The car rental market in UAE has been influenced by an influx of tourists, corporate organizations, business partners etc.The car rental industry has seen a great increase in the number of customers over the last couple of years. This is due to the fact that most tourists make use of car rentals for their travel experience when they come into the UAE. Because of the drive and momentum in the car rental industry, the government has brought about initiatives that have led to the transformation of these companies.
There has been an improvement in the services offered by the rental companies as most have embraced technological bases platforms for offering their rental services, this has also increased customer oriented services. Most tourists prefer booking with car rental services from the airport to reduce the cost of renting and traveling, and with the influx of customers it has led to a higher demand for rental services. Also corporate offices and organizations make use of these car rentals for the clients and corporate users.
There is bound to be an increase in car rental services especially during events and festivals like the Id el Kabir, Id el Mubarak, Dubai shopping festival, car shows etc. These events attract people into the Emirates and this makes us anticipate a great increase in demand in the car rental industry. Dubai and Abu Dhabi are currently the leading cities in the car rental industry as most car rental industries have their headquarters in them and perform their major operations within these cities. The Monthly Rent a Car Dubai companies are made up of a mix of both indigenous and foreign players such as Rental Cars UAE, Hertz, Rent a Car, Thrifty, Europcar, Diamond lease, Emirates transport etc.
In the long run what we want is sustainability and this can get achieved by good and favorable government policies. There is an ongoing trend and awareness in rental companies to replace their fleet of cars from gasoline vehicles to eco-friendly electric and hybrid vehicles in UAE. Some companies like Car Rental Dubai have started maintaining a fleet of electric cars like Tesla, Toyota, while others are still gradually adapting to the change.
How is the car rental market classified in UAE?
• By Emirates (UAE has 7 emirates in it this includes Dubai, Abu Dhabi, Ajman, Sharjah, Ras Al Khaimah, Fujairah and Mum Al Quwain).
The car rental fleet has been dominated by two emirates, this is Dubai and Abu Dhabi. This is due to the concentration of most big companies, corporate organizations and industries in the cities. Also most tourist locations are also located within these cities. So most car rental companies have their base of operations in these two cities and they have the highest population therefore accounting for the highest number of bookings in the industry.
Considering the Car Type (SUV, Sedan and Economy)
Economy cars account for more than 55% of car rentals in UAE. They are generally preferred by international tourists and keep a low profile.
Also mid-sized sedans and compact SUVs have about 30% while big sized SUVs and luxury vehicles contribute to the remaining 10% and 5% respectively. Car rental companies also focus on how they can reduce the general costs of operations in terms of maintenance and management and so prefer having an economical fleet of cars like Honda, Toyota, because of more profitability and cost management.
Who are the End Users (Individuals or Corporate)?
More than 70% of the car rental bookings are carried out by individuals and the remaining 30% by corporate organizations. Individuals prefer renting cars as compared to corporate bodies; they make use of these cars for their tourist trip and visiting any place of attraction.
Duration of car rentals are either long term or short term. Long term car rentals account for more than 70% of rental fleet as the major customers in this category are local residents and business travelers who are on short work trips in the UAE. The remaining 30% is carried out by short term rentals mostly international tourists who make use of car rentals for a period of 2 to 3 weeks.
Airport bookings have also had a share in the UAE rental fleet. There is more accessibility and comfort to tourists, visitors traveling into the UAE when they rent their car from the airport. So the airport is very strategic and has greatly contributed to the number of bookings in the car rental fleet in UAE.
The Big Players and Small Players in The Car Rental Market in The UAE
The competition in the car rental market has been very healthy and competitive, with Dubai and Abu Dhabi as focal points, the big players (i.e. the big rental companies) and small players (i.e. local rental companies) bring in different incentives to attract customers. Popular rental companies in operation include Rental Cars UAE, Thrifty, Car Rental, Hertz, Dollar National, Diamond Leave etc. The big companies own about 78% of the car rental fleet market while the remaining 22% is for the small local companies.
Major features and characteristics of Big companies include:
1. They are present across multiple locations in the UAE.
2. The have a fleet size above 1000 cars.
3. The offer online booking.
4. They have an active social media presence.
5. They are located at airports.
6. They offer little or no price negotiation.
For the small companies, they’re key features include:
1. Their location is limited, mostly residential areas.
2. The number of cars in their fleet can be as low as 30 vehicles.
3. They accept cash payment.
4. They’re prices are negotiable.
5. Limited or less sound media presence.
The major driving force of growth in the car rental industry in the UAE has been increase in the number of tourists, decline in oil prices, and rising trend in hybrid and electric cars as rentals. While the major challenge witnessed by the car rental industry includes cost of operation and maintenance, regulation changes and seasonal changes which causes price fluctuations etc.
Currently the COVID-19 pandemic has had a toll on the car rental industry around the world and it is slowly bouncing back as there has been an ease on the lockdown and car rental companies are taking all the necessary safety measures to safeguard their customers from the virus.