Car Rental Market Size - By Booking Channel (Online, Offline) By Rental Length (Short Term, Long Term), By Vehicle (Luxury Cars, Executive Cars, Economy Cars, SUVs, MUVs), By Application (Leisure/Tourism, Business), By End User & Forecast, 2024 – 2032
Report ID: GMI6508
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Published Date: July 2024
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Report Format: PDF
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Base Year: 2023
Companies covered: 20
Tables & Figures: 295
Countries covered: 24
Pages: 270
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Car Rental Market
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Car Rental Market Size
Car Rental Market size was valued at USD 129.1 billion in 2023 and is estimated to register a CAGR of over 7% between 2024 and 2032, driven by factors such as rising travel & tourism and paradigm shift toward on-demand mobility services. With more people traveling for both business and leisure, the demand for convenient and flexible transportation options has grown. Also, the integration of technology in car rental services, such as mobile apps for booking, GPS tracking, and automated customer service, has made the rental process more efficient and appealing to customers.
Major car rental companies are investing in digital transformation and sustainability initiatives to stay competitive and meet evolving customer expectations. For instance, in June 2024, ACE Rent-a-Car enhanced its digital platform to improve the customer experience. It is focusing on streamlining the reservation process and integrating more eco-friendly vehicles into its fleet.
The growing preference for on-demand mobility services, such as car-sharing and ride-hailing, has spurred the car rental market. Consumers are increasingly seeking flexible transportation solutions without the long-term commitment of car ownership. The corporate sector's expansion, particularly in the emerging markets, has driven the demand for rental cars. Businesses often provide rental cars for their employee business trips and corporate events. Many business travelers prefer renting cars at airports for efficient and flexible transportation during their trips. As travel rebounds post-pandemic, car rental companies are strategically expanding their presence at key transportation hubs to capture the growing market.
For instance, in June 2024, Enterprise Holdings expanded its airport locations to better serve the increasing demand from air travelers. This strategic move was aimed at enhancing its presence and meeting the rising demand for car rental services at airports.
The car rental market faces numerous challenges such as price fluctuations, competition from ridesharing services, and high operational cost. Rental car prices can be volatile, fluctuating based on season, demand, and location. Additionally, car rental companies invest heavily in purchasing and maintaining a diverse fleet of vehicles. Over time, these vehicles depreciate in value, and the costs associated with regular maintenance, repairs, and eventual replacement can be substantial. These challenges are anticipated to hinder the market growth.
Car Rental Market Trends
There is a growing trend toward digital transformation, including mobile apps for booking and managing rentals, contactless transactions, and integrating telematics for vehicle tracking and management. Car rental companies are expanding their fleets with electric and hybrid vehicles to meet environmental regulations and cater to the growing demand for eco-friendly options. Companies are offering more flexible rental options, including short-term rentals and subscription-based services, to cater to consumers who prefer not to commit to long-term car ownership.
Partnerships and integrations with ridesharing and mobility platforms are becoming more common, allowing companies to offer a wider range of transportation solutions. There is a shift toward catering to leisure travelers. This includes offering vacation packages and partnerships with travel agencies and airlines. Companies are investing in technology and services to enhance the customer experience and offer personalized rental options such as customizable rental packages, loyalty programs, and personalized recommendations based on customer preferences.
Car Rental Market Analysis
Based on rental length, the market is divided into short term and long term. In 2023, the short-term segment was valued at over USD 90 billion. Short-term car rental service offers a cost benefit to the consumer. Especially in urban areas, car ownership is expensive with factors such as parking costs, maintenance, and insurance.
Short-term car rental service allows access to a car only when one needs it, saving money in the long run. This caters to a variety of needs, from weekend getaways to errands or last-minute appointments and offer the flexibility to choose the perfect car for the specific situation. The car rental market is adapting to changing travel patterns by offering more flexible and tailored rental options, particularly for leisure travelers. For instance, in January 2024, Hertz expanded its short-term rental options, providing tourists with affordable and convenient solutions for short trips, with promotions targeting popular vacation destinations.
Based on vehicle, the car rental market is categorized into luxury cars, executive cars, economy cars, SUVs, and MUVs. The economy cars segment is anticipated to register a CAGR of over 6% from 2024 to 2032. The growth is driven by the cost effectiveness that an economy car offers. Economy cars provide lower rental rates and better fuel efficiency. This makes them attractive to budget-conscious travelers and individuals. They have lower emissions, aligning with the increasing environmental consciousness among consumers. Renters are opting for smaller, more eco-friendly vehicles to reduce their carbon footprint.
In urban areas with tight parking spaces and heavy traffic, the smaller size and maneuverability of economy cars make them a more practical choice compared to larger vehicles. Car-sharing services are adapting their fleets to match urban mobility trends and customer preferences for more efficient transportation options. For instance, in April 2024, Zipcar expanded its fleet to include more economy cars, responding to the growing demand for compact and efficient vehicles in urban environments. This strategic move enhances urban convenience, as economy cars are easier to maneuver and park in congested areas.
In 2023, North America dominated the car rental market with around 45% of the market share. The region’s cities are becoming more densely populated leading to the increased demand for shared transportation solutions. There is a growing preference for vehicle sharing instead of ownership in urban areas. Popular tourist destinations in the region, such as national parks, coastal areas, and cultural sites, have seen a rise in visitors. Car rentals provide a convenient way for tourists to explore these locations.
The growth of peer-to-peer car rental is growing in region as it provides car owners an alternative source of income. Ride-hailing companies are diversifying their services and entering the car rental market, leveraging their existing user base and technology platforms to offer new mobility solutions. For instance, in June 2024, Uber expanded its services in North America by introducing a peer-to-peer car rental platform, which will allow individuals to rent out their personal vehicles through the Uber app.
Europe is a major global travel destination, attracting millions of tourists each year. The growth in international and domestic tourism drives the demand for rental cars as visitors seek convenient and flexible transportation options to explore the diverse regions. Increasing urbanization in cities is creating a demand for flexible transportation solutions, fueling the demand of car rental services in the region.
The Asia Pacific region is experiencing significant economic growth, leading to a rise in disposable income and increased travel spending. This fuels the demand for leisure travel and car rentals for exploring new destinations. A growing middle class in many Asian countries signifies a larger population with the means to afford car rentals for personal or business purposes, driving the market growth in APAC.
Car Rental Market Share
Enterprise Holdings Inc., Hertz System Inc., and Avis Budget Group hold a significant market share of over 18% in car rental industry. These major players are adapting to changing consumer preferences and technological advancements. Companies, such as Enterprise Holdings, Hertz, Avis Budget Group, and SIXT, are investing heavily in digital platforms to enhance the customer experience. They are focusing on mobile apps and websites that offer seamless booking processes, digital key solutions, and personalized services.
Many are also expanding their fleet to include more electric and hybrid vehicles to meet the growing demand for eco-friendly options. Additionally, these companies are exploring new business models such as car-sharing services and subscription-based rentals to diversify their revenue streams.
Moreover, some companies are also exploring peer-to-peer car-sharing platforms, where individual car owners can rent out their vehicles when not in use. This allows rental companies to expand their fleet without the associated ownership costs. Getaround and Turo are examples of companies specializing in this model, while traditional rental companies are also considering how to incorporate this approach into their service.
Car Rental Market Companies
Major players operating in the car rental industry are:
Car Rental Industry News
The car rental market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Billion) from 2021 to 2032, for the following segments:
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Market, By Booking Channel
Market, By Rental Length
Market, By Vehicle
Market, By Application
Market, By End User
The above information is provided for the following regions and countries: