The Saudi Arabia Car Rental and Leasing Market size is estimated at USD 2.20 billion in 2024, and is expected to reach USD 3.42 billion by 2029, growing at a CAGR of 9.21% during the forecast period (2024-2029).
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. This is attributed to the people preferring private modes of transportation for visiting the office, institutions, and other places. Moreover, the players in the Saudi Arabia Car rental market are also launching new facilities for the customers, For instance,
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.
Additionally, 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,
Car rental services are used not only by tourists but also by locals for daily commuting. As the number of companies setting up shops in Saudi Arabia grows, so does the population of office workers, and the demand for car rental services grows at a faster rate.
Shifting consumer preferences away from traditional lifestyles and toward the use of technologically advanced personal vehicles, backed by an increase in disposable income, are the major factors driving the growth of car rental services in the country. Additionally, as a part of Saudi Arabia's vision 2030, the government is encouraging the private organization to set up their offices in the country. This is expected to witness an increase in the demand for corporate rentals and leases.
Furthermore, to capture the growing market, some market players are expanding their fleet size with the latest models, entering new partnerships, and raising funds through investors, while others are focusing on collaborations and acquisitions to increase their service offerings in the country. For instance,
The SUV segment has been expanding at a rapid pace, increasing its market share as most tourists prefer to rent an SUV for family outings because it accommodates more people and provides ample luggage space while traveling. The country's car rental market is directly related to automotive market trends. If SUV sales increase, service providers must include the most recent SUVs in their fleet to stay ahead of their competitors.
However, recent events, such as Saudi government officials relaxing the rules regarding the purchase of SUVs with a seating capacity of seven passengers. Expats can now purchase a 7-passenger SUV in Saudi Arabia without restriction or compulsion. These incidents are expected to encourage consumers to purchase SUVs while also acting as a restraint on market growth.
However, in recent years, with various startups offering subscription-based cars and key players focusing on capturing rising market share by adding attracting SUV fleet, SUVs are expected to grow. Similarly, in Saudi Arabia, Udrive intends to increase its presence. For instance,
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.
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