Saudi Arabia’s car leasing industry poised for further growth
The market for leased cars in Saudi Arabia has seen solid growth over the past several years on the back of a number of favorable conditions. Research from Glasgow Research & Consulting predicts that the sector’s growth will continue its trajectory in the years ahead.
Estimated to be worth around $772 million in 2023, Saudi Arabia’s car leasing market is projected to grow to around $1.3 billion by 2028, with a CAGR of 9.7% in the five-year period. An increasing number of companies adopting leasing solutions, and a growing bench of employees in the Kingdom are set to have a positive impact on the leasing and rental sector.
Additionally, the increasing number of women drivers, who were only recently given the right to operate vehicles, will provide a further impetus to demand.
Like the overall economy in the Kingdom, the leased car market is going through a period of transition. Having faired generally quite well post-pandemic, the major cities are enjoying rapid modernization, including a boom in electrical vehicles and other sustainable mobility.
As Saudi Arabia continues to grow into a global business hub, an increasing number of expats are relocating to the Kingdom, many of which enter into three or four-year contracts for leased cars. This is generally preferred because it is far easier than purchasing and selling a vehicle.
Various leading players in the local car leasing sector, like Hanco and Theeb, are homegrown, but international companies like Budget, Hertz, and Avis also have a foothold in the market, said Glasgow Research & Consulting. Some of the top models being leased are Toyota Camry, Hyundai Sonata, Nissan Altima, though some consumers prefer more luxury options like Mercedes-Benz E-Class and BMW 7 series.
Everyday commuting vehicles is the most popular segment: Sedans made up 43% of all leased cars in Saudi Arabia last year, and SUVs made up 39%, which premium luxury cars made up only 8%. Private leasing accounted for only around 19% of leases, with corporate leasing was 81%.
Looking ahead, Glasgow Research & Consulting said that digitalization will be key to expanding customer reach and ensuring sustenance. As the market matures, focusing on consumer retention and easy customer service experience will help companies in the landscape stand out.
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