Car Rental Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

Car Rental Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

The Car rental market accounted for USD 86 billion in 2020 and is expected to reach USD 131 billion by 2026, projecting a CAGR of about 7% during the forecast period.

The global COVID-19 pandemic has devastated economies worldwide and the impact is felt by businesses across verticals and hit transportation services particularly hard. Challenges that emerged from the worldwide lockdown are immense and insurmountable in many areas. With reduced global air traffic, demand for rental cars has slowed down at airports as there were travel restrictions across the world to contain the spread of the virus. Also, rising prices of petrol and diesel in developing countries likely to hamper the growth of the market during the forecast period.

The global crisis has merely accelerated the adoption of rental cars. However, post-pandemic with safety and hygiene becoming the need of the hour, practices for disinfecting the car are followed meticulously. The need for individual mobility and the social distancing norms is bound to improve the industry conditions. The subscription model has become the face of the car rental industry in recent times. Since this model allows the customer to enjoy temporary ownership of the vehicle without worrying about additional costs such as maintenance and insurance premiums etc.

The market in North America is expected to dominate in the global market in terms of revenue and is expected to continue its dominance over the forecast period, this can be attributed to increasing number of business trips and vacations local as well as international across various countries in this region.

The market in Asia Pacific is expected to register significant growth in terms of CAGR over the forecast period, owing to increasing travel and tourism and increasing availability of high-end luxury as well as economy vehicles, especially across developing countries in this region.

Key Market TrendsIncreasing Demand For Online Car Rental Services

Technology is a critical component expected to boost the market over the forecast period. Increased adoption of information technology is transforming the industry and enabling operators to deliver improved services to their customers. This includes the utilization of optimized corporate and customer information management and the development of convenient internet booking applications.

For instance, order online or pick-up model, and are at the forefront of identifying applications for beacons and near field communications (NFC). Newer players for instance Zipcar and BlaBlaCar are very well doing using innovative business models such as car-sharing and adopted technologies such as telematics. Uber and Lyft are using mobile technologies and devices to better meet consumers’ personal transportation needs. These initiatives are contributing to the stage for the disruption of the car rental industry.

Currently, online booking also serves a variety of purposes, such as verification of documents of the renter, offering information to the renter regarding the car, services like drop and pickup of the rented car at a certain place, e-signing contracts, and cashless transactions.

Smartphone sales is another major factor propelling the market. Rising dependence of users on smartphones for carrying out a variety of activities traditionally done by personal computers has significantly helped transform the car rental experience for customers. This is further enhanced by the increased availability of comprehensive demand-oriented mobility solutions. Industry players such as Sixt SE, Uber, and Avis have launched their mobile apps through which customers can easily choose vehicles from a portfolio and carry out bookings.

North America Is The Market Leader

North America lead the overall market in 2019 and is expected to retain its dominance over the forecast period. The rising number of leisure and business trips across the region, both locally and internationally, is among the prominent factors influencing the growth of the regional market. Additionally, a continuous shift in consumer preference toward rental services, along with the presence of prominent service providers in the region, such as Avis Budget Group and Enterprise Rent-a-Car, is expected to accelerate the revenue generation prospects.

North America is expected to be the largest car rental market globally, in the forecast period. as U.S. continues to remain the largest country for car rental services market. Recently, the usage of these services increased in several cities, fueled by increased initiatives by the service operators. For instance, Uber Technologies Inc. adopted mobile technologies and other devices to meet consumers’ personal transportation requirements, more efficiently.

This growth in revenue share can primarily be attributed to the increased usage of car rental services in the U.S., rising adoption of electric cars, and growing concern and awareness of lower emissions among consumers in the region.

Competitive Landscape

The market is moderately fragmented, with numerous international and domestic companies operating across the globe. However, the industry is on the verge of consolidation with few players capturing major market share. Key participants include Enterprise Rent-A-Car, The Hertz Corporation, Sixt SE, Europcar, and Avis Budget Group. The primary focus of these players is on enhancing their services to gain a customer base and maximize profitability. For instance.

Sixt SE has launched a smartphone app allowing company car drivers to manage everything related to their contract at the push of a button.

From March 2021, Car rental firm Hertz is introducing an annual membership fee for its 24/7 service allows members contactless rental of cars and vans

Collaboration is another key strategy implemented by industry players to strengthen their position in the market. For instance, in May 2021, Uber has launched a new car rental service called Uber Rent in partnership with Dublin-based car rental company CarTrawler. The partnership will see CarTrawler run Uber's car rental technology, which is being rolled out across the US.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
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Companies Mentioned

IBM Corporation
Oracle Corporation
Internap Corporation
Packet Inc. (An Equinix Inc. Company)
Scaleway Inc.
Amazon Web Services Inc
Rackspace Inc.
CenturyLink, Inc.
LightEdge Solutions, Inc

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