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

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

The Malaysia Car Rental Market is valued at USD 431.23 Million in 2021 and is expected to reach USD 642.52 Million by 2027 registering a CAGR of over 8.3 % during the forecast period, 2022-2027.

The COVID-19 pandemic has affected several industries causing challenges resulting from the lockdown are massive and insurmountable in many areas. Several industries are on the verge of collapse, with wage and workforce reductions becoming the norm. This means that sectors that are unable to cope with the sudden lockdown are halted, while those that adapt to the new situation remain in play. However, the car rental industry is well-equipped and ready to serve its customers. There is an expected exponential increase in demand for car rentals, especially given the current recession. Car rentals can also be a more affordable and faster way of acquiring a car, delivering a safe personal mobility replacement. Owing to the recovery of the economy in 2021, the car rental industry in Malaysia is set to register positive growth in the coming years.

Over the long term, the market's rapid growth is being fueled by rising pollution and car prices, as well as cost-effectiveness. Malaysia's car rental market has significant untapped potential. Malaysia has one of the smallest fleet sizes in the Asia-Pacific region for auto leasing and car rental. Consumers, rental companies, and manufacturers all benefit from the sector, which is quickly becoming a significant vertical in the transportation industry.

The Malaysia's car rental market is facing challenges such as an economic slowdown, a negative attitude among companies/people toward car rentals, a decline in the oil and gas industry, low auto-finance rates, and the presence of illegal operators, and a drop in used car prices.

The car rental industry in Malaysia is unable to compete with the high preference for car allowance among corporates. Car allowance provides several advantages to companies/employees over car rentals and is thus extremely difficult to compete with. The companies are trying to overcome these constraints by changing their approach to marketing/business development to lure more customers to opt for car rentals

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Key Market TrendsIncreasing Tourist Arrivals Aiding the Market Growth

Malaysia's car rental market is primarily driven by an increase of tourism activities in the country. Despite the biggest downturn in the country's tourism industry in 20 years, the government's initiative and Malaysia's beautiful landscape were able to draw visitors from all over the world. The commotion of modern cities has compelled travelers to take quick vacations in Malaysia as a trip to Malaysia is comparatively more affordable. According to the nation's leading organisation for travel and tours, 5 million foreign visitors are anticipated to arrive in Malaysia by the end of this year.

In Malaysia, Online reservations for car rentals are simple to make. Rental fares are usually inexpensive, and fuel is around the price of RON95 is RM2.15 (around € 0.50 per liter). Driving in Malaysia is typically safe, and rental cars are frequently of recent vintage and modern design. For couples and families, tourists can choose between smaller and larger vehicles. In most car rental agencies around Malaysia, one may also rent small buses and coaches for group travels.

Malaysia is a scenic place to explore by car rental. Visitors can easily reach every attraction in Peninsular Malaysia as the roads are well-maintained. Most car rental companies only rent to drivers who are at least 23 years old, however, a domestic driver's license usually suffices. At airports and in well-known tourist destinations, major car rental platforms like Avis, Hertz, and local businesses have offices. A daily cost of RM190 (USD 45), insurance included, is to be expected. Also, it's simple to locate parking garages and metered on-street spaces, some of which accept payments through mobile apps.

On Borneo, both the states of Sabah and Sarawak have a good road network around major cities such as Kuching and Kota Kinabalu; roads outside of these major cities are good and one can explore the surrounding area from these previously mentioned cities.

Government Initiatives is Expected to Drive Market Growth.

One may rent a car from a number of different companies in Malaysia. The majority of car rental agencies provide the same kind of vehicles for about the same price. The price variations for further options are typically negligible. All rental companies provide vehicles with unlimited mileage and a full tank of gas through the vehicle must be returned with full tank.

With several companies operating in the market, key players are offering new services to gain customer confidence. For instance,

• In March 2021, Avis Malaysia announced to provide consumers with a reliable, hygienic, and practical transportation option. The Avis Safety Pledge, a safety initiative that has been implemented across all of its rental stations in Malaysia, highlights this.

The Malaysian Government has been actively making legislative changes to aid the country's taxi and car rental industry. For instance,

• In March 2022, The Transport Ministry, through the Land Public Transport Agency (APAD), has agreed to open the taxi and rental car class license application to the public in an effort to boost the taxi industry.

This announcement is also expected to create opportunities for new players, particularly the younger generation, to enter the public transportation sector, thereby boosting the country's economy.

Furthermore, the government has been awarding tenders to companies to manage its fleet of vehicles, which has intrigued the interest of Malaysia's most prominent automotive groups. The contract, which includes both national and non-national brands, will cover official vehicles used by ministers and other high-ranking government officials, department cars, and police vehicles

Each car is leased to the government for five years before being replaced with a new one. The five-year replacement cycle ensures that the fleet stays current, and the maintenance costs for each vehicle are capped at predetermined levels. Such instances are driving the market forward.

Competitive Landscape

The Malaysian Car Rental Market is hugely fragmented with various foreign players like Avis, Hertz, and Europcar and startups and regional players such as Mayflower and Hawk. In order to have the edge over their competitors, the major rental companies are acquiring funding to cater to the expanding market. For instance,

• In September 2021, SOCAR Mobility Malaysia (SOCAR) raised USD 55 million which will help SOCAR expand its multiflex mobility footprint in Southeast Asia.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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