Saudi Arabia Automotive Leasing Market Analysis

Saudi Arabia Automotive Leasing Industry Analysis

Vehicle Type Analysis

• The passenger category holds the larger revenue share in 2024, and it is expected to maintain its position during the forecast period.
• The decision to allow women to drive in 2018 has expanded the customer base, and many of them prefer leasing over other options, for risk reduction.
• Leasing also provides the flexibility to expatriates and locals who require short-to-mid-term transportation solutions without long-term ownership commitments.
• The rise in passenger car leasing is also due to the increase in the adoption of ride-hailing and carsharing services, provided by companies such as Uber and Careem. People involved in these services often lease passenger vehicles as a means of generating income.
• Commercial is the faster-growing category, with a CAGR of 12.2% during the forecast period.
• As part of the initiatives to diversify the economy, investments in various non-oil sectors, such as logistics, infrastructure, and construction, propel the demand for commercial vehicles.
• The players also keep their fleet of vehicles upgraded as per the recent technological advancements and altering preferences.
• Several players offer value-added services, such as servicing & maintenance, thus taking this burden off the shoulders of businesses and also helping them save on expenses.

The vehicle types analyzed here are:

• Passenger (Larger Category)
• Commercial (Faster-Growing Category)

Leasing Type Analysis

• The operating category is expected to account for the higher revenue, of USD 670.2 million, in 2030.
• Operating leases attract lessees due to their flexibility, primarily because they entail no vehicle owning obligation.
• This model is feasible for business and personal use among the huge expatriate population and the large number of transient residents, who prefer arrangements for a fixed duration.
• Additionally, an operating lease usually includes maintenance, insurance, and servicing. Such multiple services in the package guarantee reliability for businesses that depend on a well-maintained fleet.
• The financial category is the faster-growing in the Saudi Arabian automotive leasing market.
• With financial leasing, the ownership of the vehicle is transferred to the user at the end of the lease term. This becomes appealing to companies willing to incur the cost to establish an asset base without a major investment of capital.
• Through financial leasing, a company can distribute the expenses associated with acquiring the vehicles over time, hence improving cash flow and avoiding ill-planned budgeting.

The following leasing types have been evaluated:

• Operating (Larger Category)
• Financial (Faster-Growing Category)

Lease Duration Analysis

• The short-term bifurcation dominates the market in 2024.
• The large expatriate population living in Saudi Arabia for trade and business for a limited period prefers short-time leasing, which offers flexibility without the complications of owning a vehicle.
• As per an article in Argaam, the number of expatriates employed in Saudi Arabia reached 10.9 million, accounting for 75% of the total workers in the country in the third quarter of 2022.
• The long-term category is the faster-growing in the market, with an expected CAGR of 11.9% over this decade.
• Long-term leases are preferred by many companies as they allow them to maintain a consistent and reliable lineup of vehicles without purchasing them. This model is predominantly relevant in industries such as logistics, construction, and services, where employees need to be constantly or continuously on the move.
• Long-term leases are more beneficial and have better prices compared to short-term permits. These contracts also often feature predictable monthly payments and lower maintenance costs.

The lease durations analyzed here are as follows:

• Short-Term (Larger Category)
• Long-Term (Faster-Growing Category)

End User Analysis

• The individual category has the higher value in the market, of USD 361.4 million, in 2024.
• The surge in the population of Saudi Arabia, especially in urban centers, such as Riyadh, Jeddah, and Dammam, is leading to an increasing demand for personal mobility.
• People prefer leasing nowadays because they wish to have vehicles without being bothered about their depreciation or purchase cost.
• Citizens are also drawn to rental firms that have new models in their fleets to utilize evolving technologies.
• The corporate category is the faster-growing in the market.
• Corporations are leasing automobiles for cost-effective transportation without paying high prices for purchasing the vehicles.
• Automotive rental companies also provide insurance and maintenance benefits, which ensure operational smoothness.
• Companies are increasingly adopting greener practices; leasing allows them access to newer, environment-friendly vehicles without long-term commitments.

The end users analyzed here are:

• Corporate (Faster-Growing Category)
• Individual (Larger Category)

Service Provider Analysis

• Car rental companies lead the market owing to their established brand recognition and strong presence.
• Over the years, they have built familiarity and credibility by facilitating reliable and convenient services. They also have vast networks across key cities, which makes them more accessible for locals and tourists.
• Dedicated leasing firms are the faster-growing category, at a CAGR of 11.4% during the forecast period.
• Major sectors, including logistics, oil & gas, and construction, seek cost-effective substitutes over buying vehicles.
• Dedicated leasing firms help them avert the heavy initial expenditures and cover the maintenance expenses as well.

The service providers evaluated here are:

• Car Rental Companies (Larger Category)
• Dedicated Leasing Firms (Faster-Growing Category)