SAUDI ARABIA - Transport
General Manager, Al Wefaq Rent a Car
Munir M. Al Zu’bi is General Manager of Al Wefaq Rent a Car.
Al Wefaq Rent a Car was established in 2000 when the market was experiencing significant growth levels; although the car rental market was immature, there were a lot of business opportunities. Some businesses became successful because of their vision and action plans, while others exited the market. In 2010, the owner of Al Wefaq Rent a Car decided to separate the ownership of the company from the management and set KPIs along with short- and long-term goals for the company. The Saudi car rental market is different compared to other countries, especially other GCC countries. In Dubai, more than 90% of the population is made up of expatriates, while here it is the opposite. Most of our clients are locals, and they prefer to deal with local brands, even though there are international companies operating here. The government’s introduction of new regulations for the car rental industry has redefined industry practices. The car rental business is not limited to renting cars only; security is another significant concern. Al Wefaq Rent a Car is among the top-five players in the Kingdom and has always focused on providing the best services, offers, and promotions for its valued customers.
Al Wefaq corporate leasing and fleet management solutions are renowned in the region. Though Budget and Auto World are big in corporate leasing as they have been in the market for a long time, our quality has enabled us to grab good market share in the B2B market. We operate directly in international cities such as Dubai and Cairo, and we have one franchise in Amman, Jordan. Moreover, we are set to provide franchising rights in Kuwait in the near future. Turkey and Morocco are other potential franchise markets and from there, we might go to Asia Pacific, Europe, and the Americas.
There are regulations that hit the core of our business and others that affect the surroundings. The regulations that directly affect rental companies force us to integrate our systems with the government systems. For example, we have to authorize and register customers directly through a government platform when we complete the car rental contract with them. Many car rental companies do not have proper processes and IT systems in place. It is expensive, and they do not feel such an investment that adds value to their business. We own a company in Jordan that acts as the in-house development team for our fleet management systems / technologies. Another issue is that the new labor laws that impose fees for foreign employees and require more Saudis on the frontline is an additional costs for businesses, though they help. We were competing with a number of small companies that have significant market share, but due to these regulations they will not be able to survive unless they invest and improve their businesses. This will provide us with an opportunity to capture a greater market share. At the broader level, not just in terms of the transport sector, the government seeks to shift people’s approach in Saudi through its reforms. Saudis are traveling and studying abroad more than ever and are gaining a wider experience, which the companies can take benefit from.
This offers great potential for us. Saudi women already rent cars from us in places such as Dubai, Cairo, and Oman. They have driving licenses from Bahrain, UAE, the US, and Europe, and we accept all of these. Perhaps for the first few months there might be some challenges, though in time things will change and we will have a new group of clients. Al Wefaq Rent A Car’s business is mainly B2C, and we are present in 18 airport locations in Saudi Arabia. Women drivers offer us great potential, though we have to align our products and services that suit women. In other countries, companies would treat male and female clients the same in terms of the service; however, the culture here means companies have to make adjustments to the rental experience. For example, we would have to make sure women do not have to wait in queues or that the car design suits their aesthetic. Certain sectors see this change as a disadvantage because car insurance premiums will go up; however, for us I see it more as an opportunity rather than a problem.
In previous years, the car rental industry as a whole used to grow with new projects, more employment, local business travelers, and people traveling frequently to visit their families. Things are changing now because people’s costs are increasing with new fees, such as VAT, that are coming in. Our prices will increase as well. This means spending behavior is changing. Families used to rent a car for the weekend to drive around, but this may likely change as a result of all the economic changes. Growth within the sector is relatively small. There are several car rental companies that have been operating for 20 or 30 years that are shutting down. This is an opportunity for the companies that are focused and investing wisely to gain a greater share of the existing pie.
SAUDI ARABIA - Industry
President, Royal Commission for Jubail & Yanbu
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