Where is the UAE's car leasing business headed?
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Where is the UAE’s car leasing business headed?

Where is the UAE’s car leasing business headed?

The mobility industry has been evolving rapidly thanks to technology and changing consumer preferences, says Richard Sikkel, CEO of UAE-based Massar Solutions

The UAE’s car leasing business has transformed significantly, thanks to the emergence of new tech disruptors. Can you give us an overview of where it stands at present?  

The convergence between mobility and technology has been around for a number of years. New players get the advantage of a clean slate and tech-focused implementation where larger ones have traditionally been slower to move.

We are now seeing that the larger global mobility firms have geared up to implement very advanced technologies for their customers, which is supported by their size, scale, supply chain and distribution capabilities. Unique and compelling value propositions will become the key to unlock value going forward. Technologies, services and concepts that make life easier and more affordable for customers, at scale, is the need for matured markets.

The UAE is in a similar position where the combination of technology and mobility services is on the cusp of delivering substantial value to customers. Massar’s Pay Per Kay product, as an example, is one of those products which was one of the first in the region to integrate various technologies to offer a unique value proposition. This product’s technology lifecycle is still in its infancy and one can expect some new exciting features over the next 12 months, specifically designed for improving the customer service proposition.

Do consumers now prefer leasing over buying vehicles? 

The trend in the UAE is slowly moving to leasing. In some countries in Europe, the penetration of personal leasing is in excess of 40 per cent. The primary reasons that make leasing more attractive include the convenience of getting a brand new vehicle while not having to worry about registration, insurance and inclusive maintenance.

The benefits also extend to being able to get a new car in 2-3-year cycles and not having to worry about selling a used vehicle. These benefits and the convenience of leasing continues to grow, and we anticipate the trend to gain pace in the UAE.

With Covid-19, how has the UAE’s leasing and mobility evolved? Are customer preferences changing? 

As remote working has become more and more prevalent, customers are looking for more flexibility in their personal leasing contracts. This is currently aligned to the need for pay-per-use pricing models. Customers want the peace of mind that they have access to a vehicle permanently, but also the flexibility of paying only for what they use.

How much of a role does technology play in the mobility industry? 

Technology is an integral part of the entire mobility value chain. All processes related to a mobility business, both internally and externally, are – to a large extent – technologically driven. With new enhanced on-board vehicle features, aspects such as connected electric vehicles, autonomous driving and IoT will effectively transform how mobility integrates into daily life. The challenge for mobility organisations is to ensure that they integrate their unique selling propositions into these mega-trends.

At Massar, you offer mobility solutions ranging from fleet management to maintenance. How has the year been so far and what are your plans ahead? 

We are in a very unique and fortunate position that our portfolio of services in the mobility vertical are complimentary and in a number of key areas we are considered an essential service. Over the Covid period, for example, our logistics business delivered groceries to over 5,000 homes per day. Our passenger transport business transported tens of thousands of people in a safe manner, while we kept our fleet of over 8,000 lease and rental vehicles fully operational.

Moving into the latter part of 2021, we are seeing good signs of market recovery in the UAE market. There are indicators of growth in various sectors, which is an excellent sign for Massar. Key focus areas in 2021 for us include looking to enter new geographic markets in the GCC along with sizable investments upgrades to various aspects of our technology framework.

Lastly, what are the main trends set to shape the future of leasing and mobility in the region? 

It is feasible to expect some form of market consolidation. Enhanced technology offerings will continue to disrupt the market, both by vehicle manufacturers and leasing market players implementing new customer centric technologies. Mobility-as-a-service (MaaS) will continue to grow and industry players will look to adjust their models to offer more flexibility.

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