Growing Digitalization and Sharing Economy to Propel Growth of the Car Rental Market
The car rental market comprises vehicles that are leased on an hourly, daily, weekly or monthly basis. Car rental services are available at airports as well as in urban areas through both offline and online channels. These services provide flexibility to travelers and customers who may need vehicles for a short period of time without owning one. Car rental companies maintain a variety of vehicles in their fleet from economy cars to luxury vehicles based on customer needs and budgets.
The global car rental market is estimated to be valued at US$ 133.23 Bn in 2023 and is expected to exhibit a CAGR of 2.9% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
Growing digitalization and sharing economy are estimated to drive the growth of the car rental market over the forecast period. Adoption of mobility-as-a-service platforms and proliferation of online rental portals have increased the reach of car rental services to customers globally. Customers now have access to a variety of vehicles online which can be delivered and collected from desired locations, fueling the demand for such services. Furthermore, customers are now open to shared utilization of vehicles through both peer-to-peer rental as well as subscription-based models owing to increasing environmental awareness. This has attracted new potential customers to car rental services thereby positively impacting the market growth.
SWOT Analysis
Strength: The car rental market offers flexibility and convenience to customers. Renting a car allows travelers to explore places without relying on public transportation. It gives them the freedom and independence to plan trips based on their schedule. Car rental companies have large fleets of late-model vehicles available in different classes to suit different needs and budgets.
Weakness: Lower occupancy rates impact profit margins for car rental companies. Seasonal fluctuations in demand lead to underutilization of fleet during off-peak periods. Rising fuel costs and insurance expenses increase operating costs. Dependence on third-party suppliers for vehicle procurement can cause supply chain disruptions.
Opportunity: Increasing popularity of rental cars for leisure travel presents an opportunity. Customers prefer renting vehicles over taking cabs or public transport for road trips and vacations. Growth in international travel and tourism is expected to drive future demand. Emerging business travel markets in developing nations offer new opportunities.
Threats: intensifying competition from peer firms and mobility startups poses a threat. Entry of new players has increased choice for customers. Shift towards ride-hailing services is a looming threat, especially for airport rental locations. Changes in fuel efficiency norms require frequent fleet replacement, raising capital expenditure.
Key Takeaways
Global Car Rental Market Size is expected to witness high growth over the forecast period of 2023 to 2030. The market is estimated to reach a size of US$ 133.23 Billion by 2023, growing at a CAGR of 2.9% during the forecast period.
Regional analysis: North America currently dominates the global market, accounting for over 35% of the overall revenue. This is attributed to high business and leisure travel in countries like the United States. Asia Pacific is expected to be the fastest growing regional market supported by rising tourism and increasing disposable incomes in countries like China and India.
Key players: Key players operating in the car rental market are Avis Budget Group, Enterprise Holdings, Europcar Mobility Group, Hertz Global Holdings, and Sixt SE. These companies collectively account for over 50% of the global market share. They have strong international presence with vast fleets and service networks across major cities and airports globally.
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