Posted On: 2021-11-26
Central region acquired the largest revenue share in the Saudi Arabia vehicle rental market – 6Wresearch.
The COVID-19 pandemic affected the revenues and fleet size of the vehicle rental market significantly due to the moratorium on tourism activities, downscaling of commercial activities, as well as public apprehension about the hygienic treatment of rental vehicles. The vehicle rental market of Saudi Arabia is expected to witness growth, primarily backed by the rapidly growing investment in the tourism sector, robust development of the logistics sector, as well as the rising preference of corporate players towards leasing of cars. Furthermore, the government’s initiatives for the diversification of economy away from oil, led by Saudi’s Vision 2030, would lead to establishment of several new commercial entities in the country, thereby propelling the demand for transportation services over the coming years. This, in turn, would also augment the revenues of the vehicle rental market in Saudi Arabia.
According to 6Wresearch, Saudi Arabia Vehicle Rental Market size is projected to grow at a CAGR of 4.5% during 2021-2027. By type, the passenger vehicle segment dominated the market revenue share in 2020 and is expected to witness significant growth, on account of the surge in investments in the tourism sector. The rapidly growing internet penetration in the kingdom along with growing inclination of customers, especially young users, to make travel bookings through online and mobile platforms, would bolster the market for online vehicle rental bookings. The airport and seaport expansion projects in the kingdom to strengthen the logistics industry would further drive the demand for commercial rental vehicles over the coming years. The coronavirus pandemic and oil price crash had a significant impact on the vehicle rental market in 2020 on account of reduced mobility, temporary suspension of tourism and commercial activities, as well as reduced spending capacity of people. However, the resumption of tourism and commercial activities, combined with increase in potential consumer base on account of anticipated reduction in sales of new cars due to imposition of 15% VAT from July 2020 and projected shift of users of public transport to other means for commuting due to hygiene concerns, would help the vehicle rental market to gradually recover in the kingdom over the coming years.
The Central region acquired majority revenue share in the overall vehicle rental market in 2020, owing to the high density of working population and infrastructural developments in the region. Growing tourism in the western region of the kingdom, on the back of new hospitality and tourism projects such as red sea development and introduction of e-visas for tourists from 49 countries for reasons other than religious and medical tourism in 2020, would propel the market for vehicle rental services in the western region of Saudi Arabia during the forecast period.
According to Anmol Dhanju, Research Analyst, 6Wresearch, “The spot rental segment held the major share in the overall vehicle rental market in Saudi Arabia in 2020, owing to medical and business travellers in the kingdom, who preferred renting cars for short durations.
Suspension or slowdown of tourism and business activities in 2020 on account of Covid-19 affected the spot rental and limo service market severely while operating lease segment was relatively resilient as existing owners continued to renew their lease.”, Anmol further added.
“Saudi Arabia Vehicle Rental Market (2021-2027F)” report provides an in-depth analysis with 63 figures and 24 tables, covered in 228 pages. The report thoroughly covers the market by type, service type, booking type and regions. The report provides an unbiased and detailed analysis of the Saudi Arabia vehicle rental market trends, opportunities high growth areas, market drivers which would help the stakeholders to device and align their market strategies according to the current and future market dynamics.