A look at Theeb Rent a Car core activities, branches, services

Logo of Theeb Rent a Car

Theeb Rent a Car will float 12.90 million shares, or 30% of its share capital in an initial public offering (IPO) in March 2021.

The company aims at achieving leadership and excellence in all car rental and vehicle lease services across the Kingdom.

It seeks to gain customer satisfaction and trust, and to continuously develop car rental and vehicle lease services by providing various and distinct packages that serve all the needs of its customers.

The company’s strategy seeks to continue growth in car rental services by opening new branches, whether in airports, inside cities, or in new mega projects in which the need for car rental is likely to increase. Theeb Rent a Car also aims to improve customer experience by providing an e-platform for automated services, improving marketing activities and constantly optimizing its fleet and vehicle models to deliver the desired models to meet customers’ needs.

The company also aims to maintain leasing services, through growing its customer base, expanding its services, improving customer experience, and focusing on leasing commercial vehicles – which are used in goods transportation. The car rental company is looking to using technology to enhance customer experience and develop its operations.

Theeb Rent a Car said in its IPO prospectus that there are many factors that enable the company to compete with its current and potential competitors and give it strong attributes for sustainable growth. These factors include diversified business model, and a wide network of branches in strategic locations across the Kingdom. Moreover, the company has a leading brand in the Kingdom and strong relationships with suppliers, financing agencies, and a network of service providers and car agencies in the Kingdom. It also relies on an ambitious and experienced management team with a proven track record of operational success and deep knowledge of the sector.

The company also referred to its membership program which was introduced in early 2000, adding that its member base has been growing consistently and the members of the program reached over 245,000 customers as of March 31, 2020.

Theeb Rent A Car is a leading company in the Kingdom’s car rental industry, with nearly 30 years of experience in the Kingdom. It also one of the most renowned players in car rentals and leases.

The company’s operations cover the Central, Western, Eastern, Northern and Southern regions from 48 car rental branches, ten vehicle maintenance centers, and two used vehicle sales branches. Its core activities consist of three key business segments, as follows:

- Car rental and provision of other related services;

- Vehicle lease and providing other related services, in addition to providing customized solutions to vehicle lease customers;

- And sale of used vehicles owned by the company and released from its operations of the above two business segments.

By the end of March 2020, the company’s revenue generated from car rental and lease services accounted for 44.8% and 30.2% of total revenue, respectively. Revenue from the sale of used vehicles represented 25% of total revenue in the same period.

Theeb Rent a Car reported a net profit of SAR 41.9 million for the first nine months of 2020, compared to a net profit of SAR 78.4 million a year earlier.

Car Rental Services:

Theeb provides car rental services for its retail and corporate customers on a daily, weekly and monthly basis.

The car rental packages include vehicle maintenance and roadside assistance, vehicle insurance, accident assistance as well as limited daily free kilometres. The company offers extra services through 48 rental branches.

Theeb is planning three new car rental branches in Riyadh, one in Jizan and one in Dammam. It plans to renovate two car rental branches in Riyadh, one in Qassim, five in Jeddah, one in Dammam, Jubail, Al Baha and Najran each.

Theeb offers its services to various categories, including the individual customers that rent cars for business, entertainment and travel purposes or to meet other personal needs. The individual customers are either walk-in customers or member customers.

Member customers are those that have joined the Theeb Membership Program. An integral part of the company’s business strategy is its membership program. Customers meeting certain conditions can join the Theeb Membership Program, which was designed to provide customers with an opportunity to utilise and benefit from standard services, such as car rental in an expedited manner, with a discounted price.

Walk-in customers are individuals that visit Theeb locations to meet their car rental needs. They generally select the company either as a result of targeted marketing or as a result of their research for an ideal supplier that will accurately meet their needs.

The total number of individual customers grew by 3% year-on-year to 264,131 by the end of March 31, 2020. The following table illustrates the number of customers since 2015:

According to Theeb prospectus, the company leads car rentals with a 9% market share.

The following table illustrates market shares in the Kingdom’s car rental market based on value of sales in 2019:

Leasing Market:

Theeb offers lease services to its customers from both private and government sectors, which lease cars for business purposes on the account of their employers.

A lease is similar to rental with one main difference, which is the length of the lease period. Minimum contract period for a lease is one year and it can be as long as five years.

The key benefits of leasing sought by clients include fixed monthly costs, conservation of capital, zero disposal concerns, appropriate and competitive insurance, mobile maintenance team and round the clock 24 hours service and assistance, capital saving on maintenance infrastructure and availability of replacement vehicles.

Theeb maintains a diversified portfolio of customers that minimises its risks and enhances its operational efficiencies. In the three-month period ended March 31, 2020, no single vehicle lease customer generated over 2.2% of the company’s total revenue and its top ten vehicle lease customers generated collectively 10.6% of the company’s total revenue in the same period.

Used Vehicles Sales

The company sells only used vehicles from its own fleet and does not sell any third party used vehicles. In general, vehicles are sold after the end of their life cycle of two to five years.

Theeb sells its cars through the following channels:

- The company-operated vehicle sales showrooms;

- Auctions at specific times;

- And online via third party specialised websites wherein potential buyers can review a listing and place a competitive bid to buy the vehicles.

The company maintains a database of regular purchasers and actively promotes the car sales in order to target new customers via social media and other channels.

In Q1 2020, Theeb sold sold 1,585 cars, of which the company sold nearly 53.4% at its used vehicle sales showrooms, 0.9% through online sales and 45.7% at public auctions.

The company’s fleet comprises its rental, lease and service vehicles, as follows:

The Car Rental Fleet: Theeb offers a full range of options, from “good value for money” cars to luxurious options. Its rental fleet is renewed annually, based on a monthly vehicles replacement plan. As of March 31, 2020, the company operated a peak rental fleet of about 10,800 vehicles.

Vehicle Lease Fleet: Theeb purchases vehicles upon the customers’ demand. The company’s lease fleet reached 8,541 cars as of March 31, 2020, distributed over more than 350 customers and varies from passenger vehicles to commercial vehicles and light trucks.

The Service Fleet: It represented 2.6% of the Company’s total fleet as of March 31, 2020. It is used for roadside assistance, washing and mobile maintenance, towing and for employee usage. At the end of the lifecycle in rental or lease, some selected cars are allocated for service use or as an employee benefit as per the company’s employee car policy.

During the three-month period ended March 31, 2020, the company took delivery of approximately 1,435 vehicles and operated an average fleet of 19,193 vehicles.

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