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

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

The Thailand Car Rental Market is valued at USD 811.47 Million in 2021 and is expected to reach USD 1261.42 Million by 2027 registering a CAGR of over 9.22% during the forecast period, 2022-2027.

Prior to COVID-19, the car rental industry in Thailand was expanding steadily and profitably, and more individuals were hiring cars than in prior years. However, the pandemic completely declined the country's travel sector, including the market for rental cars. After travel restrictions and lockdowns were relaxed, however, rental cars have gained momentum as people preferred rental cars over public transportation.

Tourism is one of the main factors promoting the growth of car rental services in Thailand. Demand for an alternative mode of transportation has increased due to an increase in tourism and increasing traffic in the nation's largest cities.

Thailand is one of the world's most affordable holiday destinations. Due to the virus outbreak, the country saw a very low number of tourists in 2020, but by 2022, the country will regain its position as a tourist destination as people are eager to travel, and business trips are also gaining traction. Furthermore, in order to attract more tourists, Thailand's government has implemented a number of policies and schemes that will increase demand for rental cars in the country.

Key Market TrendsRising Tourism Industry in the Region Drives the Market

Tourism in Thailand is well-known for its attractions. Thailand is a popular holiday destination for people worldwide. Travelers have a variety of options for getting around the nation, including airlines that connect the major provinces, airport shuttles, rental buses and coaches, special transfers like limo services with experienced chauffeurs, car and other vehicle rentals, trains, boats and yachts, motorcycle and scooter rentals, cycling, and many other modes. Prior to now, public transportation options like buses, trains, airplanes, and other kinds of transportation served both Thais and tourists' travel needs. A desire for an alternate mode of transportation has grown as a result of increased tourist numbers and traffic congestion in the nation's major cities.

International tourism, a once-thriving industry that has been hampered by pandemic restrictions, is a key component of Thailand's economy. However, once Thailand reopened to vaccinated foreign passengers from 63 countries on November 1, 2021, there have been ongoing government initiatives to increase domestic tourism as well as measures to assist returning international demand.

The domestic tourism sector alone is not enough to bring the country's tourism earnings back to 2019 levels; the sector's revival would depend on a resurgence in international travel. Given that Thailand's GDP depends heavily on foreign tourism income. This scenario of recovery would probably alter the travel industry's environment and generate a strong need for both the public and private associated sectors like car rentals and hospitality to take action to ensure the industry's recovery.

In July 2022, The Tourism Authority of Thailand (TAT) has unveiled its marketing strategy for 2023, which will maintain the objective of revitalising and transforming Thai tourissm while focusing more emphasis on the sector's recovery in order to achieve stronger and more inclusive tourism growth.

Competition in the Car Rental Market Driving Market Growth

Thailand's car rental market is extremely disorganized. The majority of the market is dominated by leasing companies affiliated with banks that combine hire purchases and rentals. High competition, high lease rental, low residual value, political instability, unstable FDI, unclear tax regulations, and rising unemployment are among the market restraints and challenges. Corporate entities are the most common customer type, with financial leasing being the most popular product. Despite the challenges, certain factors such as a growing economy, increased popularity of company cars, an expected increase in the number of SMEs, rising currency, and a changing mindset toward vehicle ownership are some of the key drivers expected to boost this market in the short to medium term.

Thailand's car rental market is highly competitive, with both organized and unorganized players present. Thailand's organized car rental market controls the majority of the market. The organized channel is growing in popularity due to the large number of fleet sizes available, which include numerous benefits such as a technologically advanced online booking system, trained and verified drivers, and mileage-based discounts, among others.

The unorganized segment caters primarily to tourists who book through a travel agency, and these car rental companies collaborate with travel agencies. However, as cab aggregators enter the market and internet penetration increases, unorganized car rental players are becoming more prevalent.

With about a million private passenger cars on the road, Bangkok is the second-most crowded city in the world. This has created a chance for the nation's current car rental and taxi aggregator companies to test a ride-sharing or car pooling segment for their business model. With government efforts to curb emissions, more hybrid-electric vehicles (HEVs), plug-in hybrid vehicles (PHEVs), and battery electric vehicles are anticipated to be added to rental car fleets as part of government measures to reduce carbon emissions. Due to the high retail price of electric vehicles, their rental rates will be greater than those for gasoline-powered vehicles.

Furthermore, the market is growing due to the wide range of fleet sizes available, which come with numerous benefits such as a technically advanced online booking system, qualified and verified drivers, and mileage-based discounts.

Competitive Landscape

The market for renting cars in Thailand is quite fragmented because of the large number of businesses there. In Thailand, there are a small number of smaller small vehicle rental companies with less than 20 fleets in addition to the nearly organised car rental organisations, which include both domestic and international participants. These businesses are pitted against one another based on characteristics like price per day, commercial and retail clients, down payment, fleet type, maximum rental length, and others. Thai Rent A Car, Avis, Hertz, Sixt, Budget, Europcar, Chic Car Rent, and other major companies are the market's top competitors.

New players are emerging by partnering major players owing to huge market potential. For instance,

• In January 2021, Drivehub, a Thai-based online rental car startup, reported that it has raised a seven-figure tranche of funds. a funding round that was overseen by KK Fund, CAC Capital, and Toyota Tsusho. The start-platform up's provides a range of service tiers, including the ability to hire a car using a credit card from well-known worldwide firms like Hertz, Dollar, and Sixt, among others. Users of Drivehub have the option of paying cash when hiring automobiles from nearby companies.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
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