Market Definition
Car rental service provides rental cars, ranging from small economy cars to luxury cars, SUVs, and vans. The market bifurcates into airport rentals, leisure rentals, and business rentals. It’s a highly competitive market due to the presence of global brands & small regional players.
Market Insights
The Global Car Rental market is projected to grow at a CAGR of around 7% during the forecast period, i.e., 2023-28. Various factors, including the diversification of services, increasing urbanization, rising disposable income, ascending preference for on-demand transportation, and growth of tourism, have played a major role in the market growth & would continue to support the market expansion.
With the global upsurge in the price of vehicles, individuals are switching towards on-demand transportation, hence this has been complemented by surging internet penetration. As of 2022, there are approximately 4.95 billion internet-users & around 4.62 billion active internet-users across the globe.
| Report Coverage | Details |
|---|---|
| Study Period | Historical Data: 2018-21 |
| Base Year: 2022 | |
| Forecast Period: 2023-28 | |
| CAGR (2023-2028) | 7% |
| Regions Covered | North America: US, Canada, Mexico |
| Europe: Germany, The UK, France, Spain, Italy, Rest of Europe | |
| Asia-Pacific: China, India, Japan, South Korea, Rest of Asia-Pacific | |
| South America: Brazil, Rest of South America | |
| Middle East & Africa: GCC, South Africa, Rest of MEA | |
| Key Companies Profiled | Avis Budget Group, Sixt SE, Enterprise Holdings (Alamo), Hertz Corp., Europcar, Localiza, Carzonrent India Pvt. Ltd. (CIPL), ZoomCar, Inc., Dollar Rent a Car, Green Motion, Buchbinder, Others |
| Unit Denominations | USD Million/Billion |
On-demand transportation services offer online booking & payment systems and similarly use social media for marketing & reaching out to potential customers, which supported the growth of on-demand transportation services. As more customers turned towards these services, individuals became more familiar with the idea of renting cars for a short duration of time, which supported the market growth.
Moreover, many car rental companies are now operating in partnership with ride-hailing services by providing vehicles that are helping them to boost the demand for their rental services & generate additional revenues. For instance, in 2023, Uber partnered with Hertz to offer 25,000 EV rentals to Uber drivers in Europe. The partnership between them is expected to grow as both are types of companies that want to stay competitive in the rapidly evolving transporting industry, which subsequently would support the market growth during the forecast period.
Market Dynamics
Key Driver: Expansion of Global Tourism to Augment the Market Growth
Tourism is a rapidly growing industry, especially in countries like China, the UAE, France, etc., and this has been a major driver for the Car Rental market across the globe. According to World Travel and Tourism Council, the growth rate of the global travel & tourism sector outpaced the growth of the global economy for nine consecutive years prior to the COVID-19 pandemic. During the pandemic, the industry witnessed a downfall of 50.4%, and later on, it recovered by 21.7% in 2021. As more individuals travel globally, they seek convenient means of transportation, owing to which they opt for these services.
Moreover, many countries, like Saudi Arabia, Qatar, Thailand, Singapore, etc., are implementing plans to boost their sector. For instance,
Consequently, the plans by different countries to boost tourism are leading to enhanced investment in theme parks, new hotels, resorts, etc., & as the number of tourists surges, there would be an increase in car rental demand to explore these places, which would augment the market growth during the forecast period.
Possible Restraint: High Deposit Cost Associated with Car Rental to Hamper the Growth
Car rental companies often take a huge amount of deposit from the customers, which discourages some customers from renting cars. All rental car companies have different deposit charges. However, on average, in the US, around USD200 to USD500 is charged as a deposit fee by car rental companies. For instance, as of 2022, Hertz charges a minimum deposit fee of about USD200 for credit cards & USD500 if using a debit card, and similarly, Fox requires a deposit of between USD150 to USD400 when renting a vehicle with them.
Along with this, there have been many instances where customers lost deposit money due to factors like failure to return the car on time, additional charges, failure to pick up a car on time, etc. For instance, in 2023, in the US, a 54 years old individual lost his rental car reservation & around USD249 advanced fee to hold the vehicle due to delayed flight arrival at Orlando Airport. Hence, these factors are boosting the popularity of ride-hailing services as an alternative to traditional car renting services, therefore negatively affecting the market growth.
Growth Opportunity: Declining Private Car Ownership in Some European Countries to Open New Doors for the Market Players
In countries such as Sweden, the Netherlands, and part of the UK, private car ownership is declining, especially in urban areas & this is presenting a multifaceted opportunity for the market players. According to KiM Netherlands Institute for Transport Policy Analysis, private car ownership per resident in highly urbanized areas declined in the past decade, but there was a surge in car ownership in the more rural areas of the Netherlands. Meanwhile, rates of car ownership in London are significantly lower than in the rest of the UK, which is approximately 0.74 cars per household as of 2022.
Moreover, these countries are focusing to reduce carbon emissions & reach net zero between 2030 and 2040. Owing to this, they are substantially promoting ride-sharing platforms, e-scooter services, and 4-wheeler leasing services. However, this trend is not uniform across Europe, but in countries where private car ownership is declining, it would offer an opportunity for the market players to expand their wings.
Key Trend: Integration of Advanced Telematics to Car Rental Software to Create New Trends
Currently, car rental companies are increasingly integrating telematics to gain insights into fleet performance, driver behavior, and maintenance needs. For instance, in 2021, RentalMatics announced an integration with TSD Mobility Solutions’ car rental software system. The use of telematics is also helping rental companies to improve their customer's experience as it provides real-time information about estimated arrival time & vehicle location.
Along with this, advanced telematics helps rental companies by alerting the potential risks of thefts, accidents, and unauthorized use. Owing to this, the integration of advanced telematics is expected to continue to be a prominent factor in influencing market growth in the future.
Market Segmentation
Based on Vehicle Type:
Economy cars have registered a significant demand due to their compact size & cost-effectiveness. Customers usually prefer these cars for airport & intracity rides, especially in Europe & Asia-Pacific. Furthermore, they are the cheapest option available in the rental fleet line-up & have better mileage which customers who rent care for long journeys prefer them. Owing to these factors, the preference for these cars is anticipated to witness a continuous surge during the forecast period.
Based on Booking Mode:
Rental car booking through Online mode was considerably high across the globe due to factors such as convenience, flexibility, and time-saving. While booking rental cars online, customers get a wide range of options & discounts, in comparison to in-person booking, and along with this, it helps consumers to secure last-minute reservations even during peak hours. As of 2021, approximately 329 million people in North America, i.e., almost 84% of the population, have subscribed to mobile services & along with this, the internet penetration in the region is also substantially high, which supported the market growth.
Furthermore, internet penetration in the region is continuously enhancing due to various government initiatives. For instance, the Government of Canada is connecting around 98% of Canadians to high-speed Internet by 2026 & nearly 100% of Canadians by 2030. These initiates would accelerate the booking through online mode in the region, hence contributing to the market growth in the following years.
Regional Projection
Geographically, the market expands across:
North America is home to three major economies, the US, Mexico, and Canada, which have a huge number of business establishments, owing to which several domestic business trips are witnessed to be very high within the countries for purposes like client meetings, conferences, etc. The companies & executives both find rental cars, the most cost-effective way for traveling.
Along with this, rental car service providers like Avis Budget Group, Enterprise rent-a-car, etc., have established a wide rental network, making it easier for consumers to rent & return cars, hence supporting the market growth. Additionally, growing environmental concerns among business establishments in the country are further enhancing the demand for electric rental cars, which would further elevate the market growth in the region during the forecast period.
Recent Developments by the Leading Companies
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Frequently Asked Questions
A. The Car Rental Market would showcase a growth rate or CAGR of around 7% during 2023-28.
A. The surge in tourism is expected to drive the market during 2023-28.
A. Avis Budget Group Inc., Sixt SE, Enterprise Holdings (Alamo), Hertz Corp., Europcar, Localiza, Carzonrent India Pvt. Ltd. (CIPL), ZoomCar, Inc., Dollar Rent a Car, Green Motion, Buchbinder, etc., are some top players in the market.
A. Economy car is the leading vehicle type in the Car Rental Market.
A. North America would present growth prospects in the Car Rental Market during 2023-28.
A. Integration of advanced telematics to car rental software is the new trend shaping the market growth.
A. Individuals are the potential end-users.
A. Declining private car ownership in some European countries to open new doors for the market players.
