By Ali Al Majthoob
Poor Infrastructure & Low Passenger Car Rates:
Most of MENA suffers from poor public transportation infrastructure. Only 33% of MENA’s urban population has access to public transportation, which is much lower than cities in developed economies (75%) and the global average (50%). Despite the necessity of cars, the MENA region also has low vehicle penetration rates (e.g., 15.6% in KSA vs. 30% in Brazil, 50% in Germany and 87% in the USA).
Limited Access to Capital
For many in MENA, the culprit is limited access to capital and financing, especially individuals who do not have traditionally bankable income sources such as MSME employees, expats, entrepreneurs, freelancers, gig economy workers, students, and stay-at-home spouses. Banks prefer to finance employees who work for the government (especially in the GCC), state-owned companies, and large enterprises.
The mismatch in access is evident in car financing as a percentage of new car sales. Here’s a comparison for Saudi Arabia (Invygo’s main market) and other global markets
We know that the lower financing number is not because Saudi consumers typically prefer to save over getting financing (had they had the option). KSA suffers from one of the lowest households saving rates (45% of Saudis do not save, but this is a problem for other fintechs to solve). As a result, many consumers find it difficult to obtain a car for their daily transportation needs. Actual financing options become 1) asking a family member to take on the liability of a loan as a favor, 2) saving up only to buy the cheapest option available (think about the growth of Chinese vehicles in recent years), or 3) tapping into a ROSCA or other types of informal loans.
This is where Invygo comes in, providing additional options for MENA consumers to access cars.
Invygo is a car subscription and financing platform, currently operating in UAE and KSA. Starting as a digital car rental company in 2019, Invygo has evolved into a mobility fintech company with the mission of making cars more accessible through tech. Invygo offers drivers thousands of vehicles from 17+ makes to rent or purchase with monthly and yearly plans. Here’s a breakdown of Invygo’s offering catering to different mobility needs:
Why Invygo? Why now?
We got to know the founders Eslam and Pulkit through 500 Startups’ KSA accelerator program in 2019, in partnership with Misk Foundation. Over 3 years, we have witnessed the team’s resilience by withstanding COVID-19, successfully expanding from UAE to KSA, and continuously building key partnerships in the industry.
Invygo’s moat comes from its technology stack which integrates between car suppliers, Invygo’s marketplace and a consumer app. Invygo has also built its understanding of consumer demand, and as a result has been able to improve utilization rates of their vehicles, which in turn, enables Invygo to charge consumers subscriptions at very competitive rates.
Our belief in Invygo was strengthened after assessing the different car mobility solutions arising in the region (e.g., car sharing, scooters, ride hailing… etc.). We saw that invygo provides long term mobility solutions that are more aligned to the gaps in transportation and needs of consumers in MENA.
From Ownership to Subscription
Invygo’s emergence also coincides with a global shift towards subscription (e.g., from buying albums to Anghami or Spotify, from buying movies to Netflix and Shahid, and from on-premises software to SaaS). Apple has also been reported to consider iPhone subscriptions for their 2023 releases . Local apps like Careem and Talabat have all introduced subscription programs. Most major car OEMs have experimented with subscriptions in different markets (e.g., VW Group, Volvo, BMW, and others). Car subscription will further grow as the electrification of vehicles continues making depreciation more drastic and maintenance more costly (i.e., you cannot take your Tesla to your local mechanic, you’ll need more specialized service providers). When it comes to cars, subscription can save consumers from many costs and frustrations such as:
- Maintenance Cost: As cars age, maintenance becomes more frequent and costly
- Maintenance Information Asymmetry: Car dealers are incentivized to overcharge their customers (e.g., replacing slightly damaged parts rather than fixing them), creating lack of trust between dealers and customers and an unpleasant experience when owners take their vehicles to the dealer
- Yearly Fees: Owners need to ensure that their cars are registered, tickets are paid for, and insurances are obtained, which is time consuming and onerous. Many car owners drive their cars un-insured or un-registered due to the burden of maintaining cars
- Selling is Challenging: Selling a car can be a hectic journey as owners don’t know what to charge or where to sell their vehicles
Invygo has built a platform that solves mobility for a lot of consumers. Invygo will continue to launch new auto financing and subscription models which will provide access to vehicles to additional consumer segments. We’re excited for what Invygo will bring next and to be part of the company’s journey towards becoming the region’s de facto car subscription and financing solution!
 Finance & Leasing Association (FLA), 2021
 India Times
 PWC, 2019
 Bloomberg.com, April 2022