The Saudi Arabia Car Rental and Leasing Market is projected to grow with a CAGR of more than 5 % during the forecast period.
- The market is primarily driven by the factors such as growing tourism industry in the country including religious visits (Hajj and Umrah) and the growing businesses, which is propelling the demand for rental and leasing cars in the country.
- The leasing car segment in Saudi Arabia is primarily dominated by corporate demand especially from industries such as logistics, construction and the oil and gas sector with demand for transportation of employees.
- However, the norms imposed by the government to employ only locals in the company is hurting the market and has led to force closure of many small businesses in the car rental and leasing market in the Kingdom of Saudi Arabia. Also, the enhancement of public transport in the country by the government is a threat for the market.
Key Market Trends
Increase in Tourist Activity to Help Market Growth
The government of the Saudi Arabia is taking major steps by changing many rules for travelers in the country and making other big investments to build tourist destinations to attract more foreign nationals in the country, which would drive the growth for car rental and leasing market in the country. For instance,
- In September 2019, the country announced a new Visa plan with an aspect of economic reform plan to boost tourism industry and to lower the kingdom’s dependence on oil. The new e-visa plan will include 49 countries from different parts of the world. The government aims to increase the contribution of the tourism sector in the country from 3% to 10% and expect a footfall of around 100 million tourists annually.
- The country is investing in construction of new cities which are dedicated for tourist activities. Construction on new cities is underway, including the $500 billion futuristic city, NEOM, and Qiddiya, an “entertainment super-city,” which are around 25 miles outside the capital, Riyadh.
- The Saudi tourism commission also partnered with the World Travel and Tourism Council, the global organization that represents the private sector of the travel and tourism industry, to help make the kingdom a top five inbound destination with 100 million international and domestic visits, by 2030.
Business Rental has the Largest Market Share
Owing to the economical and infrastructural development in the country, and the rich oil reservoirs, business activities in the country are growing with a very rapid rate. The businesses want to please the arriving guests with luxury and comfort right from their arrival in the country. For this they are opting for renting luxury or premium cars.
In February 2020, Saudi Arabia has announced that there is a rise in number of international businesses in the country by more than 54 %, as compared to 2018. During 2019, 193 new construction, 190 manufacturing and 178 ICT companies were established, compared to 111, 113 and 111 established in the three sectors in 2018 respectively.
Major players in the Global Luxury vehicle rental market are entering into partnership with the existing players in the country to capture the market. For instance, in June 2020, SIXT, the German based international provider of high-end mobility services, has appointed Samara Rent a Car, the car rental, leasing and limousine subsidiary of Alturki Holding as its franchise partner in The Kingdom of Saudi Arabia.
The Saudi Arabia Car Rental and Leasing Market is fragmented, with many players accounting for a small market share. Some of the prominent companies in the Saudi Arabia Car Rental and Leasing Market are Hertz Corporation, Sixt, Avis Corporation and others. There are many startups in the country who are getting money from investors all around the world as the growth prospects in the market are very high.
For instance, in November 2019, Dubai-based pay-per-minute car rental startup Ekar has raised $17.5 million in a Series B round of funding,
In May 2020, Riyadh-based car rental platform Telgani has raised six-figure investment (USD) in a seed round from 500 Startups, Saudi Venture Capital Company, Impact46, and a group of angel investors
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