The rewards far outweigh the risks in developing car rental markets such as Saudi Arabia, where population growth and an increased number of pilgrims is igniting demand.
The car rental market in Saudi Arabia is poised to grow by 20 percent to reach more than SR2.4 billion ($640 million) in the next two years, according to Said Al-Bassami, head of transport and car rentals committee at Jeddah Chamber of Commerce and Industry (JCCI).
The expected growth rests on a number of factors, including population growth, the growing numbers of pilgrims, Umrah performers and visiting businessmen coupled with the developmental plans experienced by the Kingdom in oil and nonoil sectors, Al-Bassami told Al-Eqtisadiah daily.
Car rentals for individuals capture more than 70 percent of the overall sector activity whereas the remaining 30 percent covers contractual rental deals with governmental and private sector agencies, he said.
Normally, the car rental activity flourishes in certain seasons such as Eid Al-Fitr and Eid Al-Adha festivals where rate of operation reaches 100 percent but in normal days it goes down to 70 percent, he added.
He called for removal of some obstacles facing the sector, notably the increased rates of insurance which were hiked to 100 percent in addition to circumventing by some insurance companies and absence of governmental entities as referrals for such complaints.
Despite the growing demand on car rentals, it still remains highly vulnerable to risks as some individual customers do not abide by rental conditions, whether in terms of handing over cars at the deadline, and payment or parking of cars at different locations, he said.
Meanwhile, Anees Moumina, CEO, SEDCO Group, said the business and economic boom prevailing in the Kingdom and increased number of visitors had raised the pace of car rental demand. The car rental market is expected to hit SR4.1 billion by 2016, he added. ___
Tags: saudi arabia