Car Rental Service Market: Emerging Trends Point Towards Surpassing US$ 307.5 Billion by 2033

Car Rental Service Market
Car Rental Service Market

During the forecast period, the car rental service market is anticipated to grow at a Compound Annual Growth Rate (CAGR) of 7.2%. Starting from its 2023 valuation of US$ 153.4 billion, the market is projected to exceed US$ 307.5 billion by 2033. Within the transport market, the target market commands a share ranging from 1% to 3%. This indicates a substantial presence within the broader transportation industry, underlining the significance and potential of car rental services in meeting consumer mobility needs. The consistent growth trajectory suggests a promising outlook for the car rental service sector in the coming years.

Substantial growth in the number of people taking business and leisure travel trips is spurring the demand for the car rental market in the forecast period. The widespread access to and use of the internet across developing as well as developed nations have helped enterprises in the market to expand their customer base with the aid of mobile applications. In addition, the subscription model introduced by many market players is expected to contribute to market growth.

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Rapid advancements in technology are anticipated to be an essential factor aiding the expansion of the market size. Technologically-empowered web-based solutions like online sales and booking channels enable consumers to rent a car at their convenience and ease. Technological advancements in this sector have improved customer and corporate information management and enabled hassle-free internet bookings. These considerations will supplement the growth of the car rental market.

Again, the heightened dependency of  consumers on smartphones for carrying out myriad tasks- tasks that were conventionally done by computers- has altered the car rental experience for consumers. This is because swift technological progress has helped enterprises in this sector to introduce various applications that will ensure a smooth booking process for consumers which, in turn, drives global market growth.

The market is also significantly influenced by the introduction of concepts like opaque renting which is a booking platform that allows online customers to offer the value that they will pay for a specific travel-related product or service without knowing the brand beforehand. The brand is only revealed after the consumer makes an online purchase. This concept, thus, enables car rental businesses to grow and use their fleet to their full capacity. This trend is expected to have an immense impact on the car rental services market. Hence, technological advancements in mobile capacities along with advancing web-based media enable the growth of opaque renting which, in turn, drives the overall car rental market growth.

Business Growth Drivers:

  1. Convenience and Flexibility: Car rental services offer customers the convenience of accessing vehicles on-demand, providing flexibility in terms of pick-up and drop-off locations and rental durations. This convenience appeals to both leisure and business travelers.
  2. Increasing Travel and Tourism: The rising trend of travel and tourism, both domestic and international, contributes to the growth of the car rental industry. Tourists often prefer renting cars to explore destinations at their own pace, boosting demand.
  3. Expansion of Ride-Hailing and Car Sharing: Ride-hailing services and car-sharing platforms have grown in popularity, contributing to the overall awareness and acceptance of shared mobility solutions. Car rental companies often integrate these services into their offerings, expanding their customer base.
  4. Business Travel Needs: Corporate travelers frequently utilize car rental services for business trips, conferences, and meetings, driving demand in the corporate sector. Companies often establish partnerships with rental providers to manage their travel needs efficiently.
  5. Technological Advancements: Integration of technology such as mobile apps, GPS navigation, and digital booking platforms enhances the customer experience, streamlines operations, and improves fleet management for rental companies.
  6. Economic Factors: Economic growth, increasing disposable income levels, and urbanization contribute to the expansion of the car rental market as more individuals and families seek affordable transportation options for various purposes.

Industry Restraints:

  1. Regulatory Challenges: The car rental industry is subject to various regulations, including licensing requirements, insurance regulations, and taxation policies, which vary across regions. Compliance with these regulations can be complex and costly for rental companies.
  2. Competition from Alternative Transportation Modes: Car rental services face competition from alternative transportation modes such as ride-hailing, car-sharing, and public transportation. The convenience and cost-effectiveness of these alternatives may pose a threat to traditional car rental businesses.
  3. Environmental Concerns: Increasing environmental awareness and regulations aimed at reducing carbon emissions may impact the demand for car rental services, especially those operating fleets of gasoline or diesel-powered vehicles. Rental companies need to invest in eco-friendly options to stay competitive.
  4. Dependence on Travel Industry: The car rental market’s growth is closely linked to the travel and tourism industry. Economic downturns, geopolitical tensions, natural disasters, and pandemics can significantly impact travel demand, thereby affecting the rental market adversely.
  5. Fleet Management Challenges: Managing a diverse fleet of vehicles involves significant operational challenges, including vehicle maintenance, depreciation, and inventory management. Fluctuations in demand and changes in consumer preferences can affect fleet utilization and profitability.

Key Takeaways:

  • Sharp rises in fuel prices will likely serve as an impediment to the global car rental services market.
  • Favorable government initiatives like the implementation of policies regarding the reduction of carbon emissions will likely strengthen market prospects.
  • The car rental market in the US will be driven by the presence of market leaders like The Hertz Corporation.
  • China’s car rental market will dominate the East Asia region with East Asia registering a CAGR of 10.8% from 2023 to 2033.
  • By car type, the economy cars segment will dominate the international marketplace.
  • Based on end-users, the on-airport segment will account for over 40% of the market share.

Competitive Landscape 

  • Enterprise Holding Inc.
  • The Hertz Corporation
  • Localiza-Rent A Car
  • Sixt SE
  • Avis Budget Group
  • among others

are a few of the significant players in the car rental market profiled in the full version of the report.

In a competitive market, key players are keen on capitalizing on ongoing technological advancements. These organizations make use of web and mobile-based advancements to attract a wider consumer base. Strategic service offerings, mergers, and acquisitions are also employed by these participants to gain a competitive edge. For instance, Localiza Rent A Car SA merged with Car Rental Systems in 2020 to meet strategic guidelines for simplification and administrative and financial rationalization.

More Insights Into Car Rental Market 

In its latest report, FMI offers an unbiased analysis of the global car rental market, providing historical data from 2018 to 2022 and forecast statistics for 2023 to 2033. The report offers insights into a ten-year sales prospect, market drivers, opportunities, trends, and challenges. For a better understanding of the global market potential, growth, and scope, the market is segmented on the basis of car type, end-use, booking mode, sector, and region.

As per FMI reports, based on segmentation, the mobile app booking mode will be the most preferred booking segment during the assessment period. This category will register a CAGR of about 8% during this period. In terms of car type, though the economy segment will lead, the intermediate car type will register a significant CAGR of 7.5% from 2023 to 2033. Based on region, East Asia and South Asia will emerge as remunerative pockets for the car rental market. Where the East Asian car rental market will witness a 10.5% CAGR, the South Asian market is expected to undergo a CAGR of 8.8% from 2023 to 2033. This is attributed to the expanding tourism sector in countries like China and India. Other countries like the US and Germany will also contribute to the growth of the car rental market.

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Car Rental Services Market by Category

By Car Type:

  • Economy Cars
  • Compact Cars
  • Intermediate Cars
  • Premium Cars
  • Luxury Cars
  • Others

 By End Use:

  • Intercity
  • Intracity
  • On-Airport
  • Others

By Consumer Type:

  • Business
  • Leisure

By Booking Mode:

  • Offline Access
  • Mobile Application
  • Other Internet Access

By Sector:

  • Organized
  • Unorganized

By Region:       

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia
  • Oceania
  • Middle East and Africa (MEA)

About Future Market Insights (FMI)

Future Market Insights, Inc. (ESOMAR certified, recipient of the Stevie Award, and a member of the Greater New York Chamber of Commerce) offers profound insights into the driving factors that are boosting demand in the market. FMI stands as the leading global provider of market intelligence, advisory services, consulting, and events for the Packaging, Food and Beverage, Consumer, Technology, Healthcare, Industrial, and Chemicals markets. With a vast team of ~400 analysts worldwide, FMI provides global, regional, and local expertise on diverse domains and industry trends across more than 110 countries.

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About the Author

Ronak Shah

Associate Vice President at Future Market Insights is deeply committed to uncovering actionable insights for consumer and food and beverage players. She brings a unique blend of analysis, industry trends, and consumer behavior to put data into perspective.

What she makes out of data becomes a delight to read. She has authored many opinions, including for publications like Process Industry Informer and Spinal Surgery News, as she understands the market pulse and consumers' shifting preferences.

She likes to bring experts to a roundtable to weigh the impact of a trend on an industry. Catch up with her discussion on the impact of AI in packaging.

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