Review of Saudi’s car leasing industry

It can be difficult to choose between buying or leasing a car. Priorities usually determine which option is selected. It is purely a financial issue for some drivers. Which makes them consider the least expensive option.

Others focus on the benefits of ownership. Let’s understand better the Saudi car leasing industry and its relation to insurance.


Car Leasing Market in Saudi Arabia

The market for leasing cars in Saudi Arabia expanded at a CAGR between 2012 and 2017, both in terms of transaction value and fleet size. The development of end-user industries, the increased rate of tourist arrivals, the volume of business travelers, and other factors were some of the causes that drove the growth of the long-term car leasing market in the country. The car leasing business was significantly influenced favorably by the country’s influx of tourists where the inbound arrivals to the holy cities of Makkah and Madinah as well as commercial travel to cities like Riyadh and Jeddah increased.


The industry saw a general growth in fleet size as a result of escalating competition, rising demand, and expanding market penetration throughout the country’s numerous cities and provinces. The quality of services provided by car leasing companies in the country has improved due to increased market competition, which has attracted more clients. Access to services has improved as a result of the country’s rising technological advancement.


Car Leasing Market Segmentation in Saudi Arabia


– By Market Players: The car leasing market is dominated by car leasing companies in terms of revenues and fleet size. As a result of their abundance in the most sought-after destinations, such as Riyadh, and Jeddah, the Eastern districts like Dammam, and others. Accessibility, dependability, quality of services, popularity, online booking, and similar other elements are the main drivers behind the dominance of car leasing companies.


– By Region: the central region has the biggest market share in terms of transaction value since it has the most developed infrastructure and a high concentration of businesses operating in a wide range of industries. The holy city of Makkah, Medina, and the commercial hub in Jeddah, along with the development of the tourism and hospitality sectors in these areas, give the western region its significance. The Eastern region of the KSA is the largest geographically and has a significant position due to having the second-largest oil and gas reserve in the world. The lowest share is in the southern and northern regions, where there are fewer establishments and cities that are still in the stages of development.


– By End Users: The expansion of end-user sectors has a significant impact on the demand for car leasing services. Considering the fleet size, the logistics industry has the highest proportion, followed by the FMCG and oil and gas industries. The construction industry has a significant share as well.


Leased Car Insurance


If you decide to lease your next car, it’s necessary to evaluate both leasing rates and offers. You should also make sure you are aware of the requirements of the contracts that bind you to your lessor and insurance provider.

You should be mindful of the following in your insurance coverage:


  • The insurance value is the market value of the car when the insurance is requested.
  • Comparison between the insurance premium’s worth before and after deductions.
  • The deductible amount that you must pay when filing a claim before the insurance company covers the remaining costs.
  • Understanding the criteria that the insurance company employs to determine the depreciation rate.


Leased car insurance coverage may have the following terms and conditions:


  • You promise not to use the car for anything else but what’s written on the policy.
  • Taking on more passengers or cargo than is permitted by law.
  • The use of the car in racing and competitions.


Future Prospects for Car Leasing Market in Saudi Arabia


The market for car leasing in Saudi Arabia is anticipated to expand as a result of factors like an increase in tourists, a larger fleet, increased market competition, an increase in the number of businesses and people employed, and the growth of end-user sectors. It is anticipated that car rental companies would continually update their IT systems to handle information more quickly and accurately, provide greater service, flexibility, and security to the end users, and improve fleet management. Car leasing businesses’ expansion of their business into smaller cities will be crucial to the industry’s revenue development. In accordance with Saudi Arabia’s Vision 2030.

In order to lessen the country’s reliance on the oil industry and to lower unemployment, the government plans to develop seaports, railway lines, airports, and manufacturing facilities. As a result, the construction industry is an end-user segment and a promising market for companies that provide car leasing services.


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