What is the United Arab Emirates market-size and opportunity for the luxury car rental segment/industry?
Hello! Thank you for your question about the market size and opportunities of a luxury car rental industry in the United Arab Emirates. The short answer is that the market size is estimated to be USD73.71 million with an annual growth rate between 5% and 10%. The average daily price for a premium car is USD672, and 80% of Dubai's denizens have moved from purchasing cars to renting them. Please see below for a deep dive of this research.
The majority of the market reports on the UAE and this industry are behind a paywall, so to determine the market size of this industry, I triangulated an estimate using publicly available reports on the total rental car industry's revenues, and data on the luxury car segment of UAE auto sales. For these calculations, I used the conversion of Dirham to US dollar of 1 AED= 0.27USD where appropriate to keep all numbers in the same unit. Automotive industry reports, business news, and company websites were used to understand the range of options in this industry, its projected growth, and other trends.
MARKET SIZE AND GROWTH
The total revenue from car rentals in the country was 2.1 Dirham, or USD567 million. This number includes luxury cars and other vehicle types. Of all cars purchased in the UAE, 13% were luxury cars. Assuming that this preference for top cars extends to rentals cars, this can be used to ascertain an estimate for the luxury rental car market. This assumption is a fair one to make as the premium car rental market "has been experiencing a return to pre-2009 levels of growth", so it must be a significant portion of a rental car business's fleet. Also, 80% of drivers in Dubai are opting to rent a car rather than purchase one, and they choose a rental car much as they would one to buy.
(0.13)*(USD567 million)= USD73.71 million luxury car rental market size.
The growth rate of this overall rental market is reported to be 10% compounded annually, though some experts warn that the 'mom-and-pop' rental fleets who enter into the market with 50-100 cars will be tested as oil prices, and the country's economy, fluctuate. Luxury car sales have a growth rate of around 5%, and other premium goods in the country have a similar projected growth. This data gives us a range for the growth rate of the luxury rental car market of 5-10%.
LUXURY CAR RENTAL TRENDS
The daily rental rates for luxury cars in the UAE (e.g. Ferrari, Lamborghini, Aston Martin, etc.) range from USD550 to USD1,360 a day with an average, across brands, of approximately USD672 per day or USD15,300 per month. Many of these cars can be rented on a monthly basis. Most company place a USD1,000 to 1,300 hold on the renter's credit card that is released after the car is returned. A selection of prices is given below.
Two-seater Ferrari California: Dh3,000 to Dh3,500 per day (USD817 to USD952)
Lamborghini Gallardo: Dh4,000 to Dh5,000 per day (USD1,089 to USD1,360)
Aston Martin Rapide and Maserati GranCabrio: Dh2,250 per day (USD612)
Dubai's top luxury rental car company is HDS Rent A Car. The company has a fleet of elite cars, "unparalleled premium level service," and the option of a dedicated chauffeur with some cars. They, like other rental companies, both luxury and otherwise, have seen a steady increase in business with the growth of the UAE's business sector. The automotive rental industry has seen growth of 10% CAGR from 2014 to 2015, with non-airport rentals posting 14% growth for that period. Though these numbers are not specific to the luxury rental industry, they do suggest that the market would have increased in similar ways within this sector.
An estimated market size for the luxury rental car industry in the United Arab Emirates is USD73.71 million, with a growth rate between 5-10% annually. The industry's average daily rental price for a range of cars in USD672.
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