The Car Rental Market is estimated to be valued at US$ 119.28 billion in 2023 and is expected to exhibit a CAGR of 11% over the forecast period 2022-2027, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
Car rental services provide vehicles on rent for a short period of time ranging from hours to weeks. Car rental services fulfil the mobility needs of individuals and groups for local as well as outstation travel. The vehicles offered on rent include economy cars, luxury cars, sports utility vehicles, multi utility vehicles and others.
Market key trends:
One of the key trends fueling the growth of the car rental market is the rising demand for on-demand mobility services. The proliferation of ride-hailing and car rental apps that offer instant booking and flexible rental duration has increased the adoption of on-demand car rental services. The easy availability of vehicles via mobile apps for point-to-point transportation is appealing to a large consumer base, especially the young millennials and Gen Z. Furthermore, the launch of self-driving vehicles by major car rental brands is anticipated to disrupt the market and attract more customers by offering them a convenient autonomous driving experience.
Porter’s Analysis
Threat of new entrants: Low capital requirements make the threat of new entrants moderate in the car rental market. However, established brands have recognition and loyalty which provides them a competitive advantage.
Bargaining power of buyers: Buyers have high bargaining power due to availability of several alternatives. Brand loyalty is low and buyers are price sensitive.
Bargaining power of suppliers: Car manufacturers are the major suppliers to car rental companies. Suppliers have moderate bargaining power due to dependence of car rental companies on few automobile brands.
Threat of new substitutes: Threat from new substitutes like ride-hailing and car-sharing services is growing.
Competitive rivalry: Intense competition exists among existing players to gain market share.
SWOT Analysis
Strengths: Strong brand recognition, global presence, and diverse fleet of vehicles.
Weaknesses: High operating costs, susceptible to economic downturns, and stringent emission regulations increase compliance costs.
Opportunities: Growth of online rentals, rise in business and leisure travel, and demand for luxury and electric vehicles.
Threats: Risk of natural calamities and political instability affecting tourism and travel. Stringent safety and emissions norms increase compliance costs.
Key Takeaways
The Global Car Rental Market is expected to witness high growth, exhibiting CAGR of 11% over the forecast period, due to increasing business and leisure travel. The market size for 2022 was US$ 119.28 billion.
The North American region currently dominates the car rental market owing to developed tourism and travel industry in the US and Canada. However, the Asia Pacific region is projected to be the fastest growing market due to rising disposable incomes and increasing tourism in countries like China, India, and Southeast Asian nations.
Key players operating in the car rental market are Enterprise Holdings, The Hertz Corporation, Avis Budget Group, Europcar Group, Carzonrent, Sixt SE, Al Futtaim Group, Localiza – Rent a Car, Eco Rent a Car, and GlobalCARS. These major players are focusing on fleet expansion, digitalization, and acquisitions to strengthen their market position.