Transport

Invygo, Gulf’s largest car subscription startup, raises $10m

October 31, 2022, 11:09 AM

More people are choosing to rent cars since the cost of fuel began to rise

Invygo, the Gulf’s first car subscription operator, has secured $10 million in new funding, endorsing a trend for businesses to opt for renting over ownership.

Headquartered in Saudi Arabia and the UAE, Invygo is an app-based service that allows people to choose, drive and swap cars.

Founded in 2019, the new funding was led by Dubai venture capital fund MEVP, with participation also from Al Rajhi Partners, Arab Bank, Amana Capital and Palm Drive Capital.

UAE drivers rent cars rather than buy since fuel price surge

Already the largest operator in the car subscription segment, the startup aims to use the new cash to finance further expansion in the UAE and Saudi Arabia.

“Since our launch, Invygo has achieved leadership in the car subscription category, with four times average growth annually,” Eslam Hussein, co-founder and CEO of Invygo, said in a press statement.

The global car subscription market is worth $3.1 billion and expected to grow to $9.8 billion by 2027.

Earlier this year industry experts told AGBI that higher petrol prices in the UAE are pushing small businesses and private individuals to switch from vehicle ownership to rentals.

UAE fuel prices have increased more than 40 percent since the beginning of 2022, attributed to tightening global crude supplies after EU sanctions were applied to oil imports from Russia, the world’s third largest oil producer, following its invasion of Ukraine in February.

Soham Shah, CEO and founder of subscription platform Selfdrive.ae, said his company had recorded growth of 30 percent month-on-month since petrol prices began surging in April.

“In the [car] rental industry things typically slow down in the summer,” he said.

“Subscriptions, or micro-leases as we call them, have skyrocketed and people want to have on-demand rentals rather than committing to a purchase.”

Shah said customers who usually opt for daily or weekly rentals before buying a car have been switching to longer-term subscriptions for up to 12 months.

“It’s not just the fuel price that has gone up, multiple factors have changed the industry at a rapid pace in the last couple of months,” he said.

Nicholas Watson, co-founder and CEO of pay-per-minute car rental app Udrive, said his company has seen a 15 percent increase in users since the petrol price hikes.