Saudi Arabia Car Rental Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Saudi Arabia Car Rental Market Size

Saudi Arabia Car Rental Market Trends and Growth Drivers

Advanced Technological Integration Is Trending in the Market

• One of the major factors influencing the market is the integration of advanced technologies to reach customers around the kingdom.
• Businesses are using digital platforms to interact with customers, where they provide the facility of booking a car through their online applications. They can also receive feedback from customers, which will help them improve their services.
• Additionally, developments in the internet of things (IoT) and vehicle connectivity technology are enabling companies to offer smart rental solutions.
• IoT can help track locations and driving patterns. Additionally, companies are offering value-added services, such as effortless vehicle returns and customized driving suggestions.

Rise in Tourism Is Driving the Market

• One major factor boosting the market is the increasing tourism in this country.
• For instance, in 2023, according to UN Tourism, Saudi Arabia welcomed more than 100 million tourists and marked a significant milestone in its journey to become a global tourism powerhouse.
• As tourists need flexible and reliable modes of transportation for exploring the country, these rental services are becoming a favorable choice, as they are affordable and convenient.
• Furthermore, the government is promoting tourism by focusing on expanding infrastructure and increasing investments in constructing resorts, hotels, theme parks, and museums.

An Increase in Traffic Is a Challenge for the Market

• One main challenge faced by this industry is the increase in traffic, which is impeding market growth.
• Due to the delays in reaching their destinations as a result of congested roads and protracted traffic jams, customers are becoming less satisfied with their driving experiences.
• The surge in the number of vehicles on the road is leading to longer delays in pick-and-drop services and longer travel times.
• This is leading to high fuel consumption and giving the customer a negative experience.
• To overcome this obstacle, the market needs innovative solutions that can monitor real-time traffic and optimize routes, such as ADAS and V2V connectivity.
• Additionally, this congestion and increasing traffic are also raising the possibility of road accidents and collisions, which is hindering market growth further.
• For instance, the World Health Organization (WHO) reports that, in Saudi Arabia, 1.25 million people lose their lives in road traffic accidents each year.

Saudi Arabia Car Rental Market Outlook

Car Type Insights

• Budget-friendly cars are estimated to hold the largest market share of 65% in 2024.
• This is due to the increase in tourism, as many tourists opt for budget-friendly cars for their trips because they are accessible and affordable.
• For instance, Q1 2024 saw a 10% growth in tourism, according to Saudi Arabia’s Minister of Tourism, AI-Khateeb.
• Moreover, these budget-friendly cars have lower maintenance and operational costs in comparison to other cars.
• The biggest factor behind the rise in popularity of these affordable cars is customer choice; many people seek them out because they are convenient to drive and do not consume too much fuel.

The types of cars analyzed in this report are:

• Budget-Friendly (Larger and Faster-Growing Category)
• Premium

Booking Type Insights

• Online booking platforms hold the larger share of 80% in the market and are expected to grow at a CAGR of 10.0% in the forecast period.
• One main factor boosting the market is that online booking platforms provide more convenience to costumers in comparison to traditional offline booking methods.
• Using online booking platforms, customers can also compare prices offered by different companies and select the service that is most affordable for them.
• These platforms offer a detailed explanation of the product, so customers do not have to strain themselves by searching and asking different service providers about the product.
• Moreover, online platforms provide coupons and offers occasionally, which drives more customers toward online booking.

The booking types included in this report are:

• Online (Larger and Faster-Growing Category)
• Offline

Renting Duration Insights

• Short-term renting is estimated to hold the larger market share, of 70%, in 2024 and is expected to do the same in the coming few years.
• Short-term rental services allow customers to rent a car for a few hours or even for weeks, which is beneficial for both local customers and tourists.
• Nowadays, business travelers are increasing in number in Saudi Arabia, and they require a reliable mode of transportation to move between meetings.
• Another reason for the increasing popularity of this category is that these short-term services are cost-effective, especially for budget-friendly tourists.

The renting durations in this report are:

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

Purpose Insights

• The business trips category is estimated to hold the largest market share, of 55%, in 2024.
• The increasing business activities in Saudi Arabia are fueling this market, as professionals need flexible, cost-effective, and reliable transportation.
• Additionally, in some parts of Saudi Arabia, the rapid development of business complexes and commercial centers is boosting the market, as business travelers need convenient transportation to explore the landscape.

The purposes included in this report are:

• Vacation (Fastest-Growing Category)
• Special Events
• Business Trips (Largest Category)
• Others

Propulsion Insights

• The internal combustion engine (ICE) category will hold the largest market share in 2024.
• One major factor boosting ICE car demand is that they are easy to maintain, repair, and affordable in comparison to others.
• The gasoline and diesel fueling infrastructure in the kingdom is better developed than the EV charging network, which makes conventional vehicles more preferable.

The propulsions included in this report are:

• Battery Electric (Fastest-Growing Category)
• Internal Combustion Engine (ICE) (Largest Category)
• Hybrid Electric

Space Insights

• Compact cars are estimated to hold the largest market share in 2024.
• In comparison to larger cars, compact cars are easy to operate and cost-effective to maintain.
• These models are ideal for navigating in crowded and urban areas and easy to park owing to their easy maneuverability.

Some other space insights analyzed are:

• Compact (Largest Category)
• Mid-Size (Fastest-Growing Category)
• Full Size

Al-Riyadh Is Largest Provincial Market

• Al-Riyadh is leading the Saudi Arabian car rental market by holding 35% market share in 2024.
• The strong presence of the tourism sector and technological developments in this province are the major factors propelling the market.
• There are several major commercial centers and business hubs in this province, which is contributing to the increasing demand for rental cars. This is because corporate workers, tourists, and travelers need efficient transportation to move from one place to another.

The provinces analyzed are:

• Al-Riyadh (Largest Province)
• Makkah (Fastest-Growing Province)
• Al-Madinah
• Al-Qaseem
• Eastern Region
• Aseer
• Tabouk
• Hayel
• Northern Border
• Jazan
• Najran
• Al-Baha
• Al-Jouf

Competitive Landscape – Fragmented

This market is dominated by the big players, such as Theeb and Hanco. The Saudi Arabian car rental market is highly competitive. It is categorized by the rising concentration on infrastructure developments and technological innovations.

Saudi Arabia Car Rental Market News

• In April 2024, Budget Saudi, a car rental company, renewed its budget and payless franchise agreement with the Avis Budget Group.
• In December 2023, AI Jazira Equipment Company Limited (Auto World), a car rental company, was acquired by United International Transportation Company (Budget Saudi) for USD 121 million (SAR 455 million).
• In July 2023, the Saudi transport authority brought Lucid EVs to the car rental offices of Theeb Rent-A-Car.