Car Rental Market

Car Rental Market Outlook (2023 to 2033)

The global car rental market is predicted to expand at an impressive CAGR of 9.6%, rising from its current value of US$ 80 billion to reach US$ 200 billion by the end of 2033.

Car rental is the service of renting automobiles for a specified period of time, either through offline or online channels. Car rental services are primarily designed to assist travelers and persons who don't have personal vehicles. Renting a car is more cost-effective than owning one since it provides better mobility, lower-cost travel, and avoids large ownership expenses.

For added convenience, car rental companies also sell additional items such as insurance compensation packages, automotive damage repair, global positioning systems (GPS), entertainment systems, and Wi-Fi networks.

Rapid increase in COVID-19 infections had a substantial influence on the overall tourism sector in 2020, affecting global market expansion.

• According to World Tourism Organization (UNWTO) data, global tourism dropped by 60 to 80% in 2020, owing primarily to the COVID-19 pandemic, leading to significant revenue losses.

A drop in global air traffic led to declining demand for car rentals at airports. However, the tourism sector rebounded in several parts of the world in the second half of 2021, giving new opportunities for global market growth.

Car rental companies are now following hygiene and safety standards to maintain safety and prevent virus transmission, such as sanitizing their vehicles after each ride. Some car rental companies are also providing free masks and hand sanitizers to their customers.

Throughout the previous decade, there has been tremendous growth in global travel. The growing number of air travelers due to increasing disposable income, decreasing fares, and a growing leisure and tourism industry in both developed and developing countries are increasing the demand for airport car rental services.

• The International Air Transport Association (IATA) predicted in October 2019 that the number of air travelers worldwide is projected to double to 8.3 billion by 2037.

Some major car rental firms plan to profit from this trend by spreading their brand and distribution networks around the world. Incorporating a global integrated car rental system will enable these operators to oversee their geographically dispersed firm activities.

Businesses are growing worldwide, which is impacting the rise of business travelers. As a result, the significant population of corporate or business visitors is projected to spur the demand for luxury car rental services.

'Bleisure' is a new trend in the travel and tourism sector. This comparatively new term, which specifies a combination of leisure and business travel, is getting popular around the world. Bringing the family on business travels is becoming increasingly common as businesses accept the concept to promote employee retention and alleviate some of the pressure of key road warriors.

Report Attributes	Details
Car Rental Market Size in 2023	US$ 80 Billion
Projected Market Value (2033)	US$ 200 Billion
Global Market Growth Rate (2023 to 2033)	9.6% CAGR
North America Market Share (2022)	52%
Economy/Budget Cars Segment Growth Rate (2023 to 2033)	5.4% CAGR
Key Companies Profiled	Toyota Motor Corporation Enterprise Rent-A-Car Zipcar, Inc Enterprise Holdings, Inc Sixt SE Avis Budget Group, Inc Getaround, Inc

Why are Car Rental Services Rapidly Growing in Popularity?

“Reduced Preference for Car Ownership among Millennials”

Millennials have a lower rate of car ownership due to the high expense of personal car upkeep. Furthermore, millennials are attracted to car rentals due to benefits such as cost savings and fuel economy. In developed countries, the surge in demand for ride-hailing services and facilities such as car sharing, car rental, and station-based mobility has cut private car ownership by 80%.

• For example, the number of passenger automobiles on American highways is predicted to fall significantly by 2030 as the usage of electric ride-sharing services grows.

Such aspects are projected to raise the global demand for car rental services during the forecast period.

“Increasing Use of Car Rental Management Software”

On a global scale, the global market is rising significantly. Many big businesses have already joined the market and established significant market positions, but there is still room for more entrants. By enhancing their operations and implementing new automated technologies, all market participants are taking steps to deliver better services and offers to increase bookings.

Car rental companies increasingly use car rental management software to improve their services and streamline operations. The car rental management software reduces management tasks and increases operating effectiveness. Furthermore, management software includes capabilities such as advanced pricing management, fleet optimizations, and custom reports.

Country-wise Insights

What Makes the United States a Large Market for Car Rental Service Providers?

“Booming Domestic Tourism Industry”

As per this study by Fact.MR, a market research and competitive intelligence provider, North America accounted for 52% of the global market in 2022. The presence of prominent car rental companies, including Enterprise Rent-a-Car and Avis Budget Group, is boosting the market growth in the region. Moreover, the growing number of business and leisure visits across the region is also driving regional market growth.

The United States is a market leader in North America due to the booming domestic tourism industry. The increase in the number of people taking both leisure and business trips across the country is bolstering the market expansion. Furthermore, increased internet penetration has aided market players in capturing a broader customer base through the use of specific mobile apps for user convenience.

• As per the United States Travel and Tourism Statistics, the number of Americans traveling within the country in 2021 accounted for the lion's share, totaling 2.25 billion. Moreover, leisure travel accounted for 72.6% of all tourism in America, with the remaining 25.3% being for business and other reasons.

The state of New York is located in the northeast part of the United States and is a popular tourist destination. With a land area of about 140,000 square kilometers, the state offers a variety of historic and picturesque tourist locations, creating demand for rental services. Due to the existence of multiple car rental providers, New York represents the most competitive market for car rentals in the United States.

Which Countries are Witnessing Strong Market Growth in Asia Pacific?

“South Korea and Japan to Enjoy Strong Market Growth”

The Asia Pacific market is growing at a rapid pace due to continuously growing economies, increasing consumer disposable incomes, as well as increased business travel expenditures.

South Korea and Japan are witnessing strong growth in the global market as a result of rising travel spending, increasing demand for rental cars, and greater internet and smartphone penetration in these countries.

Why is Germany Commanding the European Market?

“Low Cost of Car Rentals in the Country”

Demand for car rental services is escalating in Europe. Germany is dominating the European market. Compared to the rest of Europe, car rentals in Germany usually are less expensive. As a result, the low cost of car rentals in Germany is propelling the regional market expansion.

Category-wise Insights

Why is Demand for Economy/Budget Car Rentals Surging?

“Cost-effectiveness and Compact Nature of Economy/Budget Cars”

Demand for economy/budget cars is estimated to develop at a CAGR of 5.4% over the next ten years. The cost-effectiveness and compact nature of economy/budget cars are two primary elements fueling their demand. As a result, economy cars are becoming more popular for intra-city and airport transport.

Demand for luxury/premium cars is also growing due to the rising number of business travelers around the world, particularly in emerging countries. Furthermore, these vehicles provide customers with a combination of quality features at a reasonable price, driving their popularity among corporate travelers.

Why Do Travelers Prefer Online Booking Platforms?

“Affordability and Convenience Offered through Online Booking”

Most travelers prefer online booking methods for renting a car. Nowadays, online booking serves a range of objectives, including automobile information, document verification, services such as rented car drop-off and pick-up at a specific location, cashless payments, and e-signing agreements.

Online booking also allows for car booking from remote locations without the need to physically visit the facility. Furthermore, travelers can browse thousands of impartial evaluations from other travelers, eliminating the stress and unpleasant surprises associated with bookings.

Travelers can quickly compare the prices, services, and quality of various accommodation options. Greater transparency leads to more competition among accommodations. Reduced costs and higher quality mean visitors get more bang for their buck.

Increased smartphone sales are another key market driver. Customers' heavy dependence on smartphones to complete a wide range of tasks traditionally performed by personal computers has significantly contributed to the transformation of the car rental experience.

Competitive Landscape

The worldwide market is moderately fragmented, with a large number of international and domestic firms present. Key players in the car rental market are focusing on expansion initiatives to obtain regional market share, raise brand awareness, and enter developing markets. These players primarily focus on improving their services to increase profitability and acquire a broader customer base.

Another effective approach that market participants use to increase their market position is strategic partnerships. Moreover, several start-ups are entering the market and competing with prominent players.

• Kovi, a Brazilian start-up, provides an online platform for car rental services. The platform allows customers to search for and book rental cars by providing duration, personal information such as driving license, and so on. It provides services such as a large pool of cars, insured rides, various payment choices, etc.
• Ikenna Ordor's luxury car rental company 'Starr Luxury' announced its entrance into the United States in July 2022. It announced the launch of its services in major cities, including Miami, Los Angeles, Austin, Atlanta, and Houston. Starr Luxury is well-known for being one of the world's few companies of its sort to collaborate with five-star hotels.
• Uber's premium electric car service, Uber Comfort Electric, revealed its extension into other United States cities in July 2022, including Portland, Las Vegas, Seattle, Baltimore, Denver, Philadelphia, and Austin.
• Uber introduced a new car rental service named Uber Rent in May 2021 in collaboration with the Dublin-based car rental firm CarTrawler. CarTrawler will manage Uber's car rental technology, which is being pushed out across the United States as part of the agreement.

GoAir collaborated with Eco Europcar in April 2021 to introduce car rental services in 100 cities across India, comprising 25 airports. GoAir will provide chauffeur-driven cars in the mid to luxury car classes through Eco Europcar.

Key Segments of Car Rental Industry Research

• By Vehicle Type :

  • Luxury/Premium Cars
  • Economy/Budget Cars

• By Booking Type :

  • Offline
  • Online

• By Application :

  • Leisure/Tourism
  • Business

• By End User :

  • Self-driven
  • Chauffeur-driven

• By Region :

  • North America
  • Latin America
  • Europe
  • Asia Pacific & China
  • Middle East & Africa