However, despite the coronavirus disease (COVID-19) pandemic and some of its vehicles being grounded due to travel restrictions during the lockdown, the company still registered double-digit growth, with 2020 being its first year of profitability.
“So it is a little bit contradictory,” Al-Lawendy told Arab News. Ajar is a subsidiary of Aljomaih Holding and is the master franchisee of the Enterprise, National, and Alamo car rental brands in Saudi Arabia, the Gulf Cooperation Council countries, the Levant, and Austria.
According to a report by the Research And Markets company, the vehicle rental market in Saudi Arabia is forecast to grow by 7.5 percent per annum between 2020 and 2026.
Despite Al-Lawendy describing 2020 as “not a great year,” Ajar grew by 40 percent year-on-year and is forecast to grow by about the same figure in 2021. “January 2021 was much better than 2019 or 2020, so it is getting better,” he said.
The reason the company was able to maintain double-digit growth was its unique approach to the lockdown in early 2020 when it allowed clients to keep cars in their driveways free of charge and use them if they needed to, whether to go to the supermarkets or health clinics.
The decision came down to logistics, as the company had 4,500 vehicles and could not store them all in their facilities. On top of that, when the lockdown ended in June, clients already had rental cars in their possession and could easily return to normal.
• Missouri-based Enterprise Holdings, Inc. is the largest car rental company in the world.
• Ajar was established in 2015 and began trading in May 2018.
• The company’s fleet in the Kingdom rose by 27% year-on-year to 5,700 units by 2020.
• It plans to launch a website and an application in 2021.
“It was a nice message from our marketing and our admin team,” Al-Lawendy said, adding that after lockdown, the business quickly recovered to pre-pandemic levels and the company began buying more vehicles, with its fleet in Saudi Arabia rising by 27 percent year-on-year to 5,700 units by the end of 2020. “It kept the customer loyal to the brand and loyal to us,” he added.
Looking to the future, now that the company has reached profitability in 2020, it plans to continue to open in new locations, launch an app, expand its fleet, and an initial public offering (IPO) is also on the cards in a few years.
At present, it is located in six Saudi airports and 24 locations across the Kingdom, and it plans to open eight more branches by the end of the year.
Uber announced in April that it had chosen Saudi Arabia as one of its key international markets to launch into the car rental space in the coming months.
The San Francisco-based ride-hailing app announced a partnership with Avis Budget Group Inc., Hertz, and other vehicle rental agencies, to allow users in the US to book a rental car and have the vehicle delivered directly to them.
While it did not say when it will be launching this service in the Kingdom, Ajar is already taking action and ramping up its digital offering. “We are preparing ourselves for a website and an application, and will launch them during 2021,” Al-Lawendy said.
Theeb Rent a Car Co. launched a successful IPO in March. Its retail offering was 3,385.37 percent oversubscribed and its share price has remained steady overall, despite announcing a net loss after zakat and tax of SR131 million ($34.93 million) for the first quarter of 2021, compared with a net profit of SR1.1 billion during the same period in 2020.
While an IPO is in Ajar’s ambitions, Al-Lawendy said that it was too soon for the company to consider going public.
“Yes, we have some expectations and plans to do so. We are still growing this year. This year we are going to grow another 42 percent. I believe that even until 2023 we would be going on double-digit numbers and then you would reach a stage where you will start growing on a single-digit number, and I think at that time you would be very smart to move to an IPO or some sort of investment,” he said.