- KSA car rental and leasing market generated revenue of SAR ~15 Bn in 2022 and grew at a CAGR of only ~3% over 2017-2022 due to Covid-19 and sluggish economy.
Slow growth in the market during 2016-2017 can be attributed to sluggish economic growth owing to cheap oil which led to fiscal consolidation, weakening investor and consumer sentiment. Also, shortage of liquidity and capital crunch forced companies to cut costs, with even leasing companies were reducing their lease price to be competitive and to stay in business. With introduction of COVID-19 restrictions caused a huge dip in the market demand. On the supply side this led to a large sell off of fleet by major companies.
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- The market players were also faced with difficulties due to the increase in fuel prices, booking and pricing management, rising marketing costs, and fierce competition.
KSA experienced the largest increase in gasoline/fuel prices, with prices for octane 91 and 95 standing at SAR 2.2 and SAR 2.3 per litre, respectively. As a result, maintaining and monitoring booking data can be difficult, especially when there are price changes or special offers. In the meantime, the introduction of ride-hailing programs and the increasing popularity of online reservations may further split the industry, increasing competition. As the need for digitization has grown over time, so have the marketing expenses associated with creating and maintaining websites and mobile applications. Because of their low consumer conversion rates, new players struggle. For market players, the risk of stealing data, user, and payment information, as well as other things, is a significant concern, particularly for those without an internet presence.
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- The market will be driven in the future by the growth of tourism, infrastructure developments under Vision 2030, and economic diversification in non-oil sectors.
Growing tourism in the kingdom’s western region, supported by new hospitality and tourism initiatives like red sea development and the introduction of e-visas for visitors from 49 countries for reasons other than religious and medical tourism will give a boost to KSA Car Rental and Leasing Market. Apart from this Vision 2030 is also encouraging new commercial entities to set up in the country which has increased demand for fleet management, leasing and last mile delivery during the recent period.
Technology isn’t just evolving the way people rent cars, it is completely transforming the experience, with rental vehicle’s operation, performance, and maintenance being made available in real time. Such features are tremendous assets for drivers and fleet managers, enabling them to more efficiently identify risks and implement timely improvements of their rental services. Car Rental and Leasing Companies are increasingly moving towards digitization to improve operational profits as well as customer experience. Online car rental booking services in the form of mobile applications and websites has been gaining popularity in KSA, which has enhanced user experience by making the process quicker and more convenient by showing the customer the range of cars at a one stop shop.
For more information on the research report, refer to below link:
KSA Car Rental and Leasing Market Outlook to 2027F: Ken Research