Car rental service is an innovative approach of providing cars and automobiles on rent for a specific period of time which can vary as per the requirement. Car rental service stations are majorly located near airports, tourist places, and cities. This service enhances the ease of booking and convenience of use without any hesitation. A car rental service is ideal for customers who do not want to own a car and who do not want to use public transportation or traveler who is out of town. Car rental service also serves self-moving industries by renting vans and trucks or other types of vehicles.
The global car rental market was estimated to be valued more than US$ 80.0 billion in terms of revenue in 2019 and is predicted to grow at a CAGR of 13.6% during the forecast period (2020 to 2027).
Growth in the tourism industry is a prime factor fueling the market growth of car rental. According to the data by SelectUSA.gov, the U.S. travel and tourism industry generated over US$ 1.6 trillion in economic output in 2017. Moreover, expenditures by international visitors in the United States passed US$ 251 billion in 2017, yielding a US$ 77 billion trade surplus for the year. Thus, growth in the tourism industry is expected to augment the market growth of the car rental service.
The advent of an electric and hybrid vehicle is projected to represent potential growth opportunities to the market of the car rental. The demand for an electric and hybrid vehicle is expected to significant demand over the forecast period and this is attributed to the strict emission rules set by the government. According to a report published by The Economic Times in April 2020, Electric vehicle sales in India increased by 20% to 156,000 units in 2020 from 130,000 units in 2019.
Stringent emission standards implemented by the government are projected to restrict the market growth of the car rental. According to the EU Legislation passenger cars are responsible for around 12% of the total European CO2 emissions. EU Legislation states that new cars registered in Europe, should not emit more than an average of 130 grams of CO2 per kilometer (g CO2/km) by 2015.
On the basis of category, on-airport dominated the global car rental market in 2019 with around 43% of market share in terms of revenue, followed by intra-city/outstation and other, respectively.
The advent of value-for-money car rental is a major trend in the market and this trend is expected to accelerate the market growth of the car rental. Various players are introducing low-cost service with attractive schemes and discounts for the customers is also projected to drive the market growth. Growing sales of smartphones along with the rapid urbanization across the developing region is further expected to foster market growth.
The growing focus of manufacturers to expand their geographical presence and to cater to the rising demand for car rental service is expected to be a major trend in the market. For instance, in June 2019, Car rental service provider, Avis India has announced the launch of its services in Coimbatore with the aim of geographical expansion and strengthening the company’s operations in South India by building on its existing market presence.
Global Car rental Market - Impact of Coronavirus (Covid-19) Pandemic
Travel bans implemented by governments across the globe in order to stop the spread of Covid-19 have hit the car rental market during first quarters of 2020. The global car rental market is expected to grow at a much lower CAGR of around 5% for a short term period till 2021.
Key players are operating in the global 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
Few Recent Developments
Avis Budget Group, Inc.
By Car Type