The car rental and leasing market in Saudi Arabia was valued at around USD 1,655. 19 million in 2021. It is expected 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 publication 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 has had a negative impact on the market as initial lockdowns and travel restrictions have resulted in low demand creating chaos in the market as several car rental service providers found themselves in a difficult position in the midst of suppressed demand. However, post-pandemic, with the easing of restrictions, demand is expected to recover over the forecast period.
The major driver of market growth is tourism as the country is a hub of holy places, like Makkah and Madinah, which witness a large influx of tourists during the Eid Al-Fitr and Islamic festivals. Eid Al-Adha. Moreover, with the growth of online platforms, car rental costs have come down significantly, which encourages customers to rent a car rather than using taxis or public transport for their journeys.
However, high rental costs and major local players still facing losses due to the impact of the pandemic and several other affordable alternative transport services, such as public transport and personal vehicles, may pose a challenge. challenge to players operating in the market.
Online passenger vehicle reservations are increasing in the country owing to the increased penetration of technology in various regions and the growth in the number of users between the ages of 25 and 34 who prefer to book vehicle rentals through online channels. line. For example,
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, the penetration of Internet in Saudi Arabia stood at 95.7% in January 2021.
Main market trends
Car rental dominates the market
Car rental services are used not only by tourists but also by locals for daily commuting, with the increase in the number of businesses moving to Saudi Arabia, the population of office workers is increasing and the demand for car rental services is also increasing at a higher rate.
Shifting consumer preferences towards modernized versus traditional lifestyle and their preferences in using technologically advanced personal vehicles supported by increasing disposable income are the major factors propelling the growth of rental services cars in the country.
While some market players are expanding their fleet size with the latest models, entering into new partnerships and raising funds from investors to capture the growing market, others are focusing on collaborations and acquisitions to increase their service offerings in the country. For example,
In January 2022, ekar, the largest personal mobility company in the Middle East, activated car subscription in its self-driving super app across Saudi Arabia in partnership with some of the largest car rental companies from the country.
In June 2021, Aljomaih Auto Rental (Ajar), which is a franchisee of Enterprise Holdings rental brands in Saudi Arabia, announced that it had started purchasing new vehicles to meet growing demand. The company’s fleet in Saudi Arabia grew 27% year-on-year to 5,700 vehicles.
Growing demand for sport utility vehicles
The SUV segment has been growing at a phenomenal rate, increasing its share as most tourists prefer renting an SUV in case of family outings as it can accommodate more people and provides ample luggage space during the trip. travel. The car rental market in the country is directly related to automotive market trends. If SUV sales are increasing, service providers need to include the latest SUVs in their fleet to stay ahead of competitors.
However, recent circumstances, such as the Saudi government authorities, have relaxed the rules on the ban on the purchase of SUVs with a capacity of 7 passengers. Now, expats can buy a 7-passenger capacity SUV in Saudi Arabia without any restrictions or constraints. These cases are expected to encourage consumers inclined to purchase SUVs and they are expected to act as a brake on the growth of the market.
But in recent years, various startups offering subscription cars and key players focusing on capturing growing market share by adding attractive SUV fleet are expected to contribute to 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 example,
In March 2020, Invygo signed its first car rental partner in Saudi Arabia. After the new partnership with Budget Rent a Car Saudi Arabia, Invygo has started offering multiple car brands and the latest models for a monthly subscription.
The Saudi car rental and leasing market is fragmented. The majority of the market share is held by multinational companies, such as Theeb Rent a Car, Hertz Corporation, Budget Rent-A-Car, Hanco Automotive, Sixt SE, and Key Car Rental.
The Saudi car rental and leasing market is dominated by Hertz Corporation, followed by Budget Rent A Car. Hertz is one of the leading car rental companies in the world and in Saudi Arabia. The company is expanding its Hertz My Car monthly vehicle subscription service to new geographies to better penetrate the market, further share and dominate the industry.
Budget announced that its short-term car rental business, which represents 30% of its fleet, has been affected by the precautionary measures taken by the Kingdom to curb the COVID-19 pandemic, such as the closure of airports, the temporary suspension of Umrah and the imposition of a 21-day curfew. All of these factors impacted Budget’s revenue and that of other market players. However, the demand is gradually accelerating and is expected to grow rapidly over the forecast period.
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