Asean Car Rental Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Asean Car Rental Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The ASEAN Car Rental Market is anticipated to register a CAGR of about 15.7% during the forecast period (2020 – 2025).

• Car rental companies rent out cars for a suitable fee for a certain duration. Generally, hiring periods could range from a few hours to also a few days or weeks. With hassle-free, low maintenance, and cheap pricing, renting cars is also becoming popular in the ASEAN markets.
• Various factors, including population rise along with growth in the economy, are making the ASEAN counties the fastest and also an attractive economic market to the investors. The ASEAN region includes already developed countries like Singapore, Thailand, Malaysia, Indonesia, while also developing countries with low per capita revenue like Vietnam and the Philippines, which are also to see a massive demand for Car Rentals.
• Rise of electric cars providing the same utility as any Car rental with an added benefit of reduced ill-effects on the environment is also becoming popular amongst the developing ASEAN countries. Many young engineers and entrepreneurs with experience in design and innovation see the E-vechicles industry as a massive opportunity, especially in the ASEAN markets.

In the ASEAN region, all nations are seeing growth in their tourism sectors. Due to the rise of incomes in both China and other Southeast Asian counties, there is a surge in the number of tourists visiting ASEAN nations. China today is the second-largest economy with a huge middle-class population. While ASEAN regions themselves contribute towards 40% of international tourists in the form of intra-ASEAN tourists. The air travel has become much more affordable, and China's being situated closer to ASEAN counties has resulted in Chinese tourists visiting the neighboring regions on an annual basis. For instance, 10 million tourists from China have been visiting Thailand annually since 2016. One-third of Thailand's foreign tourists come from China. Other ASEAN countries are seeing a similar trend, which is a driving factor for the ASEAN Car rental market.

Using public transportation can become time-consuming and unpredictable. Also, cities like Luang Prabang and Bohol require long distances to see places for sightseeing. Moreover, public transportation doesn't give an end to end ride, which is especially unfavorable among tourists.

Recent growth for Car rental players such as Grab and Gojek in significantly larger cities is becoming popular. With 24/7 service, timed pick-ups and drops to designated locations and free 4G internet for the customer and added comfort are driving the growth of the market.

Today, Car rental services are offering online systems, including mobile applications, to gain consumers. 73.3% of adults in the ASEAN region have access to the internet through their mobile phones, which is also one of the highest amongst compare to other regions. As mobile phone use has risen, the usage of smartphones for the purposes of convenient Car rental booking has also increased.

The Singaporean government has also granted an exemption of registration fees for battery-operated/electric vehicles and even an exemption to permits to E-Vehicles running on ethanol and methanol fuels. Grab is the largest electric and hybrid vehicle fleet operator in Southeast Asia. Car rental companies like Grab are also pushing to move from gas to complete E-vehicles. Grab, which has today become the major service for connected users through its app by smartphones, is all set to introduce 200 BYD e6 Car rentals by 2025.

Similarly, HDT has plans to expand its all-electric fleet to at least 800 vehicles over the coming years. With such a wide range of options and growing government incentives towards E-vehicles, ASEAN countries will see a greater demand for EV Car rentals.

While the Indonesian government plans to collaborate with the manufacturers to increase the electric vehicle fleet size in the country, in March 2018, the Indonesian government partnered with Honda to help the country reduce exhaust emissions and develop a greener environment. However, the high cost of the battery and thus of E-vehicles is the key factor hindering the growth of the market.

In Singapore, new concepts such as Zero-Commission ride-hailing service is being offered by TADA. They promise stable fares throughout the day as they do not collect a commission from the drivers earning. As a result, drivers earn more, so they also don't always look for picking customers with the highest fares. However, markets such as TADA are not expanding as fast as competitors like GRAB and GOJEk since they do not have a big marketing budget to squander due to the zero-commission model.

The ASEAN Car Rental Market is hugely fragmented with various startups and regional players such as Grab, Gojek, TADA, and RYDE. Although to have the edge over its competitors, the major rental companies are making joint-ventures, partnerships to launch newer products.

For instance, GRAB has merged with Uber previously in ASEAN markets. Today it is the biggest app in Singapore. GRAB's main rival in SG which Launched in SG in last year has already established a huge market in Indonesia and will not enter the Singapore market

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