"Rent a car," or car rental services, are when a company offers vehicles to customers on temporary bases and charges them based on the type of vehicle chosen, miles/hours driven, and the number of days, among other parameters. These services are swiftly gaining popularity across the UAE, owing primarily to the mounting influx of tourists, pilgrims, & migrants using rental cars for local commute.
The UAE Rent a Car Market is projected to register around 8.9% CAGR during the forecast period, i.e., 2022-27. Most of the market expansion would be driven by the growing focus of the UAE government on the economic diversification away from the oil & gas sector, i.e., portraying massive expenditure on the tourism sector to attract tourists, pilgrims, and migrants to the country. As a result, the demand for car rental services for local commute is increasing swiftly across the country and driving the UAE Rent a Car Market.
|Study Period||Historical Data: 2017-20|
|Base Year: 2021|
|Forecast Period: 2022-27|
|Region Covered||Dubai, Abu Dhabi & Al Ain, Sharjah & Northern Emirates|
|Key Companies Profiled||Thrifty, Hertz, Emirates Transport, Massar Solutions, Sixt Rent a Car, Fast rent a car, Kayak, Europcar, Avis Rent a Car, Dollar Rent a Car, Others|
|Unit Denominations||USD Million/Billion|
Besides, favorable policies & easy licensing in the country are leading to the consumer inclination toward using rental cars for commercial applications like cab & taxi services, etc. In addition, massive expenditure on hosting Auto Expos, where the event spans around 6 months & expects more than 3 million people, is another crucial aspect playing a prominent role in propelling the demand for car rental services in the UAE.
Moreover, growing encouragement by the UAE government for the adoption of electric & hybrid vehicles by laying out incentives is also likely to generate growth opportunities for the leading market players with an anticipated rise in the vehicle fleet over the coming years. Furthermore, easy licensing is showcasing a mounting competition between prominent car rental companies in the UAE for offering superior value-added services instead of just heading toward a price war.
Such strategies include services like a sliding scale termination policy, pooled mileage for corporates, and guaranteed replacement of vehicles during servicing, among others. Hence, these aspects indicate that the UAE Rent a Car Market is set to observe an upward trend through 2027.
Impact of Covid-19 on the UAE Rent a Car Market
In 2020, the Covid-19 pandemic had a decelerating effect on most industries across the UAE, and the Rent a Car Market was no exception. All car rental services were suspended in the country owing to the imposition of lockdown & stringent movement restrictions by the government to curb the spread of this dreadful disease.
Additionally, the severity of the disease was so concerning that most people restrained themselves from using rental services and instead chose personal vehicles to avoid the virus spreading. As a result, the market witnessed a downward trend and caused massive financial losses for the leading players & stakeholders.
However, with gradual improvement in the pandemic situation, the government uplifted the restrictions and allowed the recommencement of business operations. It, in turn, not only resumed the car rental services but also demonstrated a mounting influx of tourists, which, in turn, surged the growth of the UAE Rent a Car Market.