Budget Saudi profits up — but from selling cars instead of renting them

Arab News
Car rental companies have been hit hard by the collapse of global travel that has accompanied the pandemic. (Supplied)
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  • Net income up by more than a fifth
  • Car hire sector not yet 'normalized'

RIYADH: Car hire company Budget Saudi lifted first quarter profits — but the increase was driven by sales rather than rentals.
Net income rose 21 percent to SR55.2 million ($14.7 million), the company said in a stock exchange filing on Thursday.
“The increase in the net profit is due to an increase in the net gain on the sale of the vehicles, as more vehicles were sold with improved margin in the first quarter of 2021 compared to the same quarter last year,” the company said in a statement. “The better gain on sale has compensated the decline of lease and rental revenue due to COVID-19, which is not yet recovered or normalized.”
A year of lockdowns, airport closures and other travel-related restrictions has hit car companies hard and forced some to change their business models in response.

Selling used cars after renting them represents about 65 to 70 percent of the company's profits, while renting cars contributes between 30 to 35 percent of the total profits, UniTrans Budget Saudi Arabia President and CEO Fawaz Danish said, Al Arabiya reported today.

Short-term car rentals fell 30 percent from usual levels because of a lack of traffic at airports, Danish said.