In a regulatory move aimed at promoting the sharing economy and enhancing the efficiency of the transportation sector in Saudi Arabia, the Public Transport Authority has issued the executive regulations governing private car rental and brokerage activities via electronic applications. This decision comes as part of the Authority's efforts to govern the sector, guarantee the rights of all parties, and keep pace with the Kingdom's digital transformation within the framework of Vision 2030.
Regulating the private car rental sector
The new regulations establish a clear legal and operational framework for companies wishing to invest in this vital sector. The authority has mandated that companies maintain a minimum fleet of 100 vehicles, whether owned or leased, to ensure financial solvency and sustainable operational capacity to serve customers efficiently.
This regulation is a qualitative leap aimed at eliminating randomness in the market, and ensuring that operating companies are strong entities capable of adhering to safety and quality standards.
Opportunity for individuals: Investing personal assets
Perhaps the most significant aspect of the regulations is allowing Saudi individuals to engage in "vehicle brokerage" activities, thus opening the door for citizens to invest in their private vehicles and generate additional income in a regulated and secure manner. The Authority has established specific guidelines for this activity, the most prominent of which are:
- The activity is restricted to Saudi individuals only.
- Only one car per individual is allowed to be registered.
- The car must be owned by the individual directly or through a financial lease.
- Work is exclusively through electronic applications approved and licensed by the Authority.
Quality standards and operational lifespan
To ensure the safety of users and the quality of service, the regulations stipulate a maximum operational lifespan of five years for vehicles used in the activity, starting from the year of manufacture. However, in line with global and local trends towards clean energy, the Authority has granted an exception for electric (environmentally friendly) vehicles and luxury cars, allowing their operational lifespan to be extended to ten years with the approval of the Authority's Chairman.
Digital transformation and standardized contracts
The regulations emphasized the necessity of technical integration with the Authority's "Wasl" platform and mandated that all parties conduct their business through standardized electronic lease agreements. This measure aims to:
- Documenting financial and contractual obligations with complete transparency.
- Clearly define the type of insurance coverage and deductibles.
- The regulations prohibit any transactions outside the official electronic framework, as they also prohibit conducting business through traditional offices or providing driver-assisted rental services.
Protecting the rights of beneficiaries
The regulations placed great emphasis on consumer rights, guaranteeing the user the right to a replacement vehicle of the same or higher class at no additional cost in the event of a technical malfunction not caused by their negligence. They also prohibited service providers from imposing any fees not stipulated in the contract and clarified that the contract automatically terminates upon official reporting of accidents or theft, thus protecting the renter from incurring costs during the period of forced vehicle downtime.
