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UAE’s Car Rental Sector Picks Up Speed

  • Published by Vedat
The UAE’s car rental sector seems to have successfully navigated challenging economic times and an increased demand for budget vehicles, with continued growth forecast by new research.
Continued economic uncertainty in the UAE has altered the car rental landscape, presenting new challenges, but also opportunities, to rental companies.

Consumers Want Budget Options, And Little Tastes Of Luxury

After years of catering to a predominantly luxury travel market, a marked rise in budget travel to the UAE has necessitated car rental companies expanding their fleets to include more cost-effective vehicles. A further way in which car rental companies in the UAE are remaining reactive to the market can be seen in their allowing the rental of luxury cars by the hour as well as by the day, with customers still wanting to sample the lavish lifestyle of the country’s recent past, despite tightened purse-strings.

The Economy’s Impact On Car Rental

The challenging economic conditions have not been solely detrimental for the UAE’s car rental sector however. Indeed, it grew at a CAGR of 5.38% between 2008 and 2012, reaching AED781.9 million (US$212.9 million). The country’s relatively small size and predominantly road-based transport infrastructure, coupled with the lack of domestic airlines, means that the demand for rented cars remains high. Whilst rental companies have been forced to slash their prices thanks to increased competition in the market, an increase in car loan rejections has boosted demand, with renting being more affordable than buying a car. Additionally, the prevailing economic climate has led more UAE citizens to holiday domestically, which has had a positive impact on the car rental market.

Thus, Timetric’s research predicts continued growth in the UAE’s car rental sector until 2017, with sales forecast to record a CAGR of 4.88%, reaching AED99.2 million (US$270.2 million) in 2016.
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