The Saudi Arabia Car Rental and Leasing Market is segmented by vehicle type, vehicle body type, and booking type. In 2020 the Saudi Arabia Car Rental and Leasing was valued at around $1470 million and it is projected to reach $2490 million by 2026. The Kingdom is also anticipating a CAGR of 8.52 percent between the period 2020-2026. The car rental and leasing market in the country is gaining popularity primarily due to the increased presence of online rental and leasing platforms. With 95.7 percent of the Kingdom’s population having access to the internet, the presence of online platforms is expected to help the market grow.
Additionally, as the presence of online platforms gradually grows, the car rental costs have come down significantly which is encouraging customers to rent a car rather than using taxis or public transportation for their trips. Additionally, the Kingdom has a lot of holy sites like Mecca and Medina that witness a vast influx of tourists during Eid Al-Fitr and Eid Al-Adha festivals that adds to its growth. As a part of Saudi Vision 2030, the government is encouraging private organizations to set up their offices in the country and is also expected to increase the demand for corporate rentals and leases.
Undoubtedly, the Covid-19 pandemic has impacted the market growth due to the lockdown and travel restrictions, but with eased restrictions and the lockdown being lifted the market is expected to get back to its normal growth rate by the end of 2021.
Online tourist vehicle bookings are increasing in the country and globally 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.The car rental market in the country is directly related to trends in the automotive market and with sales of cars increasing steadily, service providers have to include the latest SUVs in their fleet to stay ahead of their competitors.
Saudi Fransi for Finance Leasing is one of the most well-positioned leasing services in the Kingdom. How are you faring currently?
Surely, we had a good run during 2020 and were able to grow despite adverse pandemic impact. Now, having a successful year which gave us the momentum to charge into 2021 with full optimism, and thus, resulting a record portfolio growth in comparison to all our previous years. So, I can confidently tell you that currently our continues upward trajectory is helping us in grabbing more market share.
Saudi Fransi for Finance Leasing has over 3500 corporate customers. Can you tell us a bit about some of the distinctive products and services that you offer?
At SFL our corporate customers are our partners in success, we assess them fairly so that they are not overly burdened after signing a contract with us. We offer Islamic finance lease (Ijarah Muntahia Bittamleek) on the purchase of plant & machinery and car fleets on a very competitive rates with excellent insurance coverage, no late payment charges and in economic downturn like in 2020 we offer our customers to restructure their loans.
Can you elaborate on Ijarah Muntahia Bittamlek?
Our product Ijarah Muntahia Bittamleek is an Islamic way of lease financing, in which, we purchase an asset and provide it to the customer on lease for an agreed time period with monthly installments and after the lease period is matured the asset is sold to the customer and its ownership is transferred to him at an agreed amount.
The Covid-19 pandemic has affected almost every sector of the economy. How was Saudi Fransi for Finance Leasing affected by it? How did you weather the storm?
Truly 2020 was a challenging year, we faced shut down for straight two months and a sudden threefold increase in VAT rate which reduced buying power for prospective customers.
In wake of this harsh reality, our first focus was to service customers during the lockdowns by shifting toward digitalization. Further, under the guidance from Saudi Central Bank (SAMA), we deferred installment for all retail customers related to health sectors and all SMEs, thus, to ease financial anxiety of our customers.
Our second challenge was business growth, which we handled in two parts. Firstly, we partnered with auto dealers in marketing campaigns to convince consumers that they should benefit by buying before the VAT rate becomes triple. This helped us to compensate for sales lost during the lock downs. Secondly, we increased our presence in the market by covering more dealer locations which helped us to increase market share.
Saudi Fransi for Finance Leasing has an option for corporate fleet finance. Can you elaborate on it? What are some key features? What are some key features of the machinery and equipment services that your leasing company provides?
We are providing finance lease on a very attractive profit rates, a dedicated relationship manager and sales/services team. Also, we have customized fleet options and an excellent insurance coverage.
Going forward, what are your plans? Where do you see Saudi Fransi Leasing in the next five years?
Our moto is to be number one choice for consumers, and we aim to achieve it by going digital. We want to improve customer journey by providing them digital channels, thus, making it remarkably easy of doing business with us.
What is the outlook of the banking sector in Saudi Arabia?
Banking sector in KSA is continuously growing and all banks have aligned their business strategy as per KSA’s vision of 2030 with special focus on digitalization. Two new digital banks (STC Pay and Saudi Digital Bank) have been given license by Saudi Central Bank to start the business, and more digital banks to follow.
Covid-19 pandemic gave rise to more digital way of doing business which has streamlined the banking processes and has cut down on the red tape involved in the banking.