Saudi Arabia Car Rental and Leasing Market 2025 – 2034

Reports Description

The Saudi Arabia Car Rental and Leasing Market is forecast to grow at a CAGR of 8.29% from 2025 to 2034. The market is expected to grow from USD 2.58 Billion in 2025 to USD 5.59 Billion by 2034.

Overview

The demand for affordable, flexible, tech-enabled mobility services has been high, driven in part by the Kingdom’s ambitious tourism strategies, growing domestic business travel, and changing business mobility culture. The new reality of travel routinely booked online, digital fleet management, and the new addition of electric vehicles (EVs) to the rental fleets have significantly influenced operator mobility considerations and are shaping the mobility circumstances for Saudi Arabia’s urban centers, particularly Riyadh, Jeddah, and Dammam.

The fleet mix is still largely made up of sedans and SUVs, though the quick growth of multi-utility vehicles is notable and is presumably attributable to increasing family sizes and the need to travel longer distances. Industry demand for flexible, affordable, tech-enabled mobility appears to be growing as the vehicle pool continues to modernize and move towards the mobilization of a larger customer group.

The marketplace now has increasing global transparency compared to prior experience through digital booking platforms, which is forcing operators to compete based on pricing strategies, which is being studied and expanded into improved customer experiences, driving heavy investment in operational technologies such as AI-based fleet tracking, digital payment operational models, and subscription-based rental.

Key Trends & Drivers

The Saudi Arabia Car Rental and Leasing Market Trends have tremendous growth opportunities due to several reasons:

• Vision 2030 and Infrastructure Drive: Saudi Arabia’s Vision 2030 framework sets ambitious goals to diversify the economy away from oil by attracting foreign investment, growing tourism in the Kingdom, and upgrading national infrastructure. This includes smart city eco-projects such as NEOM and several giga-developments along the Red Sea coast that support the establishment of new cities and economic centers. We will see greater demand for flexible mobility solutions, such as car rentals and long-term corporate leasing, to enable workers and expatriates and millions of business travellers.

• Growing Tourism Activities: As a part of Vision 2030, Saudi Arabia proposed to welcome over 100 million visitors annually by the end of 2030, making the Kingdom one of the top destinations for leisure and pilgrimage in the world. With the vast investment of the government in heritage sites, entertainment of massive scale, and coastal resorts, we have already begun to impact domestic and inbound visitor numbers to Saudi Arabia and are key growth drivers moving forward. Domestic and outbound passengers are the key drivers of large growth in the short-term car rental market and are especially significant in the key gateway markets of Riyadh, Jeddah, and Madinah, given that tourists will always want their freedom to travel across the city and regions when required, with the convenience of Private transport.

• Technology-Based Models: The car rental and leasing market of Saudi Arabia is gradually adopting technology either to modernise its operations or to improve the customer experience. The operators are utilising features such as contactless booking and payment, digital integrations, smart vehicle tracking, and AI-capable fleet management. Technology-based models can improve operations, reduce instances of theft, and provide customers with a frictionless rental experience. The form of technology adoption will depend heavily on consumer and commercial clients, especially with so many digital natives or people looking for convenience when they can. The technology will remain a driver of growth for the car rental and leasing sector.

• Rise of EVs: The government of Saudi Arabia is looking for ways to actively facilitate the adoption of electric vehicle (EV) opportunities through policy options, charging infrastructures, and localizing the production of EVs for the Vision 2030 agenda. It is a pragmatic step in starting the move towards a further sustainable journey, along with reducing reliance on fossil fuels. The push towards having more EVs will lead to rental and leasing companies being able to offer a more extensive fleet at the car hire and rental counters with either hybrid or fully electric vehicles that will appeal to green tourists, corporate clients, and increasing numbers of expats who now expect green options.

Key Threats

• Price Sensitivity: Price is still one of the leading factors for car rental customers in Saudi Arabia, especially domestic tourists on a budget or renters with shorter rental periods. Most travellers value low daily pricing over premium add-ons or additional premium services provided by the rental companies, therefore putting significant downward price pressure on operators. Rental companies must continue to balance remaining price-competitive while still upholding service levels. As longer price competition can put pressure on margins that lift profitability, they also have to deal with continuing upward price pressures related to operational costs.

• Fleet Maintenance: With the extreme desert climate, high daily usage of the vehicles, urban highways, and off-road capability of vehicles, Saudi Arabia presents many challenges in the maintenance of fleet vehicles for rental and leasing operators. In urban centers, such as Riyadh and Jeddah, many vehicles are subject to heavy traffic, which can produce wear and tear, aside from the harsh environment they are traversing. Beyond the city center, the vehicles also operate under extreme conditions- sand, heat, and off-road. Cumulative wear, sand damage, and seasonal peaks of travel all add up to contribute to vehicle depreciation. Fleet vehicles may not be immune to degradation if they are not addressed proactively, serviced regularly, and subject to necessary repairs where required. Therefore, deteriorated fleet quality may result in detriment to customer satisfaction and the overall reputation of the company in the competitive marketplace.

Opportunities

• With government incentives recently implemented in support of electric vehicles and a larger sustainability mentality, rental and leasing companies in Saudi Arabia are positioned to take advantage of the opportunity to add electric vehicles to their fleets. In addition, short-term car subscription models or on-demand rentals are a fantastic opportunity, considering the growing audience of urban millennials seeking flexibility with no long-term ownership commitment. Rental and leasing companies applying AI-based fleet analytics will have the opportunity to optimize utilization and predictive maintenance, thus lowering downtime and cost. There will be emerging demand for rental and leasing services in secondary cities and areas beyond Riyadh and Jeddah, particularly from regional tourists and new emerging business centers.

Category Wise Insights

By Type

• Car Rental: The car rental segment continues to be the largest component of Saudi Arabia’s mobility services sector. The expansion of the short-term rental sector allows choices for domestic travellers, expatriate residents, business clients, and tourists searching for flexible mobility solutions, from a few hours to weeks. While it is not limited to hours or the number of miles travelled, the availability of rentals from airports, cities, and on-demand self-drive rentals has increased with the insertion of technological reach and contactless pick-up and returns with mobile apps. Corporate clients represent another highly important sector of the rental landscape and utilize rental solutions related to temporary or permanent workers, on-demand rentals such as car sharing, and project-based services. International brands and car rental providers rely on franchise links or business partnerships to operate in the Saudi market to maintain fleet availability, service standards, and links to quick and seamless global booking networks.

• Car Leasing: Car leasing is a segment within the mobility services market that has experienced a considerable amount of growth over the last 5 years, as many corporate clients and high-value individuals move toward leased arrangements as opposed to outright vehicle ownership. Added benefits for leasing to consider include predictable monthly spending, lower down payments, maintenance packages, fleet upgrades, etc. A leasing arrangement is an efficient way for a company to administer its business rental vehicle fleet for its employees and help save costs in operating a fleet. An additional development within the fleet leasing market is the flexible lease arrangements, such as short-cycle leasing (3–12 months) or leases customized to gig-economy drivers and ride-hailing partner arrangements. Financial institutions and large vehicle leasing companies are increasingly entering partnerships to help bundle offers with insurance, servicing, roadside assistance, etc, which will only support the value propositions to corporate fleet customers.

By Propulsion

• Internal Combustion Engine Vehicles (ICE): Saudi Arabia’s rental and leasing fleets are dominated by ICE vehicles. ICE vehicles compose the vast majority of daily rentals, largely due to the exceptional cost-effectiveness, familiarity, established servicing network, and a multitude of options from entry-level hatchbacks to premium sedans and SUVs. Even with the global move to electrification, ICE vehicles maintain a substantial market share, primarily because of the continuing fueling infrastructure, attractive gasoline pricing, and wholesale pricing opportunities available in the Kingdom.

• Electric Vehicles (EVs): The EV segment is not well established in Saudi Arabia but will be an important area for growth in the next decade. The sustainability strategy from the Saudi government, which is related to its Vision 2030, places a robust emphasis on expanding the country’s EV segment. There are numerous activities currently in progress. Investment into charging infrastructure, charging local EV production methods, and specific incentives for fleet operators indicates that electric vehicles will be increasingly integrated into renting and leasing fleets. Early uptake of EVs will likely be in premium segments for corporate clients looking to align their transport policy with ESG goals. Some rental operators, albeit limited, will be trailing EV rentals, focusing on eco-tourists and premium individual rentals. As customer education increases and day-to-day charging availability improves in the market and between urban centers throughout the Kingdom and on highways, the share of EVs in rental and leasing will slowly start to increase.

By Vehicle Type

• Hatchback: Hatchbacks continue to be popular with travellers on a budget, drivers in the city, and short-term leasing customers who need a more fuel-efficient and smaller car to drive in the city. Hatchbacks hold a large percentage of the fleets offered by lower-cost rental companies, especially those with tourists, students, and young professionals as customers. Though they have a lower daily rental price, hatchbacks are also smaller and easier to drive and park on the congested streets of cities like Riyadh, Jeddah, and Dammam.

• Sedan: Sedans remain the first choice for business people, families, and corporate fleets. A rental sedan suits travellers who want comfort and space and are looking for the best value for money available. The average mid-size sedan dominates the fleet rental contracts for companies and other organizations that require options for travel solutions or employee transportation or those who require services for corporate or executive car services. Luxury sedans are also a popular choice among the affluent customer, and many Prime customers, embassies, and businesses do a lot of short-term and mid-term rentals.

• Multi-Utility Vehicle (MUV) / SUV: SUVs and MUVs have increased in popularity in Saudi Arabia because of the lifestyle and driving habits of residents and, in particular, considerations regarding cost and reliability, a vast road network, and a need for off-road capability in some areas. Families and tourists who travel in desert areas, as well as historical sites or unsealed areas, use SUVs for their size, safety features, and flexibility. Higher-income renters, along with corporate clients that rent, prefer premium SUVs for business travel, chauffeur trips, and escorting staff for more extended periods. Most rental agencies now provide premium SUV options that embody the best safety, navigation, and entertainment systems to appeal to the premium segment.

Impact of Latest Tariff Policies

The car rental and leasing industry of Saudi Arabia plays an essential role in providing mobility for local and visiting tourists, corporate fleets, and logistics operators in the Gulf region. Increasing demand for modern fleets of vehicles, both ICE and electric, is a returning feature of the impact of Vision 2030 on tourism, digital infrastructure, and the corporate ecosystem in the Kingdom. This effectively means current and new rental and leasing operators are now required to keep large fleets of mixed vehicles, ranging from hatchbacks to sedans, MUVs, and SUVs, all with technology, maintenance, and digital booking tools, with other technological advancements co-developed by regional and international partners.

Both trade policies and tariffs deliver mixed messages for overall market performance. Saudi Arabia’s customs policy positions higher value automotive imports with no or relatively low duties. However, sudden changes in regional free trade agreements, supply chain constraints, or new taxes for imported vehicles and parts can materially increase fleet procurement costs, disease-specific.  For example, the decision to discontinue the sale of ICE vehicles by certain dates, sudden fluctuations in oil prices, or changing government incentives to adopt electric vehicles will alter fleet composition strategies, often overnight, and specifically for leasing companies who generally plan vehicle rotations for multiple years, not short-term.

As OEMs manage local assembly or local sourcing of parts to decrease import reliance, rental and leasing companies are also challenged with price variations arising through tariffs while they try to satisfy consumer and corporate customers expected to expect the latest models, at the best prices, as well as green fleet alternatives. With the Kingdom’s green mobility aspirations – advocating electric vehicle consumption, reduced volumetric consumption, and reduced emissions – operators will need to continually monitor trade dynamics and sourcing choices and their influence on cost competitiveness.

Report Scope

Regional Perspective

The Saudi Arabia car rental and leasing market displays marked regional differences influenced by economic centers, urbanization, tourism corridors, and mega-projects. The Central Region anchored by Riyadh and surrounding areas is the largest and most dominant market. As the administrative capital with key government structures, embassies, corporate headquarters, and financial institutions in the city, demand for short-term rentals and long-term leases will continue in stable. Premium sedans and organized fleet leasing are favored by business travellers, diplomats, and corporate customers, while vehicle ownership is giving way to flexible vehicle mobility to meet the needs of a growing young workforce. Large non-temporary urban infrastructure and mega-events surrounding Vision 2030 have also enabled long-term high levels of fleet utilization from both individual and corporate clients.

In the Western Region, cities such as Jeddah, Makkah, and Madinah comprise a solid percentage of the market. Jeddah, as the Kingdom’s primary commercial seaport and entrance to Makkah, serves both business travel and leisure travel. The busy international airport in Jeddah significantly contributes to the demand for short-term rental and express booking services for tourists and expatriates. Rental vehicles for religious tourism generate peaks of demand for car rental as pilgrimage traffic during Hajj and Umrah are volumes of pilgrimage traffic (billions of pilgrims) requiring flexible transportation and intercity transportation, family travel, and group travel. Group travel needs attain high populations for Makkah and Madinah, requiring larger vehicle types such as MUVs or SUVs.

The Southern Region, with Abha, Jazan, and Najran, is also seeing the benefit of increased domestic tourism and new diversification projects improving rental car usage by families, leisure travellers, and contractors. Improved transport connectivity for tourism purposes and international marketing campaigns create exciting new opportunities for rental operators to develop and expand into new and developing markets. The Northern Region is anchored by Tabuk and the NEOM mega-project when it is completed and offers medium to long-term opportunities in project-based leasing and rugged vehicle rentals, especially for those engaging engineers, consultants, and business visitors. Together, these regions provide a good counter-balance to ensure Saudi Arabia’s learn-to-rent car market remains diverse and resilient and on track with the Kingdom’s goal of transformational changes identified through Vision 2030.

Key Developments

Yelo (Al Wefaq Rent a Car)

• Fleet Expansion & EV Trials (2023-2024): Yelo, one of the largest domestic car rental operators in Saudi Arabia, grew its fleet by over 3,000 vehicles to increase its presence in key cities. Yelo also introduced a first batch of electric vehicles (EVs) to pilot mesh into its fleet as part of its green mobility plan and vision. To launch the piloting of their EVs, Yelo partnered with local EV charging infrastructure companies to assist in measuring their customers’ readiness and practical viability for the transition.

• Digital Booking Enhancements: Late 2023, Yelo launched an upgrade to its flagship mobile booking application to be a more personalized and convenient rental experience for its customers. Features of this mobile upgrade included AI-supported vehicle recommendations based on user behavior, dynamic pricing based on the local market for competitive rates, and a responsive chatbot for in-app customer support. By digitalizing the entire process from booking to vehicle return, Yelo is targeting a technology-savvy customer base as well as corporate clients who expect frictionless standards for their service as well as contactless return for flexibility.

Leading Players

The Saudi Arabia Car Rental and Leasing Market is highly competitive, with a large number of product providers in the U.S. Some of the key players in the market include:

• Hertz Corporation
• Avis Budget Group Inc.
• Sixt SE
• Hanco Automotive
• Key Car Rental Company
• Lumi Car Rentals
• SFL (Saudi-based operator)
• Theeb Rent a Car
• Enterprise Holdings Inc.
• Budget Rent a Car
• National Car Rental
• Yelo (Alwefaq Transportation Solutions)
• Bin Hadi Europcar International S.A.S.U.
• Samara (Alturki Holding)
• Zaatar Car Rental
• Others

These firms apply a sequence of strategies to enter the market, including innovations, mergers, and acquisitions, as well as collaboration.

The Saudi Arabia Car Rental and Leasing Market is segmented as follows:

By Type

• Car Rental
• Car Leasing

By Propulsion

• Internal Combustion Engine (ICE) vehicles
• Electric vehicles

By Vehicle Type

• Hatchback
• Sedan
• Multi‑Utility Vehicle (MUV) / SUV

By Booking Mode

• Online
• Offline

By End‑Use

• Individual customers
• Corporate clients