The World Travel and Tourism Council reported that in 2018, a growth of 3.9% was witnessed by the global travel and tourism industry. It created more than 319 million jobs worldwide and amassed $8.8 trillion in 2018. This massive growth in the industry also boosted the growth of other related industries, such as car rental. Nowadays, tourists prefer renting cars to explore a new place as it gives them the flexibility of planning their own itinerary without the fear of relying on public transport system. Car rental services allow customers to travel to their choice of places as per their convenience. Further, the rising disposable income has also established the trend of more people taking short trips. Rather than taking their own vehicle, customers prefer renting cars; airport rentals are the most common as tourists rent a car immediately after landing in a new country and keep the car with them for the whole duration of their stay or drop them off at convenient drop-off points.
Witnessing a 7.9% CAGR, the car rental market is expected to generate a revenue of $122.6 billion in the coming years. Car rental services are offered via three different vehicle types: luxury, executive, and economy. During 2014–2018, the economy vehicle type was used the most for car rental services. These cars are inexpensive and are smaller in size and have a seating capacity of four to five persons. Being smaller in size, these cars have a high fuel efficiency, which makes them a suitable option for rental services. Further, amidst growing environmental concerns, these cars are witnessing a high demand as their impact on the environment is not as severe as other cars. In the coming years, the luxury cars are predicted to register a faster growth in demand, as the global disposable income is improving. These cars offer superior performance, comfort, and have better configuration.
Segmentation Analysis of Market
- The market is witnessing the fastest growth in demand for luxury segment, due to sustainable economic development and increased usage of luxury cars in business trips by the corporates globally.
- Online was the preferred mode of channel globally, for booking cars on rent. It is due to the convenience provided by online system in booking a car on rent, coupled with transparent pricing, and 24-hour booking facility.
- Globally, the car rental industry generated more revenues from personal usage than business purpose. This is led by the growing expenditure on tours and travels by people, due to increased disposable income. People nowadays prefer to rent a car while travelling or going on a tour, which makes personal usage the larger revenue contributor in the market.
- The market witnessed fastest growth from airport travelling, which is mainly attributed to increased usage of car rental services during frequent international tours by business professionals.
Geographical Analysis of Global Car Rental Market
Together, North America and Europe accounted for over 67.0% revenue of the global market, in 2018. The large market size in these regions is due to presence of major car rental players in both regions and higher car rental length (days).
APAC held significant share in global car rental market in 2018, due to the fact that APAC is the second most preferred regions for travel and visits worldwide. China and Japan were the major revenue generating countries in APAC, in 2018. However, the market size in India is expected to surpass the Japanese rental market size by 2022. This can be mainly attributed to rising number of car rental companies in India and customized rental services being offered by these companies.
The global car rental industry is highly consolidated in nature as major part of the revenue is generated by only few companies. These major companies provide car rental services in many countries. For example, Enterprise Holdings Inc. operates in over 100 countries across North America, Central America, South America, Europe, the Caribbean and parts of Middle East and APAC. Sixt SE, Localiza Rent a Car SA, Europcar Mobility Group S.A., Avis Budget Group, Addison Lee Ltd., Hertz Global Holdings Inc., Zoomcar India Pvt. Ltd. are some of the major players providing car rental and leasing services.
In July 2019, Enterprise Rent-A-Car U.K. acquired Romsey-based car rental company, SHB Hire Ltd. The latter operates a fleet of over 18,500 commercial vehicles and this move will form one of the largest U.K. commercial vehicle rental business.
Some of the other major players operating in the car rental market are Uber Technologies Inc., ECOS India Mobility & Hospitality Pvt. Ltd., ANI Technologies Pvt. Ltd., Beijing Xiaoju Technology Co. Ltd. (Didi Chuxing), and Carzonrent India Pvt. Ltd.