February 17, 2023
By:EmpoweringCPO Insights Team

Car Rental Services

This UAE category report on Car Rental Services will be very useful for your team responsible for managing and buying this category. This report gives in-depth information about the Car Rental industry in UAE, sectors driving growth, segmentation of the car rental industry, integration of technology in the car rental industry, supplier cost structure, value chain analysis of car rental business, pricing structure, different types of car rental contracts and many other insights useful for benchmarking your current prices. In this report, we have also presented insights on the RFP process – data gathering, RFP elements, and buying decision scorecard.

Abstract

  • Car rental includes a wide range of services related to renting vehicles for specific time periods to a few months, in lieu of an appropriate fee; the market growth is prominently supported by the growth of both inbound and domestic tourism flows.
  • The global car rental market was valued at approximately USD 58.26 billion in 2016 and is expected to reach approximately USD 124.56 billion by 2022, growing at a CAGR of around 13.55% between 2017 and 2022.
  • The car rental market is evolving rapidly with technological advancements, an increase in per-capita expenditure, & growing demand from local/outstation travelers; operators are using digital channels for staying relevant, improving service quality & facilitate easy booking.
  • The share of car rental in UAE is the second largest within the entire car rental market in the Middle East region with a contribution of around 35% in overall revenues in 2017.
  • Car rental in the United Arab Emirates is set to increase by a value CAGR of 7% at constant 2017 prices from 2017 to 2022.
  • Hertz Corporation, Thrifty, Europcar, Sixt, and Avis Budget have been the leading players in the UAE car rental market.
  • Market drivers of growth: UAE car rental market is majorly dependent on the air travel industry as most of the revenue is generated from airport travelers, so any unrest in the air travel industry has a major impact on the car rental market in UAE.
  • Historically Airport transport segment has the major share amongst all the rental categories, but over the years Off-airport segment has started to grow; economic cars are the most preferred category amongst types of cars.
  • The car rental industry is comprised of two principal markets – General use (including airport and local market facilities) and Insurance replacement; car rental firms can opt to purchase, lease or purchase vehicles under a buyback program from manufacturers.
  • The use of technology platforms is extended to improve vehicle safety & provide real-time data on traffic & weather patterns.
  • Depreciation is the largest component of operating costs & indicates the importance of asset management in the business; also it must be examined with profits on the sale of vehicles, as overly conservative depreciation will result in an inflated profit.
  • In the car rental industry, primary activities (Operations, Marketing & Sales, Services) significantly affect the overall profitability as they are the major cost components, whereas supporting activities (Business Infrastructure, Human Resource Management, Technology Development, Procurement) provide a competitive advantage over peers.
  • Corporate Contract Pricing is usually based on an “Agreed Per Day Rate”, which is also the “Base Rental Rate”; users rent cars based on the agreed slab rate and the customers are refunded the cost difference at the end of the year after fulfillment of the pre-agreed conditions.
  • Organizational culture, travel policy, and rental patterns are major factors in determining which car rental suppliers to consider and which contractual elements to emphasize during negotiations.
  • Some concessions that can be negotiated include surcharges, weekly and monthly discounts, upgrades, waiving drop-off charges, removing add-on charges for one-way rentals, and complimentary car delivery to headquarters or corporations’ other locations.
  • As per  Procurement Market Intelligence, Buyers have high bargaining power in this industry as the UAE Car rental market is growing rapidly & substitutes are easily available; the threat of new entrants is low due to various regulations and the high initial capital required.

 

Table of Content

Contents Slide No:
Executive Summary 3
Introduction – Global Car Rental Market 4
Global Car Rental Market Outlook 5
UAE Car Rental Market Outlook 6
Sectors Driving Car Rental Growth in UAE 7
Segmentation of the Car Rental Industry 8
Business Model 9
Integration of Technology in the Car Rental Industry 10
Car Rental Suppliers Cost Structure 11
Value Chain Analysis of Car Rental Business 12
Pricing Structure 13
Different Types Of Car Rental Contracts 14
Data Gathering for RFP Elements 15
RFP Elements 16,17
Car Rental Negotiation Parameters 18
Buying Decision Scorecard 19
Price Comparison (Spot Prices) 20
Price Comparison (Long-Term Lease Prices) 21
Peer Comparison 22
Porter’s Five Force Analysis 23
Vendors List 24,25

If required EmpoweringCPO can support with additional information and the next steps with executing projects like Car Rental Services. Also, feel free to reach us if a similar report is required for any other category. We can also help your organization with tools like Procurement Dashboard, Tail Spend Management, Procurement Market Intelligence, and Procurement Consultancy.

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