Today's Edition
YOUSEF AL ARABI (ABU DHABI)
The UAE car rental market is expected to grow at a compound annual growth rate (CAGR) of 8.9% from 2023 to 2028, according to a report by the consulting, data analytics, and market research firm MarkNtel Advisors.
The report, which was seen by Aletihad, states that car rental services are gaining increasing popularity across the UAE due to the rising influx of tourists who prefer to use rented cars to get around during their stay in the country.
The report attributes the majority of the market expansion to the UAE government’s growing emphasis on economic diversification away from the oil and gas sector by promoting the tourism sector to attract more visitors to the country. It further explains that the increasing encouragement by the UAE government for the adoption of electric and hybrid vehicles by providing incentives is likely to generate growth opportunities for the major players in the market with an expected rise in the fleet size in the coming years.
Furthermore, easy licensing is showcasing an intensified competition among the prominent car rental companies to offer superlative value-added services rather than merely focusing on price undercutting.
The report points out that in 2020, the COVID-19 pandemic had a negative impact on the car rental market as most car rental services were suspended due to the numerous precautionary measures taken to curb the spread of the disease. Additionally, the majority refrained from using rental services and instead opted for personal vehicles to avoid the spread of the virus.
However, with the gradual improvement and control over the spread of the disease, the precautionary restrictions were lifted and allowed the resumption of business operations. In turn, not only did car rental services resume, but the country also witnessed an increasing influx of tourists, which in turn
led to an increase in the growth of the car rental market across the country.
Online Bookings to Dominate the Market
Online bookings are expected to capture the largest share of the UAE car rental market during the 2023-2028 period. This is primarily attributed to the rising proliferation of smartphones and internet penetration, coupled with the ease of selecting the most suitable cars for rent after comparing different cars on websites.
The report highlights that in addition, car rental service providers are increasingly relying on online portals due to their ease of use and convenience. The UAE is witnessing growing customer preferences towards online channels for car rental services, driven by the emergence of several car rental service apps, major upgrades in existing platforms, and the emergence of subscription-based services.
Business Applications to Contribute Significantly
Business applications are likely to contribute significantly to the market expansion by 2028, driven by massive government investments in development across the tourism sector and improving road connectivity to cater to the tourists’ local transportation requirements.
