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Car Subscription Industry

 Automotive Subscription Services Market size exceeded SAR 11.25 billion in 2019 and is
poised to register a CAGR of over 40% between 2020 and 2026. [4]
 Saudi government is looking to develop domestic automotive industries and is
encouraging global vehicle manufacturers to establish local operations, which would
further drive Saudi Arabia’s passenger car market in the coming years.
 KSA accounts for about 40% of total vehicles sold in the Middle East. [5]

 Effective July 1, 2020, Saudi Arabia hiked its VAT from 5% to 15% as part of measures
to address the fiscal imbalance between public revenues and expenditures and counter
the financial and economic burden imposed by COVID-19. [6]
 The increased VAT rates has seen a glut of second-hand cars entering the market as a
result of consumers trading in their existing cars in anticipation of buying new cars before
price increases kick in.

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Car Subscription Industry
 Amidst the shift in the consumer buying decision process, the cogs of the traditional
“buying or owning” are fast being replaced by “leasing” and to the latest “subscribing”.
 This newest trend of “Car Subscription” is gaining popularity, especially amongst the
urban young middle class, where the needle has shifted from owning to experiencing;
and subscribing to a car makes car ownership and driving easy and hassle-free.

Automotive Subscription Services Market[4]

>SAR11.25 BN >SAR150.03 BN

 The low financial liability associated with vehicle subscription compared to vehicle
ownership is supporting the market demand. The rising automotive prices along with
additional maintenance and insurance costs are enabling consumers to prefer vehicle
subscriptions. The growing market demand for Mobility-as-a-Service (MaaS) is another
factor driving the industry growth.
 In the post-COVID-19 scenario, automotive subscription services will become more
popular as consumers will prefer personal vehicles over public transportation. The vehicle
subscription services market is expected to grow exponentially post-COVID-19.

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Car Rental Industry
 The global car rental market size was valued at SAR348.52 billion in 2019 and is
projected to reach SAR802.8 billion by 2027, registering a CAGR of 10.7% from 2020 to
2027. LAMEA is anticipated to exhibit a remarkable growth rate during the forecast
period.[7]
 Car rental or car hire agencies are agencies that rent automobiles for a short period at a
certain cost. This service is often organised with many local branches, which are
generally located near airports or busy areas in the city and are complemented by a
website to allow online reservations.
 Factors such as the rise in the trend of on-demand transportation services and the low
rate of car ownership among millennials drive the growth of the car rental market.
 Besides, the advantages of millennials are inclined towards car rental owing to its
advantages such as cost-cutting and fuel economy.
 Furthermore, buying a new car and maintaining it is costlier than renting a vehicle on a
yearly basis. Hence, a lower rate of car ownership among millennials drives the growth of
the car rental market.

SAR802.8

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 For KSA, revenue in the Car Rentals segment is projected to reach SAR1.81 billion in
2020.[8]
 Revenue is expected to show an annual growth rate (CAGR 2020-2025) of 19.0%,
resulting in a projected market volume of SAR4.32 billion by 2025. [8]
 User penetration is 5.5% in 2020 and is expected to hit 11.7% by 2025. [8]
 The average revenue per user (ARPU) is expected to amount to SAR953.53. [8]
 In the Car Rentals segment, 58% of the total revenue will be generated through online
sales by 2025.[8]

Revenue from Car Rentals in KSA[8]

5

4.5 4.32
4.12
4
3.73 3.74
3.62
3.51
3.5 3.3

3
in billions (SAR)

2.71
2.5

2 1.81

1.5

0.5

0
2017 2018 2019 2020 2021 2022 2023 2024 2025

Year

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 As per a research in 2019, the Hyundai Accent gained the market crown, booming over
80% from the previous year and reaching 7.7% of share. [9]
 In second place, the Hyundai Elantra – gaining 3 spots – holding 6.8%, ahead of the
Toyota Camry with 4.6% and the former leader, the Toyota Hilux, with 4.5%. [9]
 The Toyota Yaris Sedan jumped in 5th place – surging 36.4% – with 4.2% of market
share, outpacing the Hyundai Sonata – down 2 spots – and the fast-growing Nissan
Sunny.[9]
 In eighth place, the Mazda holding 3.2% followed by the Toyota Corolla, which lost 3
positions from 2018, and the Isuzu TF, closing respectively with 3.1% and 3%. [9]
 The Company should focus on building a fleet which will be a combination of compact
sedans, Suvs, and Luxury cars.[9]

Most Popular Cars in KSA [10]

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Car Repair Service Market
 The car maintenance service market is valued at SAR1.124 trillion in 2018 and is
estimated to reach SAR1.793 trillion by 2026 at a CAGR of 5.8% during the forecast
period.[11]
 Automotive Repair and Service Market include companies that offer aftermarket
maintenance and servicing of the vehicles to improve the life of the vehicle by replacing
the vehicle consumable products such as tires, batteries, wear & tear parts, air filter,
cabin filter, oil filter, wiper blades, collision body, starters & alternators, and others.
 The Automotive Repair and Service Market is a fragmented market due to the presence
of several players and local vendors as well to perform the tasks.
 Increase in the sales of used cars creates numerous opportunities for the key players
operating in the global automotive repair and service market.
 Saudi Arabia’s auto services and spare parts market is estimated to grow 6 percent
annually over the next five years. Initiatives such as allowing women to drive in 2018
coupled with a concerted shift toward implementing cleaner technologies are having a
positive impact on the market.[12]

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Cars Sold by Dealerships in KSA
Saudi Arabia car sales was at level of 456,311 units in 2019, up from 340,218 units previous
year, this is a change of 34.12%. The data reached an all-time high of 672,300 units in Dec
2015 and a record low of 340,218 units in Dec 2018. [13]
The used car industry in Saudi Arabia has grown at a CAGR of 0.8% on the basis of gross
transaction value over the period 2014-2019 and declined at a CAGR of -2.4% on the basis
of sales volume.[14]

Number of Cars Sold in KSA [13]

DATE VALUE CHANGE, %

2019 456,311 34.12 %

2018 340,218 -19.80 %

2017 424,216 -22.79 %

2016 549,400 -18.28 %

2015 672,300 6.26 %

2014 632,700 11.00 %

2013 570,000 5.56 %

2012 540,000 17.39 %

2011 460,000 2.22 %

2010 450,000 15.38 %

2009 390,000 -2.50 %

2008 400,000