Car Rental Market Growth Owing To Increasing International And Domestic Tourism & Digitalization

car rental market

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:
The car rental market involves short-term rental of automobiles and utility vehicles. Key products associated with the market include economy cars, executive cars, luxury cars, SUVs, and MUVs. Customers can rent vehicles through both offline and online channels for purposes such as leisure travel, business travel, and airport transportation.

Market Dynamics:
The global car rental market is primarily driven by the increasing number of international and domestic travelers worldwide. International tourist arrivals crossed the 1 billion mark in 2012 and are expected to reach 1.8 billion by 2030 according to UNWTO projections. Additionally, the digitalization of the car rental industry has made booking and rental processes highly convenient for customers. Key players are focusing on launching technologically advanced mobile applications and websites for seamless reservation, pickup, and drop-off services. Furthermore, the rising popularity of car sharing and ride-hailing services among urban populace is also contributing to the growth of short-term vehicle rentals.

SWOT Analysis

Strength: The car rental market has strong brand recognition with leaders like Enterprise Holdings, Hertz, and Avis Budget dominating global operations. It allows travelers an easy option to access vehicles for local transportation needs. There is a large global network of rental locations and vehicles that provides convenience to customers.

Weakness: Fluctuations in fuel costs and economic downturns negatively impact demand for rental cars. Customers are increasingly preferring mobility options like ride-sharing which threatens the traditional rental business model.

Opportunity: Rising international travel and tourism provides significant growth opportunities for rental cars in emerging markets across Asia and Africa. Advancements in connected car technologies allow rental companies to offer new conveniences and collect valuable customer driving data.

Threats: Strict emission regulations around the world may increase operating costs for rental fleets. Emergence of autonomous vehicles could disrupt traditional ownership and rental models in the long run.

Key Takeaways
The Global Car Rental Market is expected to witness high growth, exhibiting CAGR of 11% over the forecast period, due to increasing international travel and tourism activities globally. Many countries are promoting their tourism industries which is driving the demand for rental cars.

Regional analysis: North America dominated the global car rental market in 2021, accounting for revenue share of over 35%. However, Asia Pacific region is expected to experience fastest growth during the forecast period owing to rising disposable incomes, expanding tourism industries in countries like China, India and Thailand. China, Japan and India are projected to lucrative markets for car rental companies.

Key players analysis: 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 players are focusing on fleet modernization and utilizing emerging technologies to enhance customer experience. Strategic partnerships provide them access to new international markets.

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