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Fawaz Danish, CEO of Budget Saudi, highlighted that the Saudi used vehicle market is under pressure due to a surge in Chinese car brands, now numbering over 30 in the Kingdom. This influx has accelerated depreciation rates and reduced resale values. Regional tensions have also impacted short-term rental demand, with utilization rates dropping from 65% to 50%. Long-term rental companies are delaying new orders amid uncertainty, while the CEO compared the current market challenges to the pandemic era, citing supply chain disruptions and rising logistics costs.
For traders, the situation reflects broader economic dynamics in Saudi Arabia’s domestic market. Budget Saudi’s strategy to hold inventory rather than sell at undervalued prices signals cautious optimism about a potential rebound in used car values. The company anticipates improved performance in Q2 and Q3, driven by summer travel and Hajj-related activity. Investors should monitor the interplay between new car price increases and used vehicle market recovery, which could influence the company’s profitability and sectoral trends.
The domestic focus of Budget Saudi (90% of its business) positions it to benefit from Saudi Arabia’s economic resilience. However, traders must watch for risks such as persistent supply constraints or shifts in consumer behavior. The company’s performance could serve as a bellwether for the transportation and rental sector in the Gulf, especially as regional geopolitical factors continue to shape demand patterns.
