The global car rental market is valued at $1,48,129.4 million by 2027, surging from $92,252.4 million in 2019 at a noteworthy CAGR of 15.5%.
Impact Analysis of COVID-19 on the Car Rental Market
The global market for car rental services is projected to experience a low growth rate in the midst of the COVID-19 health emergency, due to revenue losses, massive hit to the tourism sector, and complete shutdown. Therefore, the significant companies involved in car rental businesses, like Avis, are implementing cost-saving measures which include a 20% reduction in fleet coupled with a 70% reduction in its employee workforce.
On the other hand, some of the notable car rental service providers like Rent-a-car and Revv are following various strategies to help people in the COVID-19 apocalypse. Fear of viral spread while using public transport is the main driving factor raising the need for rental car services. Therefore, such companies have seen an upsurge in growth, throughout the pandemic period. These elements may lead to creating lucrative opportunities for the investors, in the forecast period.
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Car Rental Market Analysis:
The enormous growth of the global car rental market is mainly attributed to the increasing penetration of the internet & smartphones, the continuously growing disposable income of consumers, and the availability of value-added car rental service. Furthermore, the notable car rental service providers are offering services according to the need of a client with enhanced integrated safety features at a less expensive rate. In addition, these players are following business expansion, strategic collaborations, and technological innovations to acquire the largest share in the global industry. For instance, in March 2019, the Sixt SE, an innovative leader in the car rental business has entered into the partnership with Indian Hotels Company (IHCL) in Berlin. Owing to this deal, IHCL will be able to provide enhanced services to their customers. These key factors may lead to a surge in the demand for car rental services in the global market.
Fluctuations in oil prices may create a negative impact on global car rental services, throughout the analysis timeframe. Furthermore, the increase in low-cost transportation in the developed and developing economies may obstruct the growth of the global market.
The global car rental industry is growing extensively particularly in China, India, and Brazil. This factor will increase the demand for transportation, which may ultimately increase the demand for car rental services, in the forecast years. Furthermore, significant car rental service providers are offering connectivity technologies for more effective and enhanced customer experiences. Also, these players are adopting car rental management software to reduce the repetitive tasks. These factors may provide lucrative opportunities for the global car rental market, in the coming years.
Market Segmentation:
The SUV segment of the car rental market will have the fastest growth and it is projected to surpass $13,131.9 million by 2027, with an increase from $7,532.6 million in 2019. Rental SUVs are recognized as the unique option for family outdoor trips significantly due to additional cargo space, GPS facilities, and availability of famous brands such as Mercedes GLA, Range Rover Evoque, and Volvo XC90. Furthermore, enhanced safety, convenience, and security in the rental SUVs may create a positive impact on the segment, throughout the forecast period. Contrary to this, the economic vehicle type will have a significant market share and is projected to grow at a CAGR of 16.3% by registering revenue of $47,323.9 million by 2027. Extensively growing concern about the environmental pollution along with supportive government policies is anticipated to create demand for EVs which will ultimately surge the growth of the segment, during the projected period.
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Leisure sub-segment for the car rental industry shall have rapid growth and it is anticipated to generate a revenue of $95,179.0 million by 2027, during the forecast period. Corporate car rental services help to enhance the environmental credentials and fulfill the increasing needs of a busy corporation. due to these factors, the adoption of rental car services will extensively increase in the commercial sector, which may offer lucrative opportunities for the segment, during the forecast timeframe. However, the commercial segment for the global market shall have the fastest –growth and is projected to reach up to $52,947.4 million by 2027, at a 16.9% CAGR. The rapid shift towards the ‘asset-light lifestyle’ of the working professionals is one of the key factors for the growing demand for the segment which will eventually drive the market, during the forecast period. Furthermore, minimization in administration cost, instant support, and superior servicing & maintenance offered by the car rental ventures may create massive opportunities for the segment, over the forecast timeframe.
The online sales channel will be the fastest-growing segment and it is expected to register a revenue of $1,07,144.0 million by 2027, throughout the analysis timeframe. the enormously growing smartphone penetration in the developed, as well as emerging countries, projected to surge the segment growth, over the analysis timeframe. In addition, key players operating in this market are developing integrated apps to serve the customers. For instance, in May 2020, Titanium Mobility, a leading mobile solution provider, has launched a ‘Whitelabel app’ by the Car Rental Gateway platform. This app provides an entire digitized car rental service and through that offers clients with frictionless and contact-free rental experience, during the COVID-19 crisis. Such elements are projected to upsurge the growth of the segment, during the projected timeframe.
Regional Outlook:
The car rental market for the North American region will be the rapidly-growing market. This market has generated revenue of $16,614.7 million in 2019 and is further projected to reach up to $30,529.5 million by 2027. The demand for car rental services is surging in the North America region, specifically because of the presence of a large number of people preferring to utilize the car rental services on daily basis like office-goers, tourists, and travelers. Moreover, the increasing trend of carpooling also augments the usage of car rental in the region as it helps in decreasing the CO2 emissions.
The Asia Pacific car rental market shall have a dominating market share and is anticipated to reach up to $65,651 million by the end of 2027; due to the surging penetration of smartphones across the Asian countries mainly China, India, and Japan. Furthermore, the market players involved in the automotive sector are following several strategies like business expansion, strategic collaborations, and releasing of value-added services to stronghold position in the global industry. For instance, in February 2020, Toyota Motor has made an announcement that they have launched a car rental business for travelers in China. The company will provide 7 popular Toyota models for daily rentals. Also, the company is planning to offer Electric vehicles (EV) in the coming years. These initiatives may lead to creating a positive impact on the Asia-pacific car rental market, during the forecast period.
Market TOP Key players:
Some of the leading car rental market players include Avis Budget Group, Enterprise Holdings Inc., SIXT SE, Europecar, The Hertz Corporation. Bettercar Rental LLC, Carzonrent, Al-Futtaim., Eco Rent a Car., and Localiza.
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