How do UAE’s Car Rental, Leasing, And Limousine market dynamics impact its Automotive & Transportation sector?

This whitepaper dives into the vibrant landscape of the UAE's car rental, leasing, and limousine market, presenting a comprehensive analysis of its outlook. With the UAE's status as a global hub for tourism, business, and luxury, the transportation sector plays a pivotal role in facilitating seamless mobility.
Explore the market's dynamics, encompassing government rules, regulations, and initiatives that shape the industry's growth trajectory. This paper aims to analyze the industry's positioning, market overview, and ecosystem, providing insights into the factors influencing growth and the challenges faced. Additionally, it highlights emerging trends, allowing top industry executives to anticipate and navigate future opportunities in this dynamic marketplace.

1. The UAE Car Rental and Leasing Industry is highly unorganized with the small fleet operators dominating the landscape

1

65-70% Small Fleet Operators (SFOs) (< 100 Fleet)

• 100+ players with majority of the players around Dubai, Abu Dhabi, Sharjah & Fujariah
• Account for 3-5% of overall fleet size
  • Includes companies such as Butterfly rental, 111 Rent a Car LLC, 24*7 Car Rental.
  • Prefer non commercial locations for opening up rental space to cater especially to local demand
  • Has majorly On spot booking option only.
• Strong competition from aggregator based platforms which have been expanding rapidly. Customers are directly able to compare price of the SFOs with that of players on aggregators’ portals, resulting in lower translation into sales

2

15-20% Medium Fleet Operators (MFOs) (Between 100-1000 Fleet)

• Around 20-30 players with major fleet in Dubai and Abu Dhabi.
• Account for 7-9 % of overall fleet size
  • Includes companies such as Epic, Carlease, U Drive, PayperKay and others.
  • Mostly work on Spot rates with few long term contracts & depend upon brokers, direct company customers or transportation companies to get the business.
• Few of the companies have started collaborating with aggregator platform and have online booking option such as Carrental.com and Economycars.com

2

10-15% Large Fleet Operators (LFOs) (>1000 Fleet)

• ~15 players with Major Airport location.
• Account for ~85% of overall fleet size
• Majority of the players are global players such as Thrifty, Hertz , Budget rent a car, Europcar.
• Emirates Transport is the only local company backed up by government support and holds the highest fleet size (20K+) in the UAE.

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1.1 The Rental industry is currently at a late growth stage, where there is a need for better connectivity, customer centric approach & tech advancements

This phase is driven by global players catering t o local demand from corporate and government bodies

I: EMERGING PHASE <2000

• During this time period, International car rental companies started establishing their business in partnership with local companies such as Thrifty car with A.A.Al Moosa Enterprises and Diamond with Al Habtoor Group.

The UAE Car Rental Market is at a late growth stage (CAGR of -~0.5% during 2015-2020 in terms of fleets).
Car rental market driven by entry of new players, rising tourist spots and growing UAE economy

II: GROWING PHASE 2000-2025

• Entry of more global and local players resulting in increased supply of rental cars
• Influx of tourists with fast evolving infrastructure of Emirates leading to an increased demand for short term car rental services.

Car rental market driven by expected mass level of tourists and corporate clients with major online booking and electric/hybrid vehicles

III: MATURITY PHASE >2025

• Better connectivity, Customer centric approach and technological advancements will lead to the future growth of industry.
• Car rental companies to diversify their service portfolio by providing leasing services and other additional services.

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1.2 While the Leasing industry shows some promise as customers trust the companies, they seek to expand their service portfolio with more value added services

Phase driven by global players catering local demand from corporate and government bodies.

I: EMERGING PHASE <2000

• People were reluctant in leasing a car during this period as they lacked the trust in these car leasing companies.
• Few companies were witnessed to provide leasing services for short term basis with a limited fleet size.

The UAE Car Leasing Market recorded a revenue CAGR of 1.6% during 2015-2020. Car leasing market is driven by new market players entry, rising corporate sector and growing the UAE economy

II: GROWING PHASE 2000-2025

• Increase in working expats in the UAE from different countries during this period increased the demand for car leasing services.
• Increased trust on leasing companies by the end users was witnessed during this period.

Car leasing market driven by growing corporate offices and new age electric and Hybrid vehicles.

III: MATURITY PHASE >2025

• The UAE car leasing market is anticipated to grow in the future with the rising number of business traveler entering the country and staying in the country for around an year.
• The leasing companies will also expand their service portfolio by providing short term lease and other value added services

1.2.1. As far as leasing is concerned, the cost and flexibility of duration played a key role in end-user’s preferences

Factors	Description	Importance scale for Households	Importance scale for Corporate
Cost	Monthly charges, down payment charges, vendor charges on per KM basis for extra consumption over the set limit, Cheapest car option at most preferred location (airport and off airport) are the factors that end users consider.
Duration	Ability to select among hourly, daily, weekly, monthly, annual and other flexible plans (per day or by KM run). Duration preferred for leasing a car is generally 3 years majorly by the expats.
Customer Friendly	Presence of roadside assistance, 24*7 customer care, office location, doorstep delivery and other customer friendly facilities are preferred by the end users which service as a value added service.
Vehicle Type and Replacement Fleet	Types of vehicles by brands, mileage, engine size, seats a company can offer Option to avail replacement vehicle at the time of maintenance or vehicle damage.
Technology	Availability of features such as GPS, live tracking, WIFI, cloud computing, vehicle management and several others.
Maintenance and Other Charges	Availability to cover additional charges such as maintenance, insurance, breakdown covers, registration and traffic fines over and above the rental or leasing charges.

Note: Refers to

1.3. In contrast, the Limousine Industry is in its growing phase and can be expected to expand further due to development of more corporate offices & international tourists

Phase driven by local players catering the demand from corporate and government bodies.

I: EMERGING PHASE <2005

• This phase had only the offline mode to book the limousine services and no online booking service was available.
• Few companies witnessed such as Emirates Transport, Dubai Taxi Corporation and others.

The UAE Limousine market is at a growing stage and is projected to grow at a CAGR of 7.3% in terms of gross revenue during the period 2020-2025.

II: GROWING PHASE 2005-2030

• Influx of tourist and business travelers demanding for limousine services.
• Additional services such as chauffer service, online booking and others provided.
• Entry of huge number of domestic & international companies.

Car Limousine market driven by growing corporate offices and international Tourists.

III: MATURITY PHASE >2030

• The UAE Limousine market is anticipated to grow in the future with the development in the non-oil sectors of the UAE contributing the demand for limousine service by the companies and business travelers.
• The limousine companies will also expand their fleet size and their branches in other emirates.

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3. But, government initiatives such as Ghadan 21, Energy strategy 2050 are steps in the right direction to spearhead growth in rental, leasing and Limo industries

Smart Dubai 2021 Initiative

• Smart Dubai office launched 130+ initiatives in partnership with government and private sector entities with key focus on improving the lifestyle of residents and visitors.
• Electric Charging stations to be set up to boost the use of environment-friendly cars.
• Smart parking system to tell drivers the availability and location of parking spaces
• Live Traffic Monitoring: Live updates on traffic helping people to plan the journey before they leave.

Ghadan 21 Initiative

• Government of Abu Dhabi launched 50+ initiatives with an investment of AED 50 Bn with key focus on promoting business and reducing the cost of living.
• Toll Exemption: Exempting all vehicles from road toll tariffs by the end of 2020.
• Fee Exemption: Suspending tourism and municipality fees for tourism and entertainment sectors
• Registration Fee: Exempting commercial vehicles from annual registration fees till the end of 2020.

ENERGY Strategy 2050

• The UAE Ministry of Energy & Industry launched the plan in 2017 aimed at increasing the contribution of clean energy and reducing carbon Footprint.
• 10% of all new vehicles in Dubai will be hybrid or electric by 2020 with the aim of reaching 2% of all cars in Dubai as electric or hybrid vehicles.
• Target of converting 50% of the taxi fleet to hybrid cars by 2021
• The long-term target is to have a 10% electric or hybrid vehicles fleet by 2030.

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4. With the industry now tapping into the power of ML, IoT and other sustainable alternatives, UAE’s automotive & transport sector’s future looks bright

Technology Upgradation and New Players

• Customer purchase frequency (business stickiness) increased roughly by 30% while overall customer purchase volume shot up to over ~35% after car rental and leasing companies launched their own mobile app.
• Customers spend ~35% more time on the app looking for services as opposed to non-app customers.
• New car rental companies such as Udrive and Ekar launched car rental service with booking per minute in Dubai and Abu Dhabi via mobile platform.
• Massar Solutions, released PayPerKay in 2015 in the UAE as one of the most unique booking service that charge customer on the Km used.
• Emergence of Aggregators such as Selfdrive, Kayak, Carrental, Rentalcars and Beno creating an on- demand, mobile-friendly reservation process through its website and Application platforms

Security and Tracking

• With artificial intelligence, sensors in the car can gather and store information on the vehicle’s performance. Internal cameras record all activities inside the vehicle, which enable smart systems to make autonomous decisions based on the state of the driver and the passenger.
• With the actionable insights that can be harvested from the data gathered by the IoT-enabled sensors, management can take a deep look into the operational health of their assets, schedule preventive maintenance, and prolong the service lives of their cars.

Electric Fleet

• The Board of Executive Directors of Roads and Transport Authority (RTA) has endorsed initiatives to transform 90% of limousines operating in Dubai into environmental-friendly vehicles, hybrid/electric, by 2026. RTA added 200 Tesla cars in 2019 and is further planning to convert 80% of its fleets with hybrid vehicles by 2025 and 100% by 2027.
• Dubai Electricity and Water Authority DEWA enhances green mobility through the EV Green Charger initiative with more than 530 charging points in Dubai in October 2021. The ‘Green Charger Initiative’ is aimed at driving the EV and auto component markets.

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