Posted On: 2020-09-10
Saudi Arabia vehicle rental market is anticipated to register considerable growth on account of increasing demand for passenger rental vehicles by tourists and ex-pats in the kingdom during the forecast period – 6Wresearch.
Saudi Arabia vehicle rental market is anticipated to be driven by growing public investments in non-oil sectors such as tourism and logistics in Saudi Arabia as part of Vision 2030 over the coming years. Expatriates and tourists contribute significantly to the overall demand for rental vehicles in Saudi Arabia and anticipated developments in the commercial and hospitality sectors in the kingdom are expected to further propel the demand for rental vehicles during the forecast period. Moreover, the lift of the driving ban on women in 2018 is likely to increase the addressable market size for vehicle rental companies over the coming years, owing to an increasing number of female residents being issued driving licenses and relaxation of travel restrictions on female tourists such as strict dress code.
According to 6Wresearch, Saudi Arabia Vehicle Rental Market size is projected to grow at a CAGR of 7.5 % during 2020-26. The passenger vehicle rental segment acquired the major share in the overall Saudi Arabia vehicle rental market in 2019 and is anticipated to maintain its position during the forecast period, on account of increasing demand for operating lease services by ex-pats. Moreover, the anticipated surge in the tourism sector on account of opening up of the kingdom’s borders to international tourists beyond the auspices of medical and religious tourism, the introduction of e-visas for tourists from 49 countries in 2019, and large scale luxury tourism projects such as the red sea development would augment the demand for spot rental and limo services for passenger rental vehicles over the coming years. The coronavirus pandemic is, however, expected to significantly impact the rental vehicle market in 2020, due to the moratorium on commercial and tourism activities during the health emergency, as well as reduced mobility within the kingdom to maintain social distancing. However, the shift of preferences of people from buying a new car or using public transport to renting or leasing a vehicle, on account of the increase in the VAT rate to 15% from July 2020 and hygiene concerns respectively, would catalyze the recovery of the market over the next few years. Further, the resumption of tourism activities through programs such as Saudi Summer in 2020 would also facilitate the gradual recovery of demand for rental vehicles.
According to Kanika Arora, Senior Research Analyst, 6Wresearch, “The demand for commercial rental vehicles is anticipated to grow considerably on account of government initiatives to improve the logistics sector in the country over the forecast period. For instance, the National Industrial Development and Logistics Program seek to strengthen the logistics sector in the kingdom by measures such as increasing the cargo capacity at airports and seaports, which would increase the demand for the transportation of goods, thereby propelling the demand for commercial rental vehicles over the coming years. The expanding e-commerce network in the country is also expected to bolster the logistics sector, thereby propelling the demand for commercial rental vehicles during the forecast period. Furthermore, government measures such as the introduction of the ‘Privileged Iqama’ system to increase investment opportunities in the KSA for non-nationals, would attract highly skilled expatriates, thereby driving the demand for the operating lease segment in the kingdom over the coming years.”
“The western region of the kingdom is expected to register substantial growth, owing to the anticipated increase in tourism on the back of tourism and hospitality projects in the region including Amaala project. Moreover, Jeddah is expected to witness a substantial increase in the number of hotel rooms to accommodate religious, business, and leisure travelers, further augmenting the demand for passenger rental vehicles in the region. The eastern region of the country is also expected to register significant growth in demand for commercial rental vehicles on account of rapidly growing industrial and logistics sectors in the region.”, Kanika further added.
According to Sanya Sethi, Research Associate, 6Wresearch, “The online booking type is rapidly gaining popularity, on account of increasing internet penetration in the country, coupled with the improved access to new services and promotional offers provided by vehicle rental companies to users through online apps and portals. Furthermore, the coronavirus pandemic is expected to further augment the demand for online bookings, on account of the increasing inclination of customers to minimize social and physical contact.”
“Saudi Arabia vehicle rental market (2020-2023)" provides an in-depth analysis with 56 figures, covered in 200 pages. The report estimates and forecasts the overall Saudi Arabia vehicle rental market by type, by service type, by booking type and by region. The report provides an unbiased and detailed analysis of the on-going trends, opportunities/high growth areas and market drivers which would help the stakeholders to devise and align their market strategies according to the current and future market dynamics.