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

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

The Philippines Car Rental Market is valued at USD 507.62 Million in 2021 and is expected to reach USD 789.71 Million by 2027 registering a CAGR of over 7.64% during the forecast period, 2022-2027.

The COVID-19 pandemic hindered the growth of the Tourism Rental Market as there were global factory shutdowns, travel bans, and border lockdowns, to combat and contain the outbreak, impacting every industry and economy worldwide. As tourism is a huge market, the demand for vehicle rentals halted with continuous lockdowns across the world. However, as the restoring economic activities are boosting tourism, the car rental market is expected to witness nominal growth during the forecast period. People tend to prefer rental vehicles to any other means of transportation to maintain social distancing and hygiene protocols.

Over the long term, The Philippines' car rental market is growing due to various reasons. One is the rising expense of car ownership. It can be highly expensive to purchase and maintain a vehicle due to the cost of gas and other maintenance. As a result, renting cars has become a popular choice among many individuals due to their lower cost.

The rise in visitors and ex-pats to the Philippines is another aspect. There is a rising need for automobile rental services as more and more individuals visit the nation for business or pleasure.

Additionally, the country's expanding middle class has fueled the industry's expansion. People who have greater disposable income are more likely to choose rent-to-own vehicles over previously owned vehicles or new cars.

Key Market TrendsOnline Booking Expected to Witness Significant Growth during the Forecast Period

The primary consequence of increased concern and awareness about virus containment has been an increase in rental car options. Additionally, the market for rental vehicles for tourism offers the chance for greater mobility without the worry of shelling out money for vehicle expenses. These services are provided via websites and other online platforms, which has contributed to the market's expansion.

It is predicted that as internet and smartphone usage among customers rises, so will consumers' propensity for online booking. The demand of customers to have detailed access to the accommodations, services, and other benefits is credited with the increase. For instance, more than 50% of all reservations for vehicle rentals in 2021 were done online. Additionally, due to the growth of the internet.

Over the past few years, clients' preferred method of choosing a rental car has increased with the development of technology. Additionally, it offers extra tools for real-time monitoring of a rental car's performance and maintenance. With the help of such tools, fleet managers and drivers may better spot dangers and quickly adopt improvements to their rental services.

The demand for authentic travel experiences, convenience, and value for money are three main drivers of the expansion of internet booking. Only applications and websites are used by the growing number of startups and third-party travel booking businesses to provide services. As a result, consumers are favouring online booking over traditional booking. The aforementioned factors are accelerating the development of internet booking.

Rising Demand for Tourism Rental Vehicles

The Philippines, with its white-sand beaches and friendly people, is a tourism-dependent economy. Previously, tourism contributed more than 10% of the country's gross domestic product. However, due to international border closures and nationwide lockdowns, the tourism sector's direct gross value added has dropped by nearly half in the last two years. The relaxation of travel restrictions and faster vaccine rollout, as well as the relaxation of testing and quarantine requirements, are expected to revitalize the Philippine tourism industry.

The number of tourists entering the country has been increasing year on year. The number of visitors entering the nation climbed to 8.2 million in 2019 from 7.1million in 2018. However, tourism is crippled by COVID-19 which resulted in less than one million arrivals consecutively in 2020 and 2021. Increased demand for rental cars for business trips, vacations, and on-and-off airport transportation has positively impacted the car rental industry.

Legal entities are increasingly leasing cars since leasing has several advantages, including low monthly payments, tax advantages, the status of owning new cars every few years, and no maintenance costs.

The market is constrained by the nation's unsafe driver behavior and severe traffic issues (particularly in Metro Manila). Additionally, parking spaces are limited in the larger metropolises. In the Philippines, the demand for the car rental market has increased as a result of all these causes.

Competitive Landscape

There are several multinational companies operating here, including Orix, Hertz, Diamond Car Rental, Go Lag and Avis. The market is primarily driven by a planned expansion of market players' fleet sizes, a strengthening economy, an increase in the popularity of car benefit programs, and expansions in the tourism industry.

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