Car rental is a platform that offers renting vehicles/automobiles for specific periods, ranging from hours to a few weeks. This service is served by car rental agencies to the people who require a vehicle for the temporary and do not want to own a car. Car rental the agency also serves to the self-moving industry needs, by renting the vans, trucks, motorcycles or scooters. Along with the basic rental service, car rental agencies also serve value-added products such as global positioning system (GPS) navigation systems, insurance, mobile phones, entertainment systems, portable WiFi etc.
The Mexico car rental market is estimated to account for US$ 1,625 Mn in terms of value by the end of 2019.
Improving living of standard in Mexico and rising number of a manufacturing unit in the country is creating more employment which in turn resulting in increased disposable income. This has resulted in a rising number of trips by leisure travelers to leisure destinations is leading raise the demand for car rental service. Therefore, this is projected to propel the market growth of car rental in the Mexico. Moreover, the strong presence of major players such as Hertz, Avis, Alamo, Budget, Thrifty etc. in the country is also projected to boost the market growth.
Mexico City dominated the Mexico car rental market in 2018, accounting for 30.4% share in terms of value, followed by Cancun and Guadalajara, respectively.
The business is likely to get affected by various economic factors such as level of economic activity in the industry in which the player. Moreover, for a car rental agency, reduction in economic activity can results in decline both in business and leisure travel and ultimately a reduction in the volume of car rental service. Furthermore, car rental service can reduce the rate due to competitive pressure, which is projected to hamper market growth.
The advent of new business models has presented lucrative growth opportunities to the car rental services industry. For instance, the aggregator model offer rental companies to connect with actual car owners; this eases the renting process, and also add significantly benefits of cost and reduce the risk of in term of investment compared to the old business model which was followed by most of the car rental companies. Therefore, the rising introduction of advance approach for car rental agencies is expected to fuel the market growth over the forecast period.
Introduction of electric vehicle and Hybrid Vehicles due to rising implementation of strict emission regulations in order to reduce pollution is encouraging the transport companies to add electric and hybrid vehicles in their services. However, demand for these vehicles are currently low in the region, but it is projected to rise significantly over the forecast timeframe. Therefore, rising introduction of electric and hybrid vehicles is projected to offer immense growth opportunities to the market of car rental.
Economy car segment was valued at US$ 378.4 Million in Mexico car rental market in 2018 and is expected to register a CAGR of 8.6% between 2019 and 2027.
Market Trends/Key Takeaways
Rising trend of using economy and compact cars from leisure travelers and demand for cars is shifting from compact cars to intermediate or SUVs owing to an increased number of business travelers is gaining significant traction in the market. Rising number of business travelers who preferred to adopt SUVs over other compact cars are projected to fuel the market growth over the forecast period. For example, Veracruz is projected to be the new business city in Mexico due to growing foreign direct investments in the city.
The increasing trend of upgrading technologies by companies to make service more convenient and user-friendly. The trend is protected to continue because online car booking and car rental services are on the rise in the region. This is projected to propel market growth.
Players active in the market are The Hertz Corporation, Sixt SE, Avis Budget Group Inc., Alamo, National Car Rental, Europcar Group S.A., MEX Rent a Car, Budget Rent A Car System, Inc., Fox Rent A Car, and Thrifty Car Rental, Inc.