of family outings, as it accommodates more persons and provides ample space for luggage while traveling. The car rental market in the country is directly related to trends in the automotive market. If the sales of SUVs are increasing, service providers have to include the latest SUVs in their fleet to stay ahead of their competitors.
However, recent circumstances, like Saudi Government authorities, have relaxed the rules related to the ban on the purchase of SUVs having a capacity of 7 passengers. Now expats can buy an SUV having a capacity of 7 passengers Saudi Arabia without any restriction or compulsion. These instances expected to encourage consumers inclined toward buying SUVs and they expected to act as a restraint for growth of the market.
But in recent years, with various startups offering subscription-based cars and with key players focusing on capturing rising market share by adding attracting SUV fleet expected to contribute for the growth of SUVS. Similarly, in Saudi Arabia, startup Invygo has partnered with a local rental company to expand its presence in the country. For instance,
In March 2020, Invygo signed its first car hire partner in Saudi Arabia. After the new partnership with Budget Rent a Car Saudi Arabia, Invygo started offering multiple brands of cars and the latest models for a monthly subscription.
The Saudi Arabian car rental and leasing market is fragmented. A majority of the market share is held by multi-national companies, such as Theeb Rent a Car, Hertz Corporation, Budget Rent-A-Car, Hanco Automotive, Sixt SE, and Key Car Rental.
The Saudi Arabian car rental and leasing market is led by Hertz Corporation, followed by Budget Rent A Car. Hertz has been one of the car rental leaders in the world and Saudi Arabia. The company is expanding its Hertz My Car monthly vehicle subscription service to newer geographies to gain more market penetration and share and further lead the industry.
Budget announced that its short-term car rental business, which represents 30% of its fleet, was hit by the Kingdom’s precautionary measures to curb the COVID-19 pandemic, like the closure of airports, temporary suspension of Umrah, and imposing a 21-day curfew. All these factors have impacted Budget’s revenue and that of other players in the market. However, demand is gaining pace gradually and is anticipated to grow swiftly over the forecast period.
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