The launch of the Dubai office marks the start of Hanco’s regional expansion into the GCC countries with further five office openings scheduled for later this year.
Hanco has started its Dubai car rental and limousine services with 25 staff and 100 cars and, if forecasted demand is realised, the company envisages an operation of up to 100 employees and 800 cars before the end of 2013. Indeed, Hanco has already secured a limousine service contract for the Mövenpick Hotel and is waiting for the outcome from a number of confidential tender bids which, if successful, could accelerate the number of cars required to over 2,000.
“We decided to open our first overseas office in Dubai for a number of reasons. The first is to serve our existing customers who require regional and international assistance. Secondly, this supports the vision of our shareholders to expand the Saudi-headquartered brand into other markets Thirdly, Dubai is a well-established tourist destination.” commented Hamad Al-Sulaiman, CEO & Managing Director, Hanco.
“The fourth reason is because Dubai’s IT and communications infrastructure is exceptional, and we see the trend for e-business extending into the car leasing business in a similar fashion to the way that is has become the norm for corporate level airline and hotel bookings,” added Al-Sulaiman.
Hanco estimates the size of the car leasing business in the UAE to be valued at more than US$545 million with annual market growth in excess of 5%. The company’s own market research has also identified that while the competitive environment features multiple players, there is not a single dominant company, with other businesses holding no more than 15% market share apiece.
Hanco arrives in Dubai with a sound pedigree. It operates over 17,000 vehicles and employs 1,600 people through a network of over 100 outlets managed by 13 regional offices. It also has 16 workshops and over 150 outsourced quick service facilities, across Saudi Arabia. The company is also preparing to implement a state-of-the-art Enterprise Resource Planning (ERP) system across its entire network, with the goal of effectively managing future commercial demand and growth.
The estimated market value of the car rental and car leasing sector in Saudi Arabia is approximately SAR1.4 billion (45,000 vehicles) and SAR1 billion (40,000 vehicles) respectively. The car leasing market currently holds the most potential, growing at around 20% per annum in Saudi Arabia.
According to Euromonitor, by 2016 Internet sales will increase to 21% of car rental market share in the UAE. In 2011, the current value of Internet sales grew by a remarkable 35% over the course of 2010, to take a 7% share of the market by origin of sales.
“The growth in online consumer sales has had a dramatic effect on the way airlines, hotels and car rental companies attract passengers, guests and clients, and on the way in which they operate. We are already seeing corporate clients take an online route to contract leasing, with many adopting telemetrics to measure, analyse and manage the efficiency of their car fleets,” said Al-Sulaiman.
Hanco currently offers fleet management, Hajj and Umrah services, equipment rental and logistics support in Saudi Arabia, while rental, operating lease, limousine and bus transportation services are part of both its KSA operation and new UAE presence.