Car Rental Market is Expanding Growth 10.7% from 2021 to 2028

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The global car rental market was valued at $93.11 billion in 2020 and is expected to reach $215 billion by 2028, registering a CAGR of 10.7% from 2021 to 2028.

Car rental has turned into a popular activity across the globe owing to the easy booking and availability of cars for rental purposes. The demand for hassle-free money transfer, easy booking, live tracking, and high safety helps escalate the demand for the car rental market. Moreover, the rising use of smartphones and internet users is estimated to boost the global Car Rental market.

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Car rental or car hire agencies are agencies that rent automobiles for a short period of time at certain cost. This service is often organized with many local branches, which are generally located near airports or busy areas in the city and are complemented by a website to allow online reservations. With growth in pollution levels and population, the car rental industry has experienced a drastic transformation over the past few years, becoming one of the most prominent industries in fleet transportation. Manufacturers and consumers rely on various car rental schemes that are cost-effective, such as leasing cars from their owners for a period of three years and then putting these cars on rent through app-based bookings. In addition, car rentals majorly help curb the pollution level by reducing volumetric sales of owned vehicles. Moreover, with an increase in air traffic and growth in the trend of online car booking, car rentals are the preferred options for travel, as cars are the most economical and faster modes of transportation. These advantages promote growth of the car rental industry at an exponential rate.

Factors such as rise in trend of on-demand transportation services and low rate of car ownership among millennials drive growth of the car rental market. However, low rate of internet penetration in developing regions hampers the market growth. Further, adoption of car rental management software is anticipated to provide lucrative growth opportunities for the players operating in the car rental market.

Rise intrend of on-demand transportation services

On demand services include taxis, passenger vehicles, and charter vehicles with flexibility and other features such as real time feedback, tracking of vehicles, and rating to end customers. The availability of cars and comparison of fare with the correspondent car rental companies is facilitated by numerous mobile applications. For instance, in August 2017,Migo, a Seattle-based search engine for on-demand ride services launched a mobile application that allows users to compare locations and prices of nearby taxi, car-sharing, and ride-hailing companies all in one app. Moreover, such car rental services allow customers to make use of numerous functions. Thus, rise in trend of on-demand transportation services is driving the growth of car rental market.

Market Drivers:

The cost-effectiveness and demand for affordable rides among the mass customers are anticipated to boost the growth of the global Car Rental market share during the forecast period. Additionally, the rising number of business and leisure trips has surged the use of luxury and premium car rental services. The sharing and pooling concept is likely to attract more customers among the less expensive interested customers and thereby, propel the growth of the global Car Rental market. Furthermore, the growing environment and health concerns have urged customers to adopt eco-friendly services or products. The major goal is to reduce pollution by reducing the cars on the road. The high disposable income, improving road infrastructure in emerging or developed economies has increased the number of leisure and business trips which, in turn, will fuel the market growth.

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Alluring Features that Bolster Market Growth 

As per the report, there are numerous factors that are propelling the car rental market size. These include consumers increasing purchasing power, growing economy, rise in per capita disposable income of consumers, rapid growing urbanization, rise in industrialization, growing population that make it difficult to drive own vehicles, favorable government norms, awareness regarding environmental protection, rise in tourism and travel activities, and improved road infrastructure. Additional factors adding to the car rental market value include the dependence of users on smartphones, availability of online platforms, and ease of booking, which are also adding market growth.

On the contrary, the low rate of internet penetration in developing regions, high competition in the market for the presence of a high number of players, and constant changing crude oil prices may have a negative impact on the car rental market outlook.

Information Technology to Make Car Bookings Easier 

The penetration of information technology in the car rental industry has made car bookings and car reservations much simpler, reliable, easier, and safer and thus, customers are increasingly adopting these services. Stringent emissions standards by governments across countries will hamper the growth of this market. The increasing number of warnings by The International Energy Agency regarding the rising emissions of carbon dioxide will restrict the growth of this market in the years to come. International meetings and agreements are demanding mature economies and emerging nations to reduce carbon emissions. Thus, green movement has become a trend that is becoming popular. Leading companies are thus, adopting green car rentals.

Increasing Onus on Using Cutting Edge Technology

The penetration of information technology in the car rental industry has made car bookings and car reservations much simpler, reliable, easier, and safer and thus, customers are increasingly adopting these services. Stringent emissions standards by governments across countries will hamper the growth of this market. The increasing number of warnings by The International Energy Agency regarding the rising emissions of carbon dioxide will restrict the growth of this market in the years to come. International meetings and agreements are demanding mature economies and emerging nations to reduce carbon emissions. Thus, green movement has become a trend that is becoming popular. Leading companies are thus, adopting green car rentals.

The car rental market is also expected to see new horizon as tourism industry players gear toward adopting frameworks that will enable them manage disaster-related market shocks in a better way. Two factors will impede the pace at which this will be done undoubtedly. The cost-containment measures being adopted by worldwide tourism sector and still-lacking consumer confidence in some of the major economies. However, the car rental industry will emerge faster on the back of governments’ norms favoring tourism.

Low rate of internet penetration in developing regions

Generally, car rental and ride hailing services require three parties for their operation i.e. drivers, riders, and service providers. All the process such as matching rider with drivers, fare estimation & calculation, ride payment, and reputation management are done by using smartphones with mandatory internet connectivity. Some countries such as Eritrea, Burundi, Chad, and Somalia have low penetration of internet that threatens the growth of the ride hailing market in such regions. A ride driver must have a GPS equipped smartphone that have active internet connection to identify the exact pickup and drop location of customers. Therefore, such low penetration of internet in some regions hampers the car rental market globally.

Adoption of car rental management software

The car rental market is growing rapidly on a global level. Many leading players have already entered the market and acquired remarkable position in the market, however there is still scope for other players. All the players operating in the market are taking initiatives to provide better offers and services to get more bookings, by improving their operations and adopting new automated technologies. In addition, to provide better services and automate their business, car rental players are using car rental management software. The car rental management software minimizes the task of management and boosts the efficiency of operation. Further, management software also provides features such as fleet optimizations, advanced pricing management, and custom reports, which, in turn, helps car rental companies to grow their business. Thus, adoption of car rental management software holds a remarkable growth opportunity for the car rental market players for market expansion.

COVID-19 Analysis 

The COVID-19 pandemic has cast its shadow on different industries, with the car rental industry having a mixed impact. During the first quarter of 2020, following lockdowns and social distancing trends across the globe, people were compelled to be indoors due to the fear of the virus spreading. The travel industry felt the heat of the chaos that was unleashed by the pandemic. This virus resulted in a tectonic shift in the manner in which people move. During the second half of 2020, with relaxations in lockdowns people began to rent cars such as Zoom cars for long drives and road trips as they prioritize personal mobility. The best part is car rental companies are taking good measures like sanitizing cars after every ride and offer customers with hand sanitizers to reduce the risk of getting the virus. Some car rental agencies conduct daily sanitization of every vehicle with more emphasis on high-contact surfaces both outside and inside the car, like door handles, steering wheels, and seats. All these are likely to have a positive impact on the car rental market revenue.

Economical car category is projected to dominate the global Car Rental market

The economical car category is expected to hold the largest share in the global Car Rental market owing to its compact size and cost-feasibility. Additionally, it is one of the most commonly preferred modes of transportation for airport and intra-city travel.

Airport transportation is expected to substantial growth during the forecast period

Owing to the increasing interest in tourism, the use of airplanes for leisure and business is also found to surge among the tourists. Thus, the demand for car rental services is increasing in the tourism sector.

North America to Have Lions Share in Car Rental Market 

By region, the car rental market covers growth opportunities and the latest trends across Europe, the Asia Pacific (APAC), North America, and Rest of the World (RoW). Of these, North America will have the lion’s share in the market over the forecast period. Increased non-business and business trips, the rising number of international travelers in Canada and the US, a shift in consumer preference towards rental services, and the presence of prominent service providers are adding to the global car rental market share in the region.

In the APAC region, the global car rental market is predicted to have notable growth over the forecast period. Considerable economic growth, enhanced road infrastructure, the availability of high-end luxury and economy cars in developing nations, and self-driving renting trend are adding to the global car rental market growth in the region.

Market Segmentation

By Application

  • Leisure
  • Commercial

By Rental category

  • On airport
  • Off airport

By Car type

  • Luxury car
  • Executive car
  • Economical car
  • Sports utility vehicle (SUV)
  • Multi utility vehicle (MUV)

By Region

  • North America
    • U.S.
    • Canada
    • Mexico
  • Europe
    • UK
    • Germany
    • France
    • Spain
    • Rest of Europe
  • Asia-Pacific
    • China
    • Japan
    • India
    • South Korea
    • Rest of Asia-Pacific
  • LAMEA
    • Latin America
    • Middle East
    • Africa

Key Market Players

  • Avis Budget Group
  • Europcar
  • Enterprise Holdings Inc.
  • Hertz System, Inc.
  • Localiza
  • SIXT
  • Uber Technologies, Inc.
  • Carzonrent India Pvt Ltd.
  • Eco Rent a Car
  • ANI Technologies Pvt. Ltd. (OLA TAXI’S)

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