Amazon car rentals UAE: Consumers the big winners but smaller firms may face the squeeze

Amazon is set to offer daily rentals for as little as Dh44 - much less than many agencies charge

Soham Shah, founder of car rental company Selfdrive.ae, welcomed the news that Amazon has entered the UAE’s car rental market by allowing competitors to use its platform. Antonie Robertson / The National

Amazon’s car rental service was launched in the UAE through its Home Services platform. Amazon

Pulkit Ganjoo, co-founder of Invygo, said Amazon’s entry of the car rental sector was a double-edged sword. Invygo

A leading car rental expert in the UAE has warned the industry could be overtaken in the market like New York's iconic yellow taxis when Uber entered the fray. Getty Images

Amazon will offer car rentals under the umbrella of home services. Courtesy Amazon

Consumers look set to be the big winners - and smaller rental firms the potential losers - after Amazon announced it was entering the UAE’s car rental market.

The e-commerce company said vehicles would be available from its Home Services platform in Abu Dhabi, Dubai, Sharjah and Ras Al Khaimah for as little as Dh44 per day.

Amazon said existing car rental firms could use its website to connect with customers.

Industry experts said they expected the move would lead to a drop in car rental prices across the country, to the benefit of consumers.

In the long term, it's only going to drive prices down so low that many companies won't be able to compete

“It is a great opportunity for smaller companies who do not have a strong online presence to get connected to new customers,” said Pulkit Ganjoo, co-founder of Invygo.

“However, other firms that already have a strong presence will need to ask themselves why would they do this and what will they get out of it?

“In the long term, it’s only going to drive prices down so low that many companies won’t be able to compete and will end up going out of business.”

Amazon is advertising a Kia Picanto, or similar hatchbacks, online for Dh74 per day or Dh1,322 per month.

A Nissan Sunny, or a similar sedan, can be rented for Dh84 per day or Dh1,416 per month on the site. Those offers were in conjunction with Dubai-based rental company eZhire.

On eZhire’s website, it offers a Kia Picanto for Dh99 a day or Dh1,399 per month. A Nissan Sunny can be obtained for Dh119 daily or Dh1,599 for a month.

Amazon will work with some existing rental agencies. Courtesy: Amazon

Similar cars are available on other car rental sites. A Nissan Sunny on Selfdrive.ae is available for Dh999 per month and a Kia Picanto is Dh1,135 per m

Mr Ganjoo said Amazon's new offering could have the same impact as Uber’s arrival on New York’s famous yellow taxis.

In 2012 there was an average of almost 500,000 yellow cab rides per day in the Big Apple. That figure fell to close to 230,000 in 2019, before the Covid-19 pandemic, after the arrival of ride-hailing firms Uber and Lyft in 2013 and 2014 respectively.

Under the terms of Amazon’s new offering, which includes free delivery and pick-up by the service providers, customers need not pay a deposit.

It is not clear whether rental agencies who do opt to work with Amazon will drop their deposits to keep up with the competition.

Soham Shah, founder of Dubai car hire company Selfdrive.ae, was upbeat about the news.

He said the industry will be "lifted" by the arrival of the world's biggest online retailer.

Pulkit Ganjoo, co-founder of Invygo, said Amazon’s entry of the car rental sector was a double-edged sword. Invygo

“Every player in this market is going to be happy at this news,” he said.

“This is going to lift up the entire industry. From the bigger companies to the mom and pop stores, everyone is getting a lot more exposure."

A representative of ride-sharing app Careem said the announcement by Amazon was welcome and another example of how the transport market in the UAE was evolving.

“When people in our region think about mobility, many of them think about Careem first and we’re constantly looking for new ways to simplify people’s lives,” the representative said.

“We think the car rental sector is a really interesting one ripe for technology to change the conventional model and provide customers a better experience.”

Amine Mamlouk, general manager at Amazon Middle East and North Africa, said rentals were the natural next step in its 'Amazon Home Services' rollout.

“Within a couple of steps and a short three-hour wait time, customers can have the car of their choice delivered directly to their doorstep, all from the comfort of their own home," he said.